Crime & Justice

Sanctions target network of companies facilitating illicit trade with Iran

By Al-Mashareq

The United States on November 17 imposed a fifth round of sanctions on front companies facilitating Iran's illicit oil trade. [Entekhab]

The United States on November 17 imposed a fifth round of sanctions on front companies facilitating Iran's illicit oil trade. [Entekhab]

In its most recent censure of the illicit trade of Iranian oil, the United States blacklisted 13 companies in multiple jurisdictions facilitating the sale of hundreds of millions of dollars' worth of Iranian petrochemicals and petroleum products.

The move "demonstrates our determination to target sanction evasion efforts", the US Treasury said November 17, announcing the fifth round of US sanctions targeting Iran's illicit oil trade since June.

The newly sanctioned companies facilitate sales to buyers in East Asia on behalf of sanctioned Iranian petrochemical brokers, the Treasury said.

The brokers are Persian Gulf Petrochemical Industry Commercial Co. (PGPICC), Triliance Petrochemical Co. Ltd. (Triliance), the National Iranian Oil Company (NIOC) and its marketing arm Naftiran Intertrade Company Ltd. (NICO).

The latest designations further demonstrate "the complex sanctions evasion methods Iran employs to illicitly sell petroleum and petrochemical products", said Treasury Under-Secretary for Terrorism and Financial Intelligence Brian Nelson.

Front companies skirt sanctions

The petrochemical broker PGPICC has evaded sanctions through Dubai-based Access Technology Trading LLC, which has purchased petrochemicals from it worth tens of millions of dollars for shipment to China.

Hong Kong-based Highline Logistic HK Ltd. served as a front company to enable PGPICC to receive millions of dollars from customers, obfuscating PGPICC's role in the transactions, the Treasury said.

To further conceal their roles in the transactions, it said, PGPICC and its complicit business partners altered invoices to evade anti-money laundering controls.

Dubai-based Monch General Trading LLC also has purchased petrochemical products worth more than $10 million from PGPICC to broker sales to China.

Hong Kong Aeonian Complex Co., Ltd., meanwhile purchased thousands of metric tonnes of petrochemicals worth millions of dollars from PGPICC, paying it via front companies to obscure PGPICC's role in these transactions.

One of these front companies, Hong Kong-based Torgan Co., Ltd., has received payments on behalf of PGPICC for its petrochemicals sales to foreign customers.

China-based Zhejiang Wonder Import and Export Co., Ltd. has similarly purchased petrochemicals from PGPICC and remitted payment via a PGPICC front company.

Obfuscation of funding sources

Since 2020, Triliance has orchestrated millions of dollars' worth of funds transfers to accounts owned by United Arab Emirates (UAE)-based Asian Zone Trading LLC in an attempt to avoid US sanctions, the Treasury said.

It also has used UAE-based Galaxy Petrochemical FZE to facilitate the sale of petrochemicals, such as butane and propane, involving sanctioned entities.

In February 2021, Triliance brokered the sale of millions of dollars' worth of Iran-sourced naphtha destined for the UAE from Kharg Petrochemical Company Ltd.

Triliance used Galaxy Petrochemical as a front company to obfuscate the source of the funds and the entities party to the transactions.

In early 2022, Triliance used UAE-based Newton Trading FZE to receive payments for tens of thousands of metric tonnes of Iranian naphtha, worth tens of millions of dollars, most of which was bound for the UAE.

It has paid millions of dollars into accounts owned by UAE-based Sum Five Petrochemicals Trading LLC for the sale of tens of thousands of metric tonnes of paraffin, which serves as a front for Iranian producers selling petrochemicals.

In February, Edgar Commercial Solutions (ECS), a sanctioned Triliance front company, used a Hong Kong-based Barza Style & Mode Co., Ltd. account to receive funds for the sale of thousands of metric tonnes of low density polyethylene.

This was done to obfuscate ECS's and Triliance's roles in the transaction, the Treasury said.

In late 2021, the China-based East Asia Trading Import and Export Trade Co., Ltd. facilitated a shipment of petroleum to a foreign customer for NIOC and its marketing arm, NICO.

East Asia General Trading Co. Ltd. also has served as a front to facilitate the payment of debt worth tens of millions of dollars from the sale of oil by NIOC.

Previous sanctions on Iranian oil

Iran's first extraterritorial oil refinery went online in Venezuela last month, as the Islamic Republic doubles down on its efforts to circumvent US sanctions.

El Palito refinery in Caracas will be refining 100,000 barrels of oil per day, Iranian media reported October 17.

Iranian Oil Minister Javad Owji said building and operating an extraterritorial oil refinery have been "a 43-year-old dream for the Islamic Republic".

The United States on July 6 blacklisted 15 petroleum and petrochemical producers, transporters and front companies for violating oil sanctions on Tehran.

The designated individuals and entities used a web of Gulf-based front companies to facilitate the illicit sale and shipment of Iranian petroleum, petroleum products and petrochemical products to East Asia.

In September, it sanctioned an international network of companies involved in the sale of hundreds of millions of dollars' worth of Iranian petrochemicals and petroleum products to end users in South and East Asia.

The move came amid reports that Iran increased its oil exports to China in June and July, in violation of sanctions, despite facing increased competition from Russian crude that forced it to slash its prices.

An international oil smuggling and money laundering network led by Islamic Revolutionary Guard Corps Quds Force (IRGC-QF) officials and supported by the Russian government was slapped with US sanctions on May 25.

The network, supported by the Russian government and state-run economic organisations, had facilitated the sale of hundreds of millions of dollars' worth of Iranian oil to profit the IRGC-QF and Lebanese Hizbullah, the US Treasury said.

The Iranian people face rising poverty, unemployment and skyrocketing inflation.

But the income from illicit trade does not benefit anyone other than the IRGC and its associates, and Iran's proxy militias in the region, who work to disrupt regional peace and stability, observers said.

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