The Office of Foreign Assets Control (OFAC) today added Iranian businessman Babak Morteza Zanjani and a Malaysian bank connected with him to the Specially Designated Nationals (SDN) list. Zanjani, a largely UAE-based magnate considered by some to be among the richest men in Iran is accused of being a channel to facilitate Iranian oil transactions subject to sanctions. First Islamic Investment Bank of Malaysia was also added on the list. This bank is linked with Zanjani. Other entities were also added today.
An article in today’s Wall Street Journal can be found here.
The issue of First Islamic Investment Bank highlights a critical theme in these sanctions – Iran’s alleged masking of illicit transactions. With its banks shut off from the international banking system and the country falling under the increasing weight of sanctions, the Iranian government and its agents and instrumentalities have reportedly engaged in an increased pattern of setting up and relying on foreign front companies through which it conducts business. Companies doing business in the Middle East and other high exposure areas like Turkey and Malaysia should take great care to conduct due diligence on business partners, even if they feel that they are not dealing with Iran. There has been substantial “cloning” of Iranain companies overseas in neighborhing countries, and this creates more windows of risk.
This is one of the many isntances in which a written compliance program comes in handy. Companies that are dealing overseas should have written policies available aimed at detecting and preventing activities that could be violations. This will also be viewed favorably by the regulators in the event that they were to impose a fine. Arguably, no company is too small for such a policy, though the depth can obviously vary for reasons such as company size. The policy should take into consideration the nuances of the company’s business and clientele and should create a reporting method aimed at sorting out potential problems before they occur.
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