US Treasury cracks down on oil smuggling network aiding Iran, with ties to Russia

US authorities May 25 announced new sanctions on several individuals and entities involved in an international oil smuggling and money laundering network that has allowed Iran to skirt oil sanctions and fund terrorist groups in the Middle East.

The network facilitated sales of Iranian oil for the Islamic Revolutionary Guard Corps-Qods Force and Hezbollah, both of which have been designated as foreign terrorist organizations, allowing Iran to continue generating hundreds of millions of dollars of oil revenue in contravention of US-imposed sanctions on the country's oil sector, US officials said.

Statements from the US State and Treasury departments identified IRGC-QF official Behnam Shahriyari and former IRGC-QF official Rostam Ghasemi as the leaders of the oil smuggling network, and also contended that the network received backing from senior levels of the Russian government and state-run economic enterprises.

"The US remains fully committed to imposing costs on the Iranian regime for its support to terrorist proxies that destabilize the Middle East," Secretary of State Antony Blinken said in a statement. "While the US continues to seek a mutual return to full implementation of the Joint Comprehensive Plan of Action, we will strictly enforce sanctions on Iran's illicit oil trade."

The JCPOA of 2015 set restrictions on Iran's nuclear program in exchange for relief from US sanctions. The Trump administration reimposed sanctions on Iran's oil, petrochemicals, shipping and other sectors in 2018. Talks to revive the JCPOA stalled in mid-2021 but restarted in December. However, Russia's participation in those talks has created additional hurdles, as the US and others have levied heavy sanctions over its invasion of Ukraine.

"We will not hesitate to target those who provide critical support for the IRGC or Hezbollah and facilitate their access to the international financial system," Blinken said. "We work vigorously to counter sanctions evasion and continue to strictly enforce sanctions on Iran's illicit oil trade. Anyone purchasing oil from Iran faces the prospect of US sanctions."

International scheme

According to Treasury, Ghasemi began leveraging the Russian-based firm RPP as early as April 2021 to transfer millions of dollars on behalf of the IRGC-QF from Russia. RPP was formerly managed by Afghan businessman Kamaluddin Gulam Nabizada, who had ties to Moscow and was raising funds for the IRGC-QF in coordination with senior Russian government and intelligence officials.

The new sanctions also implicate RPP current manager Mihrab Suhrab Hamidi and UAE-based oil transportation and trading company Zamanoil DMCC, which Treasury said worked with Russia's Rosneft to ship Iranian oil to European companies for the IRGC-QF.

Individuals in Iran and Turkey as well as companies based in China, Iran, Lebanon and South Korea were also added to the Specially Designated Nationals and Blocked Persons List administered by Treasury's Office of Foreign Assets Control.

The designation against the individuals and entities involved in the oil smuggling network blocks any assets they have in US-linked banks and bans US persons from dealing with them.

Those designated played roles in facilitating the illicit sale of Iranian oil, helping to conceal the source of the proceeds from those sales and/or brokering and finalizing oil deals for the IRGC and Hezbollah.

The international network also helped conceal more than $6 million worth of Iranian petrochemical sales and facilitated the transfer and sale of millions of dollars' worth of gold and cash equivalents.

Oil sales

Venezuelan state-owned oil and natural gas company PDVSA as well as entities in China and Russia were among customers to use the network to secure Iranian oil supplies, Treasury said.

Sanctions for purchasing Iranian oil were extended to Hong Kong-based energy company China Haokun Energy, a subsidiary of Beijing-based Haokun Energy Group, as well as China's Fujie Petrochemical Zhoushan, a subsidiary of a joint venture between Iranian and Chinese energy companies called Petro China Pars, which was also sanctioned. China's Shandong Sea Right Petrochemical was added to OFAC's sanctions list for making payments associated with IRGC-QF oil sales and front companies.

Along with the network's leaders and RPP managers, individuals sanctioned were Iran's Mohammad Sadegh Karimian, Alireza Kashanimehr, Azim Monzavi and Esam Ettehadi, and Turkey's Hakki Selcuk Sanli, Abdulhamid Celik and Seyyid Cemal Gunduz.

Further, South Korean-based Turkoca Import Export Transit and its sole principal, Turkey's Abdulaziz Kaskariy, were sanctioned as Turkoca was used as a pass-through entity to transfer millions of dollars by falsifying invoices, Treasury said. And Concepto Screen SAL Off-Shore, a Lebanon-based company, was found to have facilitated oil deals likely benefiting the IRGC-QF and Hezbollah.

OFAC took action against the network pursuant to counterterrorism authority granted by a 2001 executive order that followed the Sept. 11, 2001 attacks, according to Treasury.