2/4/2022 5:49:00 PM | 2 minute read

UK National Pleads Guilty to Violating US Sanctions on Iran and Related Indictment Unsealed

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Menelaos Karampetsos

Associate

Get in touch

Menelaos Karampetsos

Associate

US authorities have recently secured the conviction of a UK national and disclosed charges against three other individuals (from Canada, UAE, and Iran) in respect of a scheme designed to bypass restrictions imposed on global commerce by the Office of Foreign Assets Control (“OFAC”), the US federal agency responsible for sanctions.[i] In a related indictment, an Iranian national named Jalal Rohollahnejad was also charged with offences arising from the same scheme.

Under the scheme, which violated various US measures against Iran (such as the International Emergency Economic Powers Act), the individuals worked to obtain items with potential military uses (such as counter-drone systems) and devise methods to transfer funds from Iran to the US by circumventing sanctions administered by the OFAC. This entailed sending funds from Iran to the UAE, converting them to US dollars, and transferring them to Canada via separate wire transfers. From there, Saber Fakih, director of company Ipaxiom Solutions LLC (“Ipaxiom”), contacted US companies to purchase assets and made representations that Ipaxiom (a Canadian company) would comply with all OFAC requirements. The scheme also involved falsifying various contractual documents such as shipper’s letters to create the impression that the ultimate destination of the goods was the UAE, thereby causing US companies (the sellers of the assets) to lodge false documents with the US Customs and Border Protection agency. To further the impression of legitimacy, the individuals also falsely listed a company in the UAE and falsified bills of lading to mask the true destination of items.

In investigating the schemes, various US authorities such as the FBI, the Department of Homeland Security and the Department of Commerce exchanged information and engaged in co-ordinating actions.

Key takeaways

Clients active in the field of shipping and international transport should be mindful of increasingly sophisticated schemes used by criminals to circumvent authorities and use innocent parties or information obtained by innocent parties to achieve their goals. In this instance, bills of lading and other standardised shipping documents were manipulated to enable a conspiracy to transfer goods illicitly to a destination that is the subject of extensive sanctions by the US. We therefore advise clients to ensure that their due diligence is sufficiently robust and that they properly scrutinise transactions, particularly where the source of funds is subject to multiple wire transfers from different jurisdictions.

As the above example illustrates, criminals will not hesitate to use existing corporate vehicles or falsify such vehicles to create the impression that a transaction is legitimate. Clients should, in turn, be vigilant in dealing with counterparties, and implement strict Know-Your-Customer (“KYC”) checks. They should also ensure that they are up to date with sanctions programs that affect their business, either in terms of geography or in terms of clients.

Countries such as the US enforce their sanctions laws actively and will often use co-ordinated action between different federal agencies to secure outcomes (as was the case in thwarting the scheme described above). It is, in turn, crucial that companies understand that they might have to co-operate with more than one law enforcement authority when there has been a breach of a sanctions regime.

At Brown Rudnick, we regularly advise companies on how to comply with US and other sanctions laws, as well as how to conduct transactional due diligence and investigations in respect of actual or suspected breaches of sanctions law. For more information, you can visit our dedicated Sanctions page here.