IRGC Profiteer Babak Zanjani Skims Iran’s Hormuz Tolls

The US Treasury has once again targeted the sanctions evasion network master-minded by regime insider Babak Zanjani, linking him to Strait of Hormuz toll fees collected through his crypto exchange BitBank.

Babak Zanjani has featured frequently in previous reports carried by the Maritime Executive, which have highlighted how two sons of prominent Iranian hardliners have exploited their close connections to evade sanctions controls and fund the regime, but also to profit personally.

Mohammed Hossein Shamkani, son of the late Iranian National Security Advisor Ali Shamkani, and Babak Zanjani, who manages to be inter-married both with the family of the late Supreme Leader Ali Khamenei and also his son Mojtaba, named as the current Supreme Leader, have both made billions by heading up commercial networks that sell Iranian oil exports through sanctions evasion schemes.

Shamkani and Zanjani are merely the most prominent members of a small circle of equally well-connected sanctions evasion brokers, many of whom split their time between Iran and Dubai. An up-and-coming member of this circle is Ali Rezaei, son of hardliner Mohsen Rezaei, who was recently appointed Secretary of the National Security Council. Ali Rezaei is married into the family of Iran’s first Supreme Leader Ayatollah Khomeini, and leverages his connections within the Intelligence Ministry’s Directorate-General for Fuel and Energy, and what is known in Iranian exile circles as the Shayan Network.

Typically such black-market entrepreneurs have assistance through their family connections with false passports, travel arrangements and financial transactions. But their primary route to riches is their role in selling Iranian oil for export through networks of front companies and dark fleet tankers. While the arbitrage between the discounted price of Iranian oil for export and what it can be sold for used to provide enough profit, this new generation of traders also profits by avoiding payments due to the Iranian Ministries of Oil and Finance. The Iranian ministries are particularly vulnerable to non-payment as the foreign transactions of these networks get ‘lost’ as they are routed through opaque and unorthodox payments systems designed to avoid scrutiny and effective accounting.

With the blockade on exports through the Strait of Hormuz completely blocked, and stocks held afloat in Asia now running down, the sanctions-evasion business at the moment is a bit bleak. In its latest sanctions action on September 17, the US Treasury’s Office of Foreign Assets Control (OFAC) has designated Zanjani's crypto exchange BitBank, which it says has been used to move funds between ship managers seeking to use the northern transit channel in the Strait of Hormuz and the Persian Gulf Strait Authority (PGSA), which claims to control it. BitBank has been used both to collect toll fees passed through the so-called "HormuzSafe Marine Services Authority," according to OFAC.

OFAC’s designation, and the implicit understanding that OFAC is aware of transactions taking place within BitBank, means that anyone attempting to pay the PGSA could lose their money and might also find themselves subject to US Treasury penalties, with their ships identified as blockade runners subject to follow-up action by the US Navy positioned in the Gulf of Oman. Some Asian shipowners in particular might feel they can escape OFAC financial sanctions by avoiding transacting in US dollars and using front companies, but may be exposing their ships - generally manned by Indian seafarers - to direct challenge by the US Navy.

Included under the OFAC designation are the leading executives of BitBank, which has been widely promoted by Babak Zanjani in his social media postings, and both HormuzSafe and the Persian Gulf Marine Insurance Company.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.