By Pishtaz | 2024-07-04

A covert network of around 50 entities and individuals that sought to gain access to the international financial system on behalf of Iran's military and Islamic Revolutionary Guard Corps (IRGC) is now under US sanctions.

Iran's Ministry of Defense and Armed Forces Logistics (MODAFL) and IRGC generate revenue from illicit trade, then leverage a "shadow banking" network to finance terrorism, the US State Department and Treasury said June 25.

Since 2020, the network -- which operates in Iran, Türkiye, Hong Kong, the United Arab Emirates (UAE) and the Marshall Islands -- has "processed the equivalent of billions of dollars," the Treasury said.

The IRGC and MODAFL engage in several commercial revenue-generating activities, notably the sale of Iranian oil and petrochemicals, it added.

MODAFL is responsible for development, production, funding and logistics for all of Iran's defense industries, it said.

Iran's budget allots billions of dollars' worth of Iranian oil to the Iranian armed forces to sell abroad in order to supplement their budgets.

Subsidiaries of MODAFL manufacture advanced conventional weapons, including ballistic missiles and drones, which are used by Iran's military, including the IRGC, or exported to countries such as Russia, or given to proxies such as the Houthis.

The Houthis have been attacking vessels in the Red Sea and Gulf of Aden.

The sanctioned network includes Iranian exchange houses and dozens of foreign cover companies under their control, per the State Department.

The Iranian regime uses the profits the network generates "to advance a wide range of destabilizing activities, including terrorism, lethal plotting and transnational repression," it said.

Arms transfers

Funds are used for "the development, procurement and proliferation of advanced weapons systems, extensive human rights abuses, and nuclear activities that lack any credible peaceful purpose," the State Department said.

"In particular, this 'shadow banking' revenue supports the Iranian regime's transfer of weapons and funds to its militant proxies and partners in the Middle East region, including Yemen's Houthis," it said.

Revenues also support "the transfer of deadly weapons to Russia for use in its war of aggression against Ukraine," it added.

"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," said Treasury deputy secretary Wally Adeyemo.

In May, the Financial Crime Enforcement Network issued an advisory outlining the IRGC's methods for raising and moving funds to support its proxies, including Hamas, Hizbullah and the Houthis.

In March 2023, the United States imposed sanctions on several dozen entities that operated as part of an Iranian shadow banking network that moved billions of dollars' worth of petrochemical revenues for the Iranian regime.