On March 9, 2023, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) sanctioned 39 entities. According to OFAC, the designated entities constitute a "significant 'shadow banking' network, one of several multi-jurisdictional illicit finance systems which grant sanctioned Iranian entities, such as Persian Gulf Petrochemical Industry Commercial Co. (PGPICC) and Triliance Petrochemical Co. Ltd. (Triliance), access to the international financial system and obfuscate their trade with foreign customers." OFAC's action comes in the immediate wake of the issuance of the Tri-Seal Compliance Note, which put the international business community on notice that the U.S. government is aggressively cracking down on sanctions and export controls evasion.
The March 9 designation action by OFAC exhibits its commitment to targeting intermediaries, such as Iranian exchange houses which allegedly create front companies abroad that enable trade on behalf of their Iranian clients with foreign currency transactions maintained via internal ledgers. According to Deputy Secretary of the Treasury Wally Adeyemo, "Iran cultivates complex sanctions evasion networks where foreign buyers, exchange houses, and dozens of front companies cooperatively help sanctioned Iranian companies to continue to trade . . . [and] [t]oday's action demonstrates the United States' commitment to enforcing our sanctions and our ability to disrupt Iran's foreign financial networks, which it uses to launder funds."
The March 9 action was taken pursuant to Executive Order (E.O.) 13846 and follows OFAC's February 9, 2023 designation of nine companies in Iran, Singapore, and Malaysia for their role in the production, sale, and shipment of hundreds of millions of dollars' worth of Iranian petrochemicals and petroleum to buyers in Asia on behalf of Triliance.
PGPICC was designated pursuant to E.O. 13382, a WMD authority, on July 7, 2019, for being owned or controlled by PGPIC, which itself was designated pursuant to E.O. 13382 for having provided financial support to Khatam al-Anbiya, the engineering conglomerate of Iran's Islamic Revolutionary Guard Corps (IRGC).
Triliance was designated pursuant to E.O. 13846 on January 23, 2020, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the National Iranian Oil Company (NIOC), by facilitating the sale of Iranian petroleum products from NIOC.
OFAC Targets Foreign Front Companies Facilitating PGPICC Petrochemical Sales
The OFAC designations targeted a vast network of front companies operating in Hong Kong, Singapore, and the UAE, run by foreign exchange houses in Iran and the UAE, that allegedly enabled PGPICC to orchestrate the sale of billions of dollars' worth of petrochemicals from Iran-based companies such as Mehr Petrochemical Company (Mehr) to buyers overseas. The purpose of the front companies was to conceal PGPICC's involvement in these sales. For example, PGPICC marketed millions of dollars of high-density polyethylene (HDPE) produced by Mehr to third-party buyers for delivery to Türkiye and Asia in 2022.
The announcement, which can be read here in full, alleges that UAE-based Bavi General Trading CO L.L.C (Bavi General) and Iran-based Kambiz Nabizadeh and Partners Exchange (Nabizadeh Exchange) play a key intermediary role in these types of transactions. According to OFAC, Nabizadeh Exchange serves as a vital trustee during the transfer of payments between PGPICC front companies and the buyers of their petrochemicals, with Bavi General helping coordinate tens of millions of dollars' worth of payments for front companies operated by PGPICC and Triliance.
The announcement highlighted that a significant number of front companies operate out of Hong Kong, where they receive the proceeds of petrochemical sales. Between 2021 and 2022, Hong Kong front companies: Foraben Trading Limited; Goldenix Co., Limited; Hongkong Well International Trading Limited; Horryzin International Trade Co., Limited; Jin Xin Nuo Limited, Lowell Limited; Marafi International Trading Co., Limited (Marafi); Melikal for Medical & Medicine Trading Co., Limited (Melikal); Multi Well Trading Co., Limited (Multi Well Trading); Nashville HK Limited; Qi Group Limited (Qi Group); Salita Trade Limited; and Univest Limited transferred tens of millions of dollars related to petrochemical sales to China. PGPICC has allegedly used entities like Melikal to disguise its role in enabling Iranian petrochemical sales by using companies that appear to engage in medical goods trade while conducting non-medical transactions.
The Treasury also focused on the following conduct in its designation action:
- Lowell Limited—received U.S.-dollar transactions from PGPICC customers, including Ningbo More Interest I/E Co., Limited (Ningbo More) and U.S.-designated Hong Kong Aeonian Complex Co. Limited (Hong Kong Aeonian).
- Marafi—facilitated the sale of millions of dollars' worth of China-bound petrochemicals to U.S.-designated Access Technology Trading L.L.C. (Access Technology).
- Hong Kong-based Unite Resources Co., Limited—purchased polyethylene from PGPICC and paid its front companies Qi Group, Univest Limited, and Multi Well Trading.
- Singapore-based Global Visiness PTE. LTD.—received millions of dollars in payments from buyers purchasing HDPE and low-density polyethylene (LDPE) from PGPICC for delivery to China.
- Hong Kong-based Glotreasure Company Limited—served as a front for Triliance to facilitate fee payments for vessels involved in the shipment of petrochemical sales. The Treasury also noted that PGPICC and Triliance often coordinate on vessel charters, such as Glotreasure Company Limited, to facilitate these shipments.
The announcement also designated UAE-based front companies, primarily in Dubai, for allegedly processing a large volume of payments from overseas customers of PGPICC, focusing on the following conduct:
- Greenland Oil & Gas Trading FZE—utilized by PGPICC to receive payment for petrochemical sales to Albahr Alaahmar Offshore Refined Oil Product Trading L.L.C (Albahr Alaahmar Offshore) in early 2022.
- Alshivan Line Trading FZE, Bordo Plastic Materials Trading L.L.C, Longford Trading L.L.C, and Nord Trading L.L.C—received tens of millions of dollars in payments from buyers from 2021 to 2022.
- Shams Alrabeea Chemicals Trading L.L.C (Shams Alrabeea)—acted as a front company to facilitate hundreds of metric tons of petrochemical sales on behalf of PGPICC.
- Fairtrade Non Edible Oil and Liquefied Natural Gas Trading L.L.C.—paid by a Dubai-based front company for a PGPICC HDPE shipment to India.
- Sharjah-based Famin FZE—handled millions in payments from foreign buyers for petrochemicals shipped to Southeast Asia.
Additional Foreign Buyers Engaging in Sanctions Evasion
OFAC was careful to note that the overseas buyers of Iranian petrochemicals were not isolated to a particular region but are instead geographically diverse, focusing on the following conduct which provided a critical financial lifeline for PGPICC and Iran:
- Hong Kong-based HK Sihai Yingtong Industry Co., Limited—purchased shipments of gas oil and granular urea from PGPICC valued at more than $100 million, purportedly through front companies, for delivery to Poland and the UAE.
- Marshall Islands-based Dragon Trading Limited—received payments on behalf of PGPICC for petrochemicals sales to PGPICC customers, including Ningbo More and U.S.-designated Hong Kong Aeonian in late 2022. Ningbo More sent payments to PGPICC in late 2022 through Hong Kong-based Hongkong Canway Co., Limited for polyethylene intended for buyers in China.
- Dubai-based Albahr Alaahmar Energy FZE and Albahr Alaahmar Offshore—coordinated the purchase of tens of millions of dollars' worth of petrochemicals from PGPICC since early 2022. Albahr Alaahmar Offshore utilized Dubai-based front company Sparrow Trading FZE to organize the purchases.
- Dubai-based buyer, Al Kashaf Petroleum and Petrochemical Trading L.L.C.—purchased petrochemicals from PGPICC using front company Shams Alrabeea to mask the buyer and seller of the goods.
- Türkiye-based Dayan Global Trade Dis Ticaret Ithalat Ihracat Sanayi Ve Ticaret Limited Sirketi—purchased petrochemicals from PGPICC throughout 2022, often through front companies to obscure its role in the purchases.
- Marshall Islands-based Herstel Trading Limited—served as a front for Türkiye-based Naab Kimya Dis Ticaret Limited Sirketi, enabling it to purchase millions of dollars' worth of HDPE from PGPICC for onward shipment to China during 2022.
- Pakistan-based Alliance Energy (Pvt.) Limited—purchased multiple shipments of butane and propane from PGPICC for delivery to Pakistan.
Designated Entities
OFAC designating the following entities pursuant to section 1(a)(iii)(A) of E.O. 13846 for, on or after November 5, 2018, having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, PGPICC:
- Albahr Alaahmar Energy FZE
- Albahr Alaahmar Offshore Refined Oil Product Trading L.L.C
- Alliance Energy (Pvt.) Limited
- Al Kashaf Petroleum and Petrochemical Trading L.L.C
- Alrabeea Chemicals Trading L.L.C
- Alshivan Line Trading FZE
- Bavi General Trading (L.L.C.)
- Bordo Plastic Materials Trading L.L.C
- Dayan Global Trade Dis Ticaret Ithalat Ihracat Sanayi Ve Ticaret Limited Sirketi
- Dragon Trading Limited
- Fairtrade Non Edible Oil and Liquefied Natural Gas Trading L.L.C
- Famin FZE
- Foraben Trading Limited
- Global Visiness PTE. LTD.
- Goldenix Co., Limited
- Greenland Oil & Gas Trading FZE
- Herstel Trading Limited
- HK Sihai Yingtong Industry Co., Limited
- Hongkong Canway Co., Limited
- Hongkong Well International Trading Limited
- Horryzin International Trade Co., Limited
- Jin Xin Nuo Limited
- Kambiz Nabizadeh and Partners Exchange
- Longford Trading L.L.C
- Lowell Limited
- Marafi International Trading Co., Limited
- Mehr Petrochemical Company
- Melikal for Medical & Medicine Trading Co., Limited
- Multi Well Trading Co., Limited
- Naab Kimya Dis Ticaret Limited Sirketi
- Nashville HK Limited
- Ningbo More Interest I/E Co., Limited
- Nord Trading L.L.C
- Qi Group Limited
- Salita Trade Limited
- Shams Alrabeea Chemicals Trading L.L.C
- Sparrow Trading FZE
- Unite Resources Co., Limited
- Univest Limited
OFAC also designated Glotreasure Company Limited pursuant to section 1(a)(iii)(B) of E.O. 13846 for, on or after November 5, 2018, having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Triliance.
Read here for more information concerning the designated individuals and entities.
Key Takeaway
The Treasury and the U.S. regulatory regime has increased its scrutiny of intermediaries that facilitate sanctions and export control violates for designated entities. Whether through directly purchasing shipments from designated entities or working alongside front companies that mask the buyer and seller, the U.S. is committed to cracking down on third-party intermediaries used to evade sanctions and export controls.
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