The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued an alert to help financial institutions identify and stop funding networks supporting Iran’s Islamic Revolutionary Guard Corps (IRGC).
The alert contends that the IRGC facilitates and launders the proceeds of illicit oil sales through the shell companies and financial facilitators. It provides red flags to detect and report suspicious activities. Treasury provided a full list of red flags, including:
- Shipping companies with Iranian counterparties.
- Efforts to disguise vessel information and ownership, or efforts to disguise oil origins.
- Unusual use of exchange houses.
- Unusual digital asset payments by petroleum, shipping, trading, or trust companies.
- Unregistered P2P exchangers, foreign-located money services businesses, and nested digital asset service providers.
“Degraded by Economic Fury, the Iranian military is desperately trying to fund its weapons programs and terrorist proxies,” Secretary of the Treasury Scott Bessent said. “Treasury will continue to deny the Islamic Revolutionary Guard Corps access to the financial networks it exploits to fund its terrorist acts. Financial institutions should be on notice that they have a responsibility to detect suspicious activity and stop it in its tracks.”
The IRGC is the parallel organization to Iran’s regular armed forces and reports directly to Iran’s Supreme Leader. The IRGC is a U.S.-designated foreign terrorist organization (FTO), having engaged in terrorist activity since its inception with the support of the Iranian regime. Treasury says its derives profits from illicit oil sales by misrepresenting its commercial activity.
The alert says that to smuggle the oil, the IRGC and other Iranian actors use a “shadow fleet” of old and poorly maintained vessels that operate outside of standard maritime regulations and are often owned, managed, or leased by shipping or front companies outside of Iran. Further, the oil is sometimes blended with oil from third countries or relabeled with forged documents as the product of another jurisdiction. Proceeds from oil sales are laundered through networks of exchange houses and front companies, according to the Treasury.
Treasury said the IRGC and other Iranian regime actors rely on “shadow banking” networks comprised of exchange houses, trading companies, and front companies to sell oil and other commodities abroad, launder the proceeds, and then procure weapons and other materiel on the international market.
The alert states that digital asset transactions serve as a leg of Iran’s shadow banking network. They function as part of a complex transactional structure designed to obfuscate Iranian involvement. Iranian facilitators are likely to use stablecoins for this purpose, due to stablecoins’ relative liquidity, ease of settlement, and exchange rate stability. Uneven and often inadequate regulation and supervision of digital assets across jurisdictions also enables Iranian facilitators to access digital assets through international digital asset service providers.
The Treasury Department is targeting the regime’s ability to generate, move, and repatriate funds. Any person or vessel facilitating the illicit trade of oil or other commodities, through covert trade or financial channels, risks exposure to U.S. sanctions. Treasury will target both traditional sanctions evasion schemes and the exploitation of digital assets while continuing to freeze funds stolen from the Iranian people.
Any person or vessel facilitating the illicit flow of oil or other products risks exposure to U.S. sanctions.