The United States Treasury Department announced sanctions this week against nearly 50 entities and individuals linked to a vast network allegedly used by Iran’s military to access international financial systems. Officials claim this network, dubbed a “shadow banking” system, has processed billions of dollars for Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) and the Islamic Revolutionary Guard Corps (IRGC) since 2020.
According to the Treasury Department, MODAFL and the IRGC utilize a network of Iranian exchange houses and foreign cover companies to disguise revenue generated from oil and petrochemical sales abroad. These funds are then allegedly used to support various activities, including developing advanced weaponry like drones and providing arms and financing to regional proxy groups. The Houthis in Yemen and Russia’s war in Ukraine were specifically mentioned as recipients of Iranian support.
Deputy Secretary of the Treasury Wally Adeyemo emphasized the aim of the sanctions is to disrupt Iran’s military from laundering oil revenue and other illicit funds. He highlighted the ongoing efforts to target Iran’s oil and petrochemical trade since President Biden took office and vowed to continue pursuing those financing Iranian activities deemed destabilizing and supportive of terrorism. The Treasury Department also stressed collaboration with allies and the financial industry to increase vigilance against such financial activities.
The announcement further sheds light on MODAFL’s role. The department describes it as responsible for all aspects of Iran’s defense industries, including development, production, funding, and logistics. It’s alleged that Iran allocates a significant portion of its oil sales to fund the armed forces, with MODAFL subsidiaries manufacturing weapons like missiles and drones used by Iran’s military or exported to other countries.
