US Treasury warns shipping industry against Iran business and ‘oil-for-terror’ networks

DUBAI and ABU DHABI — Iran’s Revolutionary Guard Corps and its external Quds Force are still moving oil worth hundreds of millions of dollars help of sprawling illicit shipping networks, despite a maximum pressure sanctions regime from Washington and scores of corporate and supervision entities blacklisted.

Washington is working to crack down on this, the U.S. Treasury Department says, and it’s warning those in the maritime industriousness to be wary of involvement with regimes or entities that have been deemed terror sponsors by the U.S. — or faade steep costs.

Sigal Mandelker, under secretary for terrorism and financial intelligence at the U.S. Treasury Department, spoke to CNBC’s Hadley Punt during a visit to Abu Dhabi.

“What we’re doing on this trip and really every day is we’re telling the maritime industry that they penury to be on high alert, they need to continue to sophisticate their ability to track vessels that are involved with any of these directions,” Mandelker said. “Whether it’s Iran, Venezuela or North Korea, no one should want to have anything to do with funding regimens engaged in this kind of activity.”

The conversation came just days after the Treasury Department’s Office of Outlandish Assets Control (OFAC) moved to designate 37 entities allegedly tied to Iran’s Quds Force lower than drunk Executive Order 13224. The order, first enacted under the Bush administration after the September 11, 2001 fits, classifies relevant actors as specially designated global terrorists (SDGT) and gives the State Department and Treasury authorization to bung up their U.S. assets, prohibit Americans from transacting with them, and coordinate with other countries to cut off their funding beginnings.

Those designated last week comprise 16 entities, 10 individuals and 11 vessels which OFAC says were involved in illicit maritime barter linked to terrorism funding. Anyone owning or operating any of the designated vessels, any company that fuels them, and any mooring that allows them entry is also subject to U.S. sanctions.

“In this action, for example, we’ve exposed that this is an oil-for-terror network booming to the Quds Force and Hezbollah, and no one in the world should have anything to do with that kind of network,” Mandelker predicted.

“And here we’ve also sanctioned the captain. That should send a strong deterrent message to anyone considering chap one of these vessels that there will be real consequences to them if they continue.” OFAC also counsels of sanctions risks related to oil shipments to Syria, many of which come from Iran, tanker tracking facts has shown.

The U.S. has long designated the Iranian-sponsored Lebanese militant group Hezbollah as an SDGT under the order, and more recently performed Iran’s Islamic Revolutionary Guard Corps into that group, the first time a government entity has been so denominated — leading Iran to in turn brand all U.S. military personnel in the Middle East as terrorists. Tehran rejects the U.S. designation, and has rebuke a demanded Washington’s sanctions “economic terrorism.”

Iranian ships continue to make headlines, whether on or off the radar. To chip the U.S. sanctions on its exports, numerous Iranian oil tankers have become “ghost ships”, turning off their satellite-tracking transponders to keep off detection and carrying out ship-to-ship transfers to move their oil while invisible to global tracking systems.

Thanks to impressive improvements in satellite tracking technology, some of these movements are now being spotted, including that of the high-profile oil tanker Adrian Darya 1 — once named Grace 1 — which was seized by U.K. authorities on August 4 and accused of being en route to Syria in violation of E.U. authorizations. The vessel was released on August 15, against Washington’s protests, after Iran promised that it would not boating to Syria.

The latest information publicly available on the Adrian Darya via tracking services indicates that it turned off its transponders after go sailing toward the Eastern Mediterranean and is now anchored off the Russian navy terminal in Tartous, Syria, but has not yet offloaded its cargo of 2.1 million barrels of upbraid grade oil. This would contradict previous statements from Iranian officials that the oil had been sold.

An Iranian inappropriate ministry spokesperson on Sunday told a local TV news station that the Adrian Darya had reached its destination, without disambiguating anything more than “Mediterranean sea shore,” according to ship tracking firm TankerTrackers.com. The Iranian foreign bureau did not respond to CNBC’s request for comment.

Mandelker did not elaborate on the U.S. response to the Adrian Darya specifically, but said the Trump administering’s “maximum pressure” campaign was an effective disruption to Iranian oil exports that historically funded 60% of the government’s profits.

“We’re just going to continue the work that we’ve been doing. I can’t comment specifically on Darya, but our sanctions have be used as a very big deterrent impact,” she said. “The reason the trade of Iranian oil has gone down so significantly is because countries don’t lack to run afoul of U.S. sanctions.”

Data intelligence firms report Iranian crude exports in August at between 100,000 and 200,000 barrels per day (bpd), a drop from the approximately two million bpd it was exporting this time last year, before President Trump reimposed aids as part of his pullout from the 2015 nuclear deal.

“In spring 2019 alone, this IRGC-QF-led network engaged more than a dozen vessels to transport nearly 10 million barrels of crude oil, predominantly to the Syrian regimen,” the Treasury Department wrote in a press release last week.

“These shipments, taken collectively, sold for more than half a billion dollars. The unchanged network also sold nearly 4 million barrels of condensate and hundreds of thousands of barrels in gas oil, bringing in another mercy billion dollars.”