US sanctions 5 China-based suppliers to Iranian company selling drones to Russia
- Separately, 17 Hong Kong businesses are sanctioned for taking part in a ‘significant shadow banking’ system set up for Iranian firms
- The White House has said it will act against Chinese companies should they violate US sanctions or aid the Russian war effort
Washington has sanctioned a China-based network allegedly supplying parts to an Iranian manufacturer selling drones to Russia for its war on Ukraine.
Additionally, 17 Hong Kong-based firms were sanctioned for their alleged role in a “shadow banking” system spearheaded by Tehran.
The US Treasury Department added five companies based in mainland China and Hong Kong as well as one individual to its Specially Designated Nationals list on Thursday, accusing them of selling and shipping thousands of aerospace components to the Iran Aircraft Manufacturing Industrial Company.
The company makes the Shahed-136 drones, which Iran used to attack an Israeli oil tanker last year; the Treasury Department said the company had exported the drones to Russian forces for attacks in Ukraine.
The sanctioned entities are Hangzhou Fuyang Koto Machinery Co; Guilin Alpha Rubber and Plastics Technology Co; Raven International Trade; Shenzhen Caspro Technology Co; and S&C Trade PTY Co. S&C’s China-based employee Yuan Yunxia was also cited.
The companies and Yuan’s US-based assets are essentially frozen. Americans are barred from dealing with them.
“Iran is directly implicated in the Ukrainian civilian casualties that result from Russia’s use of Iranian UAVs [unmanned aerial vehicles] in Ukraine,” Brian Nelson, the Treasury Department’s under secretary for terrorism and financial intelligence, said.
“The United States will continue to target global Iranian procurement networks that supply Russia with deadly UAVs for use in its illegal war in Ukraine,” he said.
The Biden administration has stepped up warnings that it will not hesitate to take action against Chinese companies or individuals should they violate American sanctions or aid the Russian war effort in Ukraine.
Still, US and European Union officials acknowledged last week that no evidence yet showed that China was supplying weapons to Russia.
Chinese Foreign Minister Qin Gang said on Tuesday that China “has not provided weapons to either side of the conflict”.
Qin attributed a series of global problems to the US and said there seemed to be an “invisible hand” pushing to escalate the crisis in Ukraine.
Separately, the Treasury on Thursday cited 17 Hong Kong-based companies as part of a “significant ‘shadow banking’ network” that moved billions of dollars for Iranian authorities. In all, 39 entities, including from jurisdictions like Singapore and the United Arab Emirates, were sanctioned.
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The Hong Kong companies were cited for enabling sanctioned Iranian firms like Persian Gulf Petrochemical Industry Commercial Co and Triliance Petrochemical Co to evade US sanctions, gain access to the international financial system and trade with foreign customers.
“Iran cultivates complex sanctions-evasion networks where foreign buyers, exchange houses and dozens of front companies cooperatively help sanctioned Iranian companies to continue to trade,” Deputy Treasury Secretary Wally Adeyemo said.
“Today’s action demonstrates the United States’ commitment to enforcing our sanctions and our ability to disrupt Iran’s foreign financial networks, which it uses to launder funds.”
Of the 17 Hong Kong companies, 13 were called fronts and accused of transferring “tens of millions of dollars” related to Iranian petrochemical sales to China between 2021 and 2022.
Persian Gulf Petrochemical was said to have used them to disguise its role in trade. Some of the companies appear to engage in medical goods business while conducting non-medical transactions, according to Treasury.
Another Hong Kong-based company, Glotreasure Company Limited, was accused of serving as a front for Triliance to facilitate fee payments for vessels involved in petrochemical shipments.
Ningbo More Interest I/E Co, a Chinese buyer of Iranian petrochemicals, was also added to the sanction list.
Last week, the US State Department also designated two China-based firms as “Iran sanction evaders” after Beijing and Tehran appeared to forge stronger bonds during Iranian President Ebrahim Raisi’s visit to China in mid-February.
