US Targets Iranian Network over Shadow Offshore Bank, Payment Scheme
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is designating 18 entities and individuals that play pivotal roles in the Iranian regime’s efforts to generate revenue and circumvent U.S. sanctions.
Facing severe financial constraints due to international isolation, US said Iran has engineered sophisticated banking schemes and alternate payment messaging systems specifically designed to bypass sanctions and protect its ability to collect export revenues, particularly from illicit petroleum sales.
These systems also enable the regime’s continued funding of its proxies and oppression of the Iranian people, according to US Treasury official statement.
US Treasury said financial and information technology firms designated have provided the regime with advanced surveillance technologies that Iran’s security services deploy to restrict internet access and to target women who violate the regime’s mandatory hijab restrictions.
“As a result of President Trump’s maximum pressure campaign and increasing isolation from the global financial system, the Iranian regime is running out of places to hide,” said Secretary of the Treasury Scott Bessent.
“Treasury will continue to disrupt Iran’s schemes aimed at evading our sanctions, block its access to revenue, and starve its weapons programs of capital in order to protect the American people.”
Today’s action is being taken pursuant to Executive Order (E.O.) 13902, which targets those operating in certain sectors of the Iranian economy, including Iran’s financial sector.
It is also being taken in furtherance of National Security Presidential Memorandum 2, directing a campaign of maximum economic pressure on Iran.
Treasury is committed to using all available tools to combat Iran’s attempts to circumvent sanctions and repatriate illicit foreign revenue, as evidenced by recent actions sanctioning Islamic Revolutionary Guard Corps (IRGC) and Zarringhalam family “shadow banking” networks, as well as the sprawling Shamkhani shipping network that has generated billions of dollars in revenue that is then laundered through such networks.
Treasury is designating the RUNC Exchange System Company, also known as RUNC International Banking Solutions (RUNC), for its role in developing Iran’s Cross-Border Interbank Messaging System (CIMS), a recently developed bank messaging system designed to allow Iran and its allies to circumvent controls in place on more commonly used payment systems.
In late 2023, the Central Bank of Iran authorized the use of the RUNC-developed CIMS outside of Iran to insulate the regime’s foreign financial transactions from sanctions and to facilitate Iranian banking relations with foreign partners.
CIMS has been used to connect to the U.S.-sanctioned Bank of Kunlun in order to circumvent sanctions and further banking cooperation between Iran and China.
Foreign financial institutions considering the use of CIMS to clear transactions must understand that doing so places them at heightened risk of economic sanctions for transacting with sanctioned Iranian banks.
RUNC Exchange System Company is being designated pursuant to E.O. 13902 for operating in the financial sector of the Iranian economy.
Ali Morteza Birang, Mohammad Shafipour, and Seyyed Mahmoud Reza Sajjadi are being designated pursuant to E.O. 13902 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, RUNC Exchange System Company.
A SHADOWY OFFSHORE BANK
The Iranian regime has also turned to decentralized “offshore” banking in an attempt to establish a financial conduit that outwardly appears separate from Iran’s U.S.-sanctioned, centralized banks.
In 2021, the Iranian Supreme Council for National Security (SCNS) authorized the issuance of a special license by the Central Bank of Iran to establish Cyrus Offshore Bank (Cyrus Bank) in Iran’s Kish Free Zone area on Kish Island, just off Iran’s southern coast in the Persian Gulf.
The SCNS authorized the establishment of Cyrus Bank as a mechanism for the Iranian government to avoid sanctions while making purchases abroad, with Cyrus Bank secretly owned and staffed by the sanctioned Iranian financial institution Parsian Bank.
Cyrus Bank’s specially issued license exempts it from Iran’s normal banking regulations, thereby masking its ties to the Central Bank of Iran from public view.
Parsian Bank coordinated with IRGC officials to route proceeds from Iranian oil sales to the IRGC via Cyrus Bank in 2021.
In 2022, SCNS officials and the Central Bank of Iran began using Cyrus Bank to transact with the Bank of Kunlun, in which a significant portion of Iran’s oil revenue was deposited.
Cyrus Bank is being designated pursuant to E.O. 13902 for operating in the financial sector of the Iranian economy. Cyrus Bank is headed by Parsian Bank board member Hadi Nouri, who serves as CEO and managing director.
The Bank’s day-to-day activities are managed by Parsian Bank official Alireza Fatahinojokambari, who also serves as vice chairman on Cyrus Bank’s board of directors.
Adel Berjisian, another Parsian Bank official, serves on Cyrus Bank’s board of directors and is an authorized signatory on Cyrus Bank matters.
Hadi Nouri, Alireza Fatahinojokambari, and Adel Berjisian are being designated pursuant to E.O. 13902 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Cyrus Bank.
INFORMATION TECHNOLOGY ENABLING BANKING AND SURVEILLANCE
Today’s action also targets Iranian software holding company Pasargad Arian Information and Communication Technology Company (FANAP), which is owned or controlled by Pasargad bank, a major financial institution designated by OFAC for operating in the Iranian financial sector.
FANAP entered the financial sector as a company specialized in designing and developing indigenous financial technologies for Iranian banks.
The holding company and its subsidiaries provide services such as the secure transportation of cash and high-value assets, the production and maintenance of ATMs, and the design of banking and payment hardware for Iran’s banking sector.
FANAP is being designated pursuant to E.O. 13902 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Pasargad Bank.
Since its inception, FANAP and its subsidiaries have diversified their information technology activities with the backing of the Iranian government to develop surveillance technologies for the Iranian police state.
FANAP and its director, Shahab Javanmardi, have strong links to the Iranian Ministry of Intelligence and Security (MOIS), and other FANAP executives serve as members of the IRGC.
The United States has sanctioned both MOIS and the IRGC for committing serious human rights abuses against the Iranian people and supporting terrorist groups.
SANCTIONS IMPLICATIONS
As a result of today’s action, all property and interests in property of the designated or blocked persons described above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC.
In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked.
Unless authorized by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked persons.
Violations of U.S. sanctions may result in the imposition of civil or criminal penalties on U.S. and foreign persons. OFAC may impose civil penalties for sanctions violations on a strict liability basis.
OFAC’s Economic Sanctions Enforcement Guidelines provide more information regarding OFAC’s enforcement of U.S. economic sanctions.
In addition, financial institutions and other persons may risk exposure to sanctions for engaging in certain transactions or activities involving designated or otherwise blocked persons.
US said the prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated or blocked person, or the receipt of any contribution or provision of funds, goods, or services from any such person.
Furthermore, engaging in certain transactions involving the persons designated today may risk the imposition of secondary sanctions on participating foreign financial institutions.
OFAC can prohibit or impose strict conditions on opening or maintaining, in the United States, a correspondent account or a payable-through account of a foreign financial institution that knowingly conducts or facilitates any significant transaction on behalf of a person who is designated pursuant to the relevant authority. #US Targets Iranian Network over Shadow Offshore Bank, Payment Scheme#
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