On June 6, 2023, the U.S. U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed additional Iran-related sanctions on individuals and entities. We previously discussed related sanctions imposed by OFAC on March 17, February 7, January 18, and in later posts.
In this latest announcement, which can be read in full here, OFAC sanctioned seven individuals and six entities in Iran, China, and Hong Kong for their connection to Iran’s missile and military program. According to OFAC, “This network has conducted financial transactions and facilitated procurement of sensitive and critical parts and technology for key actors in Iran’s ballistic missile development, including Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) and its affiliated organizations, Parchin Chemicals Industries (PCI), Aerospace Industries Organization (AIO), Iran Electronics Industries (IEI), and P.B. Sadr.”
In addition to the Iran-related sanctions, OFAC, on June 6, 2023, separately announced sanctions for three individuals and one entity connected with the Cartel de Jalisco Nueva Generacion (CJNG) in Mexico. OFAC designated two individuals for “trafficking high-caliber firearms from the United States and fuel theft in Mexico.” OFAC designated a third individual and one entity that “provide support to CJNG by laundering illicit narcotics proceeds.” OFAC’s announcement can be read here in full.
Iran Sanctions
OFAC’s sanctions extend the March 30, 2022 sanctions on a network of individuals and entities in Iran’s missile program. The June 6, 2023, sanctions are pursuant to Executive Order (E.O.) 13382, which “targets weapons of mass destruction proliferators and their supporters.”
Additionally, the Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson stated “[t]he United States will continue to target illicit transnational procurement networks that covertly support Iran’s ballistic missile production and other military programs.”
Centrifuge Sales to PCI VIA P.B. Sadr
Parchin Chemicals Industries (PCI) is a “subsidiary of MODAFL’s Defense Industries Organization (DIO) and produces ammunition, explosives, and solid propellants for rockets and missiles.” P.B. Sadr is “PCI’s key intermediary for the procurement of parts to develop missile propellant.” OFAC designated these individuals and entities for selling and facilitating the transaction of centrifuges to PCI.
A PRC-based company that sold centrifuges and services to PCI was designated for “having provided, or attempted to provide, financial, material, technological or other support for, or goods or services in support of, PCI.” OFAC designated the director/general manager and an employee of the company for “acting or purporting to act for or on behalf of, directly or indirectly” of the company.
A Hong Kong base company that facilitated as a front company for the Chinese company was designated for “having provided, or attempted to provide, financial, material, technological or other support for, or goods or services in support of [the chinse company].” An Iran-based company that assisted some shipments for P.B. Sadr was designated for “having provided, or attempted to provide, financial, material, technological or other support for, or goods or services in support of, P.B. Sadr.”
Dual-Use Metals Sales to P.B. Sadr
A Hong Kong and PRC-based company that “together engaged in the sale of tens of millions of dollars’ worth of dual-use, nonferrous metals to P.B. Sadr” are designated for “having provided, or attempted to provide, financial, material, technological or other support for, or goods or services in support of, P.B. Sadr.”
OFAC additionally designated three individuals who assisted in the “nonferrous metal sales to P.B. Sadr.”
MODALF’s Electronics Procurement
OFAC sanctioned a PRC-based company that “operates as a MODAFL [Iran’s Ministry of Defense and Armed Forces Logistics] front company that procures electronics on behalf of Iranian end-users.” OFAC designated the company for “being owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, MODAFL.”
OFAC designated an Iranian national based in the PRC who is a director and shareholder of the PRC company for “acting or purporting to act for or on behalf of, directly or indirectly” of the company.
OFAC additionally designated an Iranian defense administrator in Beijing who managed “procurements from procurement of accelerometers and gyroscopes, as well as P.B. Sadr’s nonferrous metals purchase.” The individual is designated for “acting or purporting to act for or on behalf of, directly or indirectly, MODAFL.”
Read here for specific information concerning the designated individuals and entities.
CJNG Mexico Sanctions
OFAC’s announcement states that the CJNG sanctions were “coordinated closely with the Government of Mexico, including La Unidad de Inteligencia Financiera (Mexico’s Financial Intelligence Unit), and is the result of ongoing collaboration with Homeland Security Investigations (HSI), the U.S. Drug Enforcement Administration (DEA), and United States Northern Command (NORTHCOM).”
CJNG Arms Traffickers
OFAC designated senior CJNG members Alonso Guerrero Covarrubias and Javier Guerrero Covarrubias, involved in weapon, drug trafficking, and fuel theft, for “being directed by, or having acted or purported to act for or on behalf of, directly or indirectly, CJNG.”
CJNG Money Laundering
OFAC listed Mary Cruz Rodriguez Aguirre (Aguirre), who “directs a money laundering network moving illicit funds between the United States and Mexico, including on behalf of CJNG,” and works for a previously sanctioned narcotics trafficker. OFAC designated Aguirre for “having provided, or attempted to provide, financial, material, or technological support for, or goods or services in support of CJNG.”
OFAC additionally designated Aguirre’s currency exchange house Nacer Agencia Panamericana de Divisas y Centro Cambiario, S.A. de C.V. for “being owned, controlled, or directed by, or having acted or purported to act for or on behalf of, directly or indirectly, Mary Cruz Rodriguez Aguirre.”
Sanctions Implications
OFAC states that the action is “part of a whole-of-government effort to counter the global threat posed by the trafficking of illicit drugs into the United States that is causing the deaths of tens of thousands of Americans annually, as well as countless more non-fatal overdoses.” Furthermore, OFAC states it “will continue to target and pursue accountability for foreign illicit drug actors.”
Read here for specific information concerning the designated individuals and entities.
Implications The latest sanctions by OFAC demonstrate a recent trend in the U.S. government’s use of sanctions, as well as criminal prosecution, as a tool in combatting transnational organized crime. In some cases, these designations involve classic transnational criminal gangs, and in others, such as the Iran designations, the groups in question are associated with sanctioned foreign states and their state-backed illicit procurement networks. In light of the increasing sanctions focus on transnational crime and money laundering, a company’s AML and “know your customer” processes should be viewed as an integral part of sanctions compliance.
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