In case you missed it, FinCEN issued an Advisory regarding Iran’s illicit oil smuggling activities, shadow banking networks and weapons procurement efforts. In February, President Trump’s National Security Presidential Memorandum announced a maximum pressure campaign against Iran and, in turn, OFAC has targeted Iranian oil exports. The Advisory further supports those efforts and replaces an existing 2018 Iran Advisory. It includes updated information and red flags associated with oil smuggling and sales; Iranian weapons procurement networks; and shadow banking networks.
To give some background, Iran relies on revenue from oil sales to fund its armed forces and terrorist activities. In 2018, sanctions hurt Iran’s financing abilities and now the “overwhelming majority” of its oil sales have been to China.
Iran uses old and poorly maintained vessels to transport oil and these are sometimes referred to as “shadow”, “ghost” or “dark” fleets. These vessels are often underinsured or uninsured and are owned or managed by companies in other countries who may change names and/or ownership frequently and/or engage in other deceptive practices in order to hide the oil smuggling.
Revenues from oil sales are laundered through “shadow banking” networks. These networks are made up of exchange houses, trading companies and foreign front companies which allow sanctioned entities to access the international financial system. Exchange houses are financial institutions that are licensed to deal in foreign exchange and transmit funds on behalf of others and will often manage front and trading companies. The front companies, which are often recently incorporated and lacking any major online presence, establish bank accounts outside of Iran. Trading companies are also used and although they are not licensed to transmit funds, they rely on regional banks with correspondent banking relationships with financial institutions in the United States.
Financial institutions filing SARs on activity related to the Advisory are asked to include “IRAN-2025-A002” in the Filing Institution Note to FinCEN (Field 2) and the Narrative. All relevant types of suspicious activity should be indicated, including Field 33(a) (Terrorist Financing-Known or suspected terrorist/terrorist organization).
Financial institutions should also consider whether it’s appropriate to notify law enforcement immediately. Suspicious transactions potentially related to terrorist activity should also be reported using the following toll-free number: (866) 556-3974.
Published
2025/07/23
