Shadow banking network for Iranian military hit with US sanctions

The U.S. Treasury Department is imposing sanctions on a what it calls a shadow banking network for Iran’s military.

The sprawling network expands to 50 people and firms in Hong Kong, the United Arab Emirates and the Marshall Islands, and is used by Iran’s Ministry of Defense and Armed Forces and Islamic Revolutionary Guard Corps, the department said.

According to the Treasury Department’s announcement, the network has gained illicit access to international finance system, allowing it to “process the equivalent of billions of dollars since 2020.”

The release said the individuals and organizations are involved in the sale of Iranian oil and petrochemicals, and use the money to purchase weapons, some of which are transferred to Russia for its war in Ukraine, and fund groups like Yemen’s Houthi rebels, which have caused a crisis in Red Sea shipping lanes amid the war in Gaza.

Deputy Treasury Secretary Wally Adeyemo said in a statement that the U.S. is taking action against the shadow banking network like “hundreds of other targets” involved in Iran’s activity since President Biden took office.

“We will continue to pursue those who seek to finance Iran’s destabilizing terrorist activities,” Adeyemo said. “We continue to work with allies and partners, as well as the global financial industry, to increase vigilance against the movement of funds supporting terrorism.”

The Treasury said Iran’s defense ministry is responsible for the development, production, funding for all its defense operations, including the manufacturing of weapons.

In March 2023, the department took action against a group of several dozen entities operating as part of an Iranian shadow banking network.

The shadow banking networks allow certain Iranian entities to access the international financial system by creating cover companies in the United Arab Emirates and Hong Kong that launder the money “into clean foreign currency,” the Treasury said.

Seyyed Mohammad Mosanna’I Najibi is an Iranian-Turkish money changer who controls 27 of the companies being sanctioned. Other individuals in the latest sanctions list are Asadollah Seifi, Ramin Jalalian and Siavash Nourian.