Client Alert: OFAC Designates Iranian Shadow Banking Network
On September 16, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) sanctioned two Iranian nationals and more than a dozen UAE and Hong Kong-based individuals and entities for coordinating transfers of funds to already-designated Iranian entities. The alleged network was sanctioned pursuant to OFAC’s counterterrorism authority, as set forth in Executive Order (E.O.) 13224, as amended.
The transfers are stated to have benefitted Iran’s Islamic Revolutionary Guard Corps-Qods Force (“IRGC-QF”) and the Iranian Ministry of Defense and Armed Forces Logistics (“MODAFL”). According to OFAC, Iranian nationals Alireza Derakhshan (“Alireza”) and Arash Estaki Alivand (“Alivand”) facilitated the purchase of over $100 million worth of cryptocurrency for oil sales for the Iranian government, in collaboration with the other sanctioned individuals and entities. Proceeds from these schemes allegedly support terrorist proxies in the region and the development of advanced weapons systems, including ballistic missiles and unmanned aerial vehicles (UAVs).
Alireza Derakhshan and Arash Estaki Alivand
Alireza and Alivand’s designation is part of OFAC’s long-running effort to target Iran’s “shadow banking” operations. Shadow banking refers to the use of non-traditional, often opaque financial intermediaries, such as front companies, money exchangers, and cryptocurrency platforms, to move funds outside the regulated financial system and evade oversight. The pair are alleged to have overseen the acquisition of more than $100 million in cryptocurrency generated from Iranian oil sales through foreign front companies, and to have facilitated transfers of funds to IRGC-QF and MODAFL, both already subject to U.S. sanctions for their connection to terrorist activity. Alivand acted as an oil broker for the Syria-based Al-Qatirji Company and conducted transactions with Tawfiq Muhammad Sa’id al-Law, a money exchanger tied to Hezbollah, to channel funds into digital wallets used in the shadow banking system.
Others implicated include Vahid Derakhshan and Leila Karimi, who are linked with several UAE and Hong Kong-based entities including Alpa Investment LLC, Alpa Trading-FZCO, Minato Commercial Brokers, Everest Investment LLC, and Unique Station Trading. These actors are accused of managing accounts, arranging transactions, and knowingly facilitating large-scale transfers of illicit funds for IRGC-QF and MODAFL.
U.S. Focus on Iran’s Shadow Banking Networks
This designation follows OFAC’s earlier actions in June and July 2025 against similar shadow banking networks tied to Iranian oil proceeds and currency exchanges. It reflects the U.S. Executive’s continued campaign of “maximum pressure” on Iran, which Treasury officials emphasized remains a core element of U.S. national security policy.
Key Takeaways
Firms operating in the Middle East and Asia, especially in the oil industry, should frequently evaluate their sanctions compliance and due diligence protocols. The U.S. government is actively focused on “shadow banking” networks that use cryptocurrencies to facilitate illicit transfers, and this scrutiny extends beyond large financial institutions to include individuals, affiliates, and subsidiaries. Stakeholders should be aware that their networks could be exposed to significant sanctions risk if they have any connection to actors who knowingly facilitate these types of transactions.
The foregoing is for informational purposes only. It is not intended as legal advice and no attorney-client relationship is formed by the provision of this information.