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The Galaxy Leader cargo ship is escorted by Houthi boats in the Red Sea.Houthi Military Media/Handout via REUTERS

The Galaxy Leader cargo ship is escorted by Houthi boats in the Red Sea in this photo released November 20, 2023. Houthi Military Media/Handout via REUTERS

U.S. Sanctions Iranian ‘Shadow Banking’ Network

Mike Schuler
Total Views: 767
June 25, 2024

The United States Treasury Department has imposed sanctions on nearly 50 entities and individuals linked to a vast “shadow banking” network operated by Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) and the Islamic Revolutionary Guard Corps (IRGC).

According to the Department, the network has been exploiting the international financial system to process billions of dollars worth of transactions since 2020, with significant implications for the global shipping industry.

The shadow banking system aids MODAFL and the IRGC in disguising revenue generated from commercial activities, a significant portion of which comes from sales of Iranian oil and petrochemicals. The hidden proceeds are then used for various activities including the procurement and development of advanced weapons systems such as unmanned aerial vehicles.

The revenue also enables the provision of weapons and funding to Iran’s regional proxy groups, including Yemen’s Houthis, who continue a carry of drone and missile attacks on global shipping. A portion of the revenue has also been used to facilitate the transfer of unmanned aerial vehicles to Russia, which are suspected to be used in its ongoing conflict with Ukraine.

“The United States is taking action against a vast shadow banking system used by Iran’s military to launder billions of dollars of oil proceeds and other illicit revenue,” said Deputy Secretary of the Treasury Wally Adeyemo. “We have sanctioned hundreds of targets involved in Iran’s illicit oil and petrochemical-related activity since President Biden took office, and we will continue to pursue those who seek to finance Iran’s destabilizing terrorist activities.”

The sanctions, implemented under the counterterrorism authority in Executive Order (E.O.) 13224, are part of a broader effort to increase vigilance against the movement of funds supporting terrorism.

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