In a significant move to curb Iran’s illicit financial activities, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned nearly 50 entities and individuals involved in a vast shadow banking network.
This network has enabled Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) and the Islamic Revolutionary Guard Corps (IRGC) to access the international financial system and process billions of dollars since 2020.
The funds generated are used for developing advanced weaponry, supporting regional proxy groups, and financing terrorist activities. This article delves into the intricate web of entities and individuals sanctioned by OFAC, highlighting their roles in Iran’s shadow banking system.
The Nature of Shadow Banking
Shadow banking refers to financial intermediaries that operate outside the traditional banking system, often evading regulatory oversight. In Iran’s case, shadow banking networks involve exchange houses and cover companies that obscure the true nature of transactions, allowing sanctioned entities to engage in international trade and financial activities illicitly. These networks are crucial for Iran’s MODAFL and IRGC to sustain their operations and evade international sanctions.
Key Players in Iran’s Shadow Banking Network
There are atleast 7 shadow banking networks involved in the actions taken by OFAC.
1. Seyyed Mohammad Mosanna’i Najibi and Sadaf Exchange
Seyyed Mohammad Mosanna’i Najibi, an Iranian-Turkish money-changer, has managed several currency exchange businesses in Iran and Turkey since at least 2019. Najibi’s operations, primarily through Sadaf Exchange, facilitate the bypassing of U.S. and European sanctions. He collaborates closely with the MODAFL Supply Division to establish cover companies, hold funds outside Iran, and execute large-scale currency transfers. His activities also include direct financial support to the IRGC-Qods Force (IRGC-QF) through gold sales in Turkey.
**Entities Sanctioned:**
– Seyyed Mohammad Mosanna’i Najibi
– Seyyed Mohammad Mosanna’i Najibi & Co. Company (Sadaf Exchange)
– Golden Stars Kiymetli Madenler Tekstil Sanayi Ticaret Limited Sirketi
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2. Omid Sepah Exchange Company & Hekmat Iranian Exchange House
These Tehran-based exchange houses are controlled by U.S.-designated Bank Sepah and engage in shadow banking transactions for MODAFL. They use numerous shell companies to move tens of millions of dollars on behalf of MODAFL.
**Entities Sanctioned:**
– Omid Sepah Exchange Company
– Hekmat Iranian Exchange & Foreign Currency Services Company
3. Cover Companies Used for MODAFL Transfers
OFAC identified 27 cover companies based in Hong Kong, the UAE, and the Marshall Islands, controlled by Najibi, which facilitate the laundering of revenues from oil and petrochemical sales. These companies engage in extensive international financial activities to support MODAFL.
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**Entities Sanctioned (Hong Kong):**
– Gainon Co., Limited
– Meishur Limited
– Relan Limited
– Roslami Limited
– Turpami Limited
– Suesian Co. Limited
– Burren Co., Limited
– Saisaipen Co., Limited
– Xaster Co., Limited
– Delaite Trading Co. Limited
– Jocwa Co. Limited
– Tenglan Limited
– Kuwan Co., Limited
– Jiankang Food Limited
– Sino Trade Limited
– Fengxian International Trading and Services Co. Limited
– Copezzi Industrial Co. Limited
– Caregis Trading HK Limited
– Lzmar Trading Limited
– Cherry Star Co. Limited
**Entities Sanctioned (UAE):**
– Lyoned Trading L.L.C.
– Atvantic Goods Wholesalers L.L.C.
– Anvex Trading L.L.C.
– Sahil Mahaba Trading L.L.C.
– Nasir Sadiqat General Trading L.L.C.
– Brighten Star FZE
**Entity Sanctioned (Marshall Islands):**
– Hermex International Corporation
4. Asadollah Seifi Network
Asadollah Seifi, an Iranian money-changer, was previously designated in 2019 for supporting the IRGC and MODAFL. Seifi continues to operate sanctions evasion schemes through UAE-based shell companies, facilitating significant financial transactions for MODAFL.
**Entities Sanctioned:**
– Asadollah Seifi
– Mufflin Trading L.L.C.
– Colwich Trading L.L.C.
– Long Worth Goods Wholesalers L.L.C.
– Bethesda Industrial Solvents Trading
– O N C U Trading L.L.C.
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5. Ramin Jalalian Network
Ramin Jalalian, an Iranian currency exchanger, manages several exchange businesses in Iran and the UAE. He establishes cover companies and accounts for MODAFL, laundered tens of millions of dollars through international transactions, often using gold sales as a pretext.
**Entities Sanctioned:**
– Ramin Jalalian
– Piera Global Trading L.L.C.
– Astoria Star Heavy Equipment Trading L.L.C.
– Golden Bronze Limited
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6. Siavash Nourian Network
Siavash Nourian, owner of Nourian Exchange, uses his exchange house to facilitate extensive foreign currency activities for MODAFL. His network involves establishing cover companies and handling large-scale currency transfers.
**Entities Sanctioned:**
– Siavash Nourian
– Siavash Nourian & Co. Exchange
– Kumu Limited
– City Base Group Limited
– Net Trading Co. Limited
7. Seyyed Reza Mir Mohammad Ali & Atropars Company
Seyyed Reza Mir Mohammad Ali, owner of Atropars Company (Atropars Exchange), is a key player in MODAFL’s shadow banking activities, managing significant international transfers and holding funds in cover accounts outside Iran.
**Entities Sanctioned:**
– Seyyed Reza Mir Mohammad Ali
– Atropars Company
Implications of Sanctions
The sanctions imposed by OFAC effectively block all property and interests in property of the designated individuals and entities within the United States or under the control of U.S. persons. Additionally, any entity owned 50 percent or more by one or more blocked persons is also subject to blocking. These measures prohibit U.S. persons from engaging in transactions involving the sanctioned parties, aiming to disrupt the financial networks supporting Iran’s military and terrorist activities.
The extensive sanctions imposed by OFAC highlight the complexity and reach of Iran’s shadow banking network, which has enabled the MODAFL and IRGC to bypass international sanctions and fund their operations. By targeting key individuals and entities, the U.S. aims to disrupt these illicit financial activities and curb Iran’s ability to support terrorism and regional destabilization. The Treasury’s actions underscore the ongoing commitment to enforce sanctions and hold accountable those who facilitate Iran’s malign activities.
