OFAC Warns on Iran’s ‘Deceptive’ Use of Airlines to Circumvent Sanctions
24 Jul 2019

The US Treasury Department on Tuesday advised American businesses and individuals to be wary of the potential sanctions hazards linked to Iran’s aviation sector.

In an advisory, the department’s Office of Foreign Assets Control (OFAC) said that entities engaged in prohibited transfers of U.S.-origin aircraft, technology and related goods, or which provide services to Iran, could face civil monetary penalties and criminal charges for sanctions violations.

Businesses also risk penalties by working with the 12 airlines previously blacklisted by OFAC for their alleged facilitation of Iranian nuclear proliferation, terrorism and human rights abuses, according to the advisory, which cited Mahan Air, Caspian Air, Meraj Air, Pouya Air, Dena Airways, Al-Naser Airlines, Syrian Air, Dart Airlines, Khors Aircompany, Kyrgyz Trans Avia, Qeshm Fars Air and UM Air.

OFAC has separately blacklisted Iran Air, the advisory noted.

“Iran has routinely relied upon Iranian commercial airlines to fly fighters and materiel to international locations in furtherance of Iranian state-sponsored terror operations,” OFAC said. “In conducting these flights, certain Iranian commercial airlines enable Iran’s military support for the Assad regime by delivering lethal materiel, including weapons shipments, prolonging the brutal conflict and the suffering of millions of Syrians.”

Sanctions violations linked to blacklisted airlines could include the provision of financial services, reservation and ticketing, freight booking, catering, refueling contracts, maintenance services, sales of aircraft parts, interline transfers and codeshare agreements, among other business relationships.

The advisory, which particularly focuses on Mahan Air’s support of Iran’s Islamic Revolutionary Guards Corps in Syria, also cited “deceptive practices” employed by Iranian entities to acquire banned aircraft parts.

In light of such obfuscation, escrow companies and other intermediaries should “remain vigilant” for falsified documentation linked to OFAC licenses, aircraft registrations, insurance data and other records, OFAC said.

The deceptive practices are listed verbatim below:

  • Using front companies and other pass-through entities in third countries in Europe, the Middle East, Africa, and Asia to conceal or obfuscate the ultimate Iranian beneficiary of U.S.-origin aircraft and aviation-related materials or foreign-made aircraft containing 10 percent or more U.S.-controlled content by value. For example, on May 24, 2018, Treasury designated an illicit network concealed by Turkish front companies that surreptitiously procured U.S.-origin parts for Mahan Air. This network purchased airline aviation parts from foreign vendors, with delivery to Istanbul, and then forwarded those parts, including U.S.- origin, export-controlled goods, to Mahan Air.
  • Iranian persons continue to circumvent U.S. sanctions and procure U.S.-origin aircraft parts through third-party suppliers from multiple jurisdictions in Europe, East Asia and the Middle East, with many parts originating from suppliers in North America and Europe. In certain cases, European suppliers maintain offices in Tehran and have instructed Iranian airlines to remit payments to accounts in third countries.
  • Misrepresenting to suppliers, dealers, brokers, re-insurers, and other intermediaries that sanctions against Iran have been lifted.
  • Claiming activities are authorized by OFAC without providing copies of any OFAC licenses purportedly held by the parties.
  • Sourcing U.S.-origin aircraft, non-U.S.-origin aircraft containing 10 percent or more U.S.-controlled content by value, and U.S.-origin goods, technology, or services from third countries known to have strong reputations for aircraft maintenance, repair, and overhaul operations, but limited export control or sanctions enforcement capabilities.
  • Using general trading firms located in free trade zones, which do not ordinarily appear to deal in aviation goods, to place orders for U.S.-origin aircraft parts or components.
  • Placing orders for U.S.-origin aircraft parts or components from firms in one country for delivery to freight forwarding or logistics firms in a second country.

Photo: Mohammadreza Farhadi Aref [CC BY-SA 4.0], via Wikimedia Commons

Read more:

How Iran fuel oil exports beat U.S. sanctions in tanker odyssey to Asia

China Quietly Defies US Sanctions on Iran: FT

US labels Iran Revolutionary Guard ‘terrorist organization’

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