Treasury Official Warns U.S. Firms, Forwarders in Third Country Trade about Iran
In a recently published op-ed piece, Treasury Under Secretary for Terrorism and Financial Intelligence, Stuart Levey discussed Iran's use of its national maritime carrier to evade international sanctions and the expectation that Iran will increase its use of non-Iranian shippers and freight forwarders to obtain and export dangerous materials as sanctions increase, among other things.
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(In recent weeks, the United Nations, the U.S., the European Union, and others partners have announced new sanctions to hold Iran accountable for conduct surrounding its nuclear and ballistic missile programs. These actions have significantly expanded and deepened existing sanctions, and seek to combat Iranian efforts to evade increasingly stringent global restrictions. See ITT’s Online Archives or 07/02/10 news, 10070208, for BP summary of the President signing the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 into law.)
The following are highlights of his op-ed piece:
Latest Round of Measures Against Iran Focuses on Shipping Sector
According to Levey, substantial attention has already been paid to sanctions in Iran's banking and energy sectors. But the latest round of measures also sharpens the focus on another sector that is a critical lifeline for Iran's proliferation and evasion: shipping. Some of Iran's most dangerous cargo continues to come and go from Iran's ports, so the U.S. must increase its vigilance over Iran’s domestic shipping lines, and attempts to use third-country shippers and freight forwarders for illicit cargo.
Levey Says Iran Used National Maritime Carrier to Advance Missile Programs
Levey writes that Iran has consistently used its national maritime carrier, the Islamic Republic of Iran Shipping Lines (IRISL), to advance its missile programs and to carry other military cargoes. Using an authority designed to freeze the assets of proliferators of weapons of mass destruction, the Office of Foreign Assets Control (OFAC) first brought sanctions against IRISL in 2008 for providing services to the arm of the Iranian military that oversees Iran's ballistic missile program.
Levey notes that almost immediately, companies around the world began to avoid IRISL, and the company started to use an array of deceptive practices to conceal its identity and evade sanctions -- including falsifying shipping documents, changing names and nominal ownership of vessels, and even repainting ships. It has also sought to assign vessel ownership to front companies outside Iran. These measures to conceal its activities have alarmed an already wary global business community. As a result, IRISL has struggled to maintain the insurance and other services necessary for operating a global shipping business.
UN Calling for Additional Vigilance of Iranian Shipping
Levey adds that IRISL's conduct has not escaped the international community's notice. In June, the UN named three IRISL companies for sanctions, and called for additional vigilance of Iranian shipping more generally. It also granted new powers to inspect Iranian ships, and ships carrying cargo to or from Iran. Subsequently, the Treasury Department sanctioned five IRISL front companies and 27 vessels, and also identified 71 renamed IRISL vessels. In July, the EU took similar actions.
Following these steps, the Treasury Department recently took further measures, designating for sanctions three Malta-based IRISL companies: Marble Shipping Limited and Bushehr Shipping Company, two entities directly owned by IRISL; and ISI Maritime Limited, owned by a previously-designated IRISL subsidiary Iran o Hand.
(See ITT’s Online Archives or 06/11/10 news, 10061051, for BP summary of the UN sanctions.)
Levey Says Iran Uses Non-Iranian Shippers, FFs to Obtain & Export Materials
Levey states that Iran also uses non-Iranian shippers and freight forwarders to obtain and export dangerous materials. As sanctions increase, he expects this pattern to increase. Therefore, over the past year, OFAC increased enforcement efforts in the shipping and freight forwarding sectors, and also investigated a number of sanctions violations.
During this time, the Treasury Department has also agreed to significant financial settlements with four U.S. shipping companies, based on alleged violations of sanctions involving third-country trade with sanctioned parties, including Iran: Oxbow Carbon and Minerals LLC; Maersk Line, Ltd, a U.S. subsidiary of A.P. Moller-Maersk A/S; Barwil Agencies NA, Inc; and National Marine Consultants Inc. Other cases are being investigated, and follow settlements reached over the past year with major banks, including Lloyds and Credit Suisse.
Levey warns that U.S. companies involved in third-country trade -- as well as foreign shippers and freight forwarders doing business with the U.S. -- must be aware of their sanctions responsibilities.
(See ITT’s Online Archives or 07/30/10 news, 10073008, for BP summary of Maersk and its wholly owned U.S. subsidiaries remitting over $3 million to settle allegations of violations of the Iranian Transaction Regulations, etc.)