The US Department of Justice (DOJ) has announced (click here) a rare civil forfeiture complaint involving the proceeds from the sale of USD $47 million worth of petroleum product allegedly to the benefit of Iran.
What is it about?
- The DOJ claims that the USD $47 million in proceeds from the sale of Iranian petroleum is forfeitable under US law because it constitutes property linked to the Islamic Revolutionary Guard Corps (IRGC) and its Qods Force (IRGC-QF), both of which are designated as Foreign Terrorist Organizations (FTOs) under US sanctions rules. The petroleum product originated from an oil terminal run by the National Iranian Oil Corporation (NIOC) according to the 23-page Complaint (click here);
- In the US, a civil forfeiture complaint is a legal action filed by the government to seize property suspected of being connected to criminal activity, even if no criminal charges are filed against the owner. The Complaint alleges that the petroleum shipment involved three ship-to-ship (STS) transfers before being discharged in April 2022 into storage at the JANAF storage facility in Omišalj, Croatia. Documents were falsified to disguise the Iranian oil as being Malaysian in order to evade US sanctions and US anti-terrorism laws. The petroleum was stored by an unnamed Swiss entity acting on behalf of the Triliance Petrochemical Company, an entity designated by OFAC on 23 January 2020 (click here). The Complaint alleges that Triliance has repeatedly “peddled” Iranian petroleum products through front companies;
- The Complaint also alleges that the storage fees were paid through US financial institutions in US Dollars which, had the true origins of the cargo been known, these institutions would have refused participation. On 12 June 2024, the Swiss entity sold the petroleum product on to another unnamed international company who subsequently sold it to a third unnamed company before it being seized by the US authorities. The Complaint was filed in the US District Court for the District of Columbia who will rule on the case in due course.
Roughly half of the complaint outlines, in a useful amount of the detail, the various connections in the Iranian oil sanctions avoidance “network” and is a worthwhile reference for those responsible for overseeing compliance with OFAC sanctions. The Complaint also outlines, in detail, the hand-off points and vessels involved in the STS activities (see from page 12).
The case serves to highlight the practical challenges firms have in tracking the origins of cargoes when sophisticated sanctions evasion measures are deployed by state actors such as Iran. As part of its “Maximum Pressure” campaign against Iran, the new US administration has clearly signalled its intent to crack down on sanctions evasion involving the Iranian hydrocarbon industry. Firms exposed to these markets are strongly advised to ensure that their sanctions screening processes remain robust, and vigilance maintained to detect sophisticated evasion measures.
