In the past week, the Department of the Treasury’s Office of Foreign Assets Controls (OFAC) has continued to increase pressure on Iran and North Korea by further identifying certain individuals and entities in the shipping sector as engaging in illicit activities and tightening related economic sanctions.
On August 30, 2019, OFAC designated two individuals, three shipping-related entities and one vessel and placed them on the Specially Designated Nationals (SDN) List. In doing so, OFAC stated that North Korea continues the use of “illicit ship-to-ship transfers to circumvent United Nations (UN) sanctions that restrict the import of petroleum products, as well as the U.S. Government’s commitment to implement existing UN Security Council Resolutions (UNSCR).” North Korea’s continued use of ship-to-ship transfers to import refined petroleum is in violation of UNSCR 2375 and UNSCR 2397. OFAC cited evidence that the involved vessel, the Shang Yuan Boa, conducted at least two transfers with North Korean-flagged vessels, which both later offloaded their cargo in North Korea’s Nampo port. All individuals and entities designated are either related to these incidents or have ownership interests in the vessel.
On September 3, 2019, OFAC designated certain Iranian space agencies for placement on the SDN List. The next day, on September 4, 2019, OFAC designated nine individuals, 16 Iranian entities and six vessels (and updated SDN information on another seven vessels) for placement on the SDN List. In making this announcement, OFAC stated in a press release that it took action against a “large shipping network that is directed by and financially supports the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and its terrorist proxy Hizballah. Over the past year, the IRGC-QF has moved oil worth hundreds of millions of dollars or more through this network for the benefit of the brutal Assad regime, Hizballah, and other illicit actors.” OFAC indicated that Iranian officials are increasingly seeking to deceive potential customers into buying Iranian oil. The sanctioned shipping network, run by IRGC-QF official Rostam Qasemi, attempted on multiple occasions to pass off Iranian cargo as Iraqi in origin. In response, OFAC has issued a new advisory to the maritime community warning of the risks associated with these illicit schemes, such as the IRGC-QF’s oil-for-terror shipping network.
As a result of these actions, all property and interests in property of these entities that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. Because U.S. persons are generally prohibited from dealing with entities on the SDN List, persons who engage in certain transactions with these designated persons and entities may themselves be exposed to designation. OFAC has indicated that any foreign financial institution that knowingly facilitates a significant financial transaction or provides significant financial services for these entities could be subject to U.S. correspondent account sanctions or payable-through account sanctions.