On June 25, 2024, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) sanctioned almost 50 entities and individuals comprising an expansive "shadow banking" network used by Iran's Ministry of Defense and Armed Forces Logistics (MODAFL) and Islamic Revolutionary Guard Corps (IRGC) to gain access to the international financial system, and added these individuals and entities to OFAC's List of Specially Designated Nationals and Blocked Persons (SDN List), noting they constituted Specially Designated Global Terrorists (SDGT). The network, comprised of Iranian exchange houses and dozens of foreign cover companies under their control, enabled MODAFL and the IRGC to generate revenue used to procure and develop advanced weapons systems, provide weapons and funding to regional proxy groups, and transfer UAVs to Russia for use in its war against Ukraine. As part of the nearly 50 newly sanctioned persons are 27 "cover companies" located in Hong Kong, the United Arab Emirates, and the Marshall Islands.
Now, unless an OFAC license is granted, all U.S. persons are prohibited from dealing with these entities and individuals, and any entity they own 50% or more, and all persons (U.S. or otherwise) are prohibited from exporting, reexporting, or transferring (to these sanctioned persons) any item subject to U.S. Export Administration Regulations.
OFAC's action underscores its continued focus on finding and sanctioning parties involved with aiding Iran and is the second such instance of OFAC taking action against groups of entities operating as a shadow banking network for Iran. In March 2023, OFAC sanctioned several dozen entities that moved the proceeds of petrochemical sales for the regime to support Hamas, Hizbollah, and the Houthis.
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