US Sanctions Members of Iranian 'Shadow Banks,' Issues Red Flags
The Office of Foreign Assets Control last week sanctioned more than 40 people and entities tied to Iranian brothers Mansour, Nasser and Fazlolah Zarringhalam, who have laundered billions of dollars’ worth of funds through the international financial system for Iran's “shadow banking” network, the Treasury Department said. The designations target front companies in the United Arab Emirates and Hong Kong along with "affiliated businessmen" and others who have ties to sales of Iranian energy.
"These front companies operate accounts in multiple currencies at various banks to facilitate payments for blocked Iranian entities engaged in the sale of Iranian oil and petrochemicals, among other goods, including the" Islamic Revolutionary Guard Corps Qods Force, the Financial Crimes Enforcement Network said in an alert.
The FinCEN alert asks banks to file suspicious activity reports with the key term “IRAN-2025-A002" if they suspect a transaction is linked to their activity. The alert also highlights Iran's weapons procurement efforts and describes a range of red flags that may signal a customer is trying to smuggle or sell Iranian oil, has ties to Iranian shadow banks or is moving weapons for Iran, including:
- if the documentation associated with a customer’s oil shipping-related transaction doesn't match up with information contained in maritime database entries used for conducting due diligence
- the documentation references vessels that have undergone recent or multiple name or flag changes, or ownership transfers following the designation of the original owner, and the original owner "appears to maintain an interest in the vessel"
- a customer makes transactions that move through multiple exchange houses or trading companies, "adding additional fees and costs as the transactions progress," and the transactions don't "reflect standard and customary commercial practices"
- a customer receives wire transfers or deposits that don't contain any information about the source of funds, contain incomplete information, or don't match the customer’s line of business
- a customer declares information about their business that's "inconsistent with other available information, such as previous transaction history or associated transactional information," especially if trade data shows they have helped move shipments to Iran
- a company based in the Middle East with links to Iran or that may be a front company receives payments mostly from petroleum companies, and then it makes payments "primarily to electronics companies based in Hong Kong and China."