High-ranking officials from the US treasury will travel to Singapore and Malaysia next week to urge the two Asian commerce hubs to do more to stop flow of funds to Iran and its affiliated armed groups.
The US treasury has noticed that more money is getting to the regime in Tehran through the Malaysian financial system, Reuters reported Friday, quoting an unnamed source.
The Iranian regime has in recent years made the most of its friendly relations with Malaysia. Large amounts of US-sanctioned Iranian oil sold to China have been branded as Malaysian oil, passed along by middlemen and transferred ship to ship in international waters, according to tanker tracking companies, with little resistance by Malaysian authorities.
Ship-to-ship transfers are Iran’s favorite method of trying to hide its oil shipments, with cargos rebranded as oil from other countries and sold mostly to smaller refineries in China.
In their visit to Malaysia next week, Neil MacBride and Brian Nelson, the US Treasury's general counsel and under-secretary for terrorism and financial intelligence, are expected to convey to Malaysian authorities that helping Iran get around oil sanctions and access funds may result in sanctions for individuals or entities involved in such business.
Iranian officials pride themselves on their ability to circumvent sanctions –with shell companies, layers of intermediaries, and at high cost, involving hefty payments to intermediaries arranging shipments and laundering money.
Last year, the US treasury sanctioned Hossein Hatefi Ardakani for overseeing a “transnational procurement network” spanning the Middle East and East Asia. Ardekani was accused of procuring “servomotors, inertial navigation equipment, and other items” for Iran’s drone program through front companies in Malaysia, Hong Kong and others.
Their endeavor has been markedly helped in the last few years by the Biden administration’s reluctance to antagonize Iran’s rulers. However, that tendency seems to have waned more recently – after October 7th, in particular.
Last December, the US treasury imposed sanctions on four Malaysia-based companies it accused of helping Iran's production of drones. A number of new sanctions have also been introduced to sever the financial flows towards Iran, which US officials say fuels instability in the Middle East.
Critics of the Biden administration say abandoning Donald Trump’s “maximum pressure” policy has not only emboldened the Iranian regime to adopt a clearly more aggressive foreign (and nuclear) policy, but has enabled the Revolutionary Guards (IRGC) to implement those policies with more money in their coffers.
Biden officials have rejected the accusations many times, stating that the administration has sanctioned “over 600 individuals and entities”, including Iran. Hamas, Hezbollah, the Houthis, and Kataib Hezbollah.” Biden says his treasury department will “impose sanctions that further degrade Iran's military industries."
In response, the president's opponents and critics point out that sanctions are effective only when (and if) they are enforced rigorously –and across the board. Iran’s biggest trade partner and main buyer of oil is China. Many experts say it’s hard, if not impossible, for any US administration to sanction China. And without China, no sanction regime would impact the Iranian regime in a meaningful way.