US Follows Israel with Sanctions Against Tankers Iran Used to Fund Proxies

U.S. sanctions targeted LPG carriers and shipments used to fund Iran's Middle East proxies (file photo)

Published Aug 15, 2024 5:50 PM by The Maritime Executive

Seeking to find a new means of cutting off the aid provided to Iran’s proxies in the Middle East including both the Houthis and now Hezbollah, the U.S. Department of the Treasury’s Office of Foreign Assets Control added a swath of tankers and gas carriers as well as shipping companies and individuals all participating in efforts to fund the proxies. While the U.S. has frequently used financial sanctions, reports said Israel launched a similar effort in recent days going after as many as 18 tankers used by Iran and its proxies.

At the heart of the scheme targeted by the U.S. OFAC, is the Islamic Revolutionary Guard Corps-Qods as well as a Houthi financial official Sa’id al-Jamal. The U.S. asserts that revenue from al-Jamal’s network helps finance the Houthis’ targeting of commercial shipping in the Red Sea. The sanctions also targeted shipping companies based in Hong Kong and the registered owners of vessels based in the Marshall Islands and elsewhere.

“Today’s action underscores our continued commitment to disrupting Iran’s primary source of funding to its regional terrorist proxies like Lebanese Hezbollah and the Houthis,” said Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence Bradley T. Smith. “Our message is clear: those who seek to finance these groups’ destabilizing activities will be held to account.”

One of the companies targeted based in Hong Kong OFAC assets has shipped Iranian LPG worth tens of millions of dollars funneling the proceeds to the Lebanese Hezbollah militants. Four vessels controlled by the Hong Kong-based company are among those being listed as blocked property. The vessels include an LPG tanker Fengshun Eswatini-flagged, two tankers flagged in São Tomé and Principe, Victoria and Lady Liberty, and another Parvati flagged in Panama, all of which the U.S. says transported Iranian LPG.

The U.S. included a long list of vessels including the Palau-flagged LPG tanker LPG OM and the Palau-flagged LPG tanker Raha Gas. Arafat Shipping which operates the Raha Gas they report shipped millions of dollars of LPG to Yemen falsely identifying it as having loaded in the UAE. The captain of the vessel, an Indian national Arif Ibrahim Knot they said facilitated illicit payments.

Another vessel, the Palau-flagged products tanker Divine Power the U.S. reports engaged in a ship-to-ship transfer with another sanctioned tanker, the Mehle, to facilitate the sale of fuel on behalf of the network.  A U.S.-sanctioned tanker named Dawn II they report used forged papers provided by a shipping company in Malaysia to falsely show the commodities were Malaysian rather than Iranian. The same Malaysian company transported Iranian fuel aboard another U.S.-sanctioned vessel. 

Israel is also reported to have launched sanctions seeking to interrupt Iran’s funding of its enemies. It is the first time Israel has attempted sanctions against tankers. Reports indicate it listed 18 tankers representing 1.88 million dwt. S&P said five of the tankers were previously listed by the West.

Israel’s counter-terrorism operation told S&P the plan is to partner with the U.S. and Europe seeking to interrupt the bunkering, supplying, and managers from servicing the vessels.

The efforts come as Israel remains on high alert for a retaliatory attack from Iran and its proxies. The U.S. and its Western allies have been pushing for a de-escalation and hoping a ceasefire in Gaza might help. The U.S. has positioned extensive resources to help in the defense of Israel.