US treasury targets shadow banking network facilitating Iran’s military funding

The US Treasury Department announced Tuesday that it has targeted a shadow banking network moving money for Iran’s military. 

The Treasury Department said its Office of Foreign Assets Control (OFAC) is sanctioning nearly 50 entities and individuals that constitute multiple branches of a sprawling "shadow banking" network used by Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) and Islamic Revolutionary Guard Corps (IRGC) to gain illicit access to the international financial system and process the equivalent of billions of dollars since 2020.

"MODAFL and the IRGC engage in several commercial revenue-generating activities, most notably the sale of Iranian oil and petrochemicals," it said in a statement.

"Networks of Iranian exchange houses and dozens of foreign cover companies under their control enable MODAFL and the IRGC to disguise the revenue they generate abroad that is then available to use for a range of MODAFL and IRGC activities, including the procurement and development of advanced weapons systems such as unmanned aerial vehicles, it added.

The Treasury said the generated revenue also supports the provision of weapons and funding to Iran’s regional proxy groups, including Yemen’s Houthis, who are continuing a campaign of attacks on global shipping, as well as the transfer of unmanned aerial vehicles to Russia for use in its war against Ukraine.

"The United States is taking action against a vast shadow banking system used by Iran’s military to launder billions of dollars of oil proceeds and other illicit revenue," said Deputy Secretary Wally Adeyemo, noting that the US has sanctioned hundreds of targets involved in Iran’s illicit oil and petrochemical-related activity since President Joe Biden took office.

"We will continue to pursue those who seek to finance Iran’s destabilizing terrorist activities. We continue to work with allies and partners, as well as the global financial industry, to increase vigilance against the movement of funds supporting terrorism," he added.