On September 8, 2023, the U.S. Department of Justice (DOJ) announced its first ever corporate criminal resolution involving the illicit sale and transport of Iranian oil in violation of U.S. sanctions. Newly unsealed court documents reveal the DOJ disrupted a multimillion-dollar shipment of crude oil by Iran's Islamic Revolutionary Guard Corps (IRGC) and its elite Quds Force (IRGC-QF), both designated foreign terrorist organizations (FTO), seizing nearly a million barrels of contraband crude oil bound for China.
On April 19, 2023, Suez Rajan Limited pled guilty to conspiring to violate the International Emergency Economic Powers Act (IEEPA) by smuggling sanctioned Iranian crude oil. As part of the plea agreement, Suez Rajan was ordered to pay a $2.46 million fine—an amount "twice the gross gain" of the 980,000 barrels—and was sentenced to three years of corporate probation. Additionally, Empire Navigation, the operating company of the vessel carrying the contraband cargo, entered into a deferred prosecution agreement (DPA) with DOJ, agreeing to cooperate and transport the Iranian oil to the United States.
The 980,000 barrels of contraband crude oil are now the subject of a civil forfeiture action in the U.S. District Court for the District of Columbia, in which the DOJ alleges that the oil is subject to forfeiture based on U.S. terrorism and money laundering statutes. The civil forfeiture complaint alleges: (1) the contraband oil constitutes property of a designated FTO; (2) the oil scheme facilitated money laundering; and (3) the profits from the sale of the oil supported IRGC's terroristic activities including the proliferation of weapons of mass destruction, human rights abuses and material support of terrorism.
Suez Rajan Limited & Empire Navigation's Conduct
Unsealed court filings show that in early February 2022, Suez Rajan entered into a time charter agreement whereby an unnamed company wired U.S. dollars to Suez Rajan to pay for its chartering fees. Upon chartering, the Suez Rajan, which was then empty and operated by Empire, anchored near Singapore and onboarded a small amount of legal oil, approximately 4,000 barrels, from a vessel named the CS Brilliance. Then, nearly a week later, the Suez Rajan onboarded nearly a million barrels of Iranian oil from another vessel, the Virgo.
Through satellite images, the DOJ was able to show the Suez Rajan and Virgo transferring the Iranian oil between the two vessels; despite the Virgo having reported a false location approximately eight miles away for the scene of the exchange. Moreover, falsified paperwork obtained by the DOJ indicated that all of the oil onboard the Suez Rajan came for its initial exchange with the CS Brilliance.
During the course of these events, Suez Rajan never possessed an OFAC-issued license and its attempts to disguise the origin of the oil using ship-to-ship transfers, false automatic identification system reporting and falsified documents were all attempts to evade U.S. sanctions. In addition, the use of the U.S. financial system to charter the vessel and facilitate the transportation of Iranian oil further subjected the participants, including the unnamed charter company, to U.S. jurisdiction.
DOJ's Emphasis on Economic Sanctions and Export Control Enforcement
Earlier this year, the DOJ National Security Division (NSD) promised a surge of resources to prioritize the investigation and enforcement of economic sanctions and export controls. This case marks the latest installment in the DOJ's response to the ongoing efforts by Iranian-backed agencies and entities to evade U.S. sanctions and use the U.S. financial system to engage in illicit activities, which generate substantial revenue for the IRGC to fund its terrorist operations. By way of example, the U.S. Treasury's Office of the Foreign Assets Control (OFAC) reported that, in the spring of 2019 alone, an IRGC-QF-led network employed more than a dozen vessels to transport nearly 10 million barrels of crude oil in violation of U.S. sanctions. These shipments, which were intended to predominantly serve the Syrian regime, sold for more than half a billion dollars.
Given the DOJ's focus on U.S. sanctions and export control compliance, companies involved in international commerce must be aware of the various and everchanging national security laws that could impact their business. Screening new and current customers, intermediaries and counterparties through the U.S. Government's sanctions lists, as well as conducting risk-based due diligence on customers and intermediaries is essential. It is also critical that every company employ a risk-based approach to sanctions and export compliance by developing, implementing and updating its compliance policies and procedures based on its individual risk profile.
Buchanan has a coordinated team with deep national security experience who are here to assist.
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