US targets Iran-linked networks as sanctions campaign expands
The United States on Thursday sanctioned networks it said were helping Iran finance and support allied armed groups across Iraq, Lebanon, the United Arab Emirates and Turkey.
The United States on Thursday sanctioned networks it said were helping Iran finance and support allied armed groups across Iraq, Lebanon, the United Arab Emirates and Turkey.
The Treasury Department said the measures targeted individuals and businesses supporting Iraq’s Kata’ib Hezbollah and Lebanese Hezbollah, including militia members, arms dealers, procurement companies, money exchangers and alleged sanctions-evasion networks.
“Whether they finance terror, launder money, or help Iran evade sanctions, we will find them, cut them off from the U.S. financial system, and dismantle the networks keeping the regime aflotat,” Treasury Secretary Scott Bessent said.
Among those sanctioned were four alleged Kata’ib Hezbollah commanders and members.
The Treasury also targeted figures connected to Iraq’s Popular Mobilization Forces, saying Iran-aligned factions had used their positions within the state-backed umbrella organization to obtain military equipment and channel resources to networks linked to Iran’s Revolutionary Guards.
One of those targeted was a UAE-based Iraqi arms dealer whose company, according to the Treasury, supplied goods and services to the Popular Mobilization Forces, including maintenance for Russian-made helicopters.
Another Iraqi procurement company was accused of helping acquire foreign defense equipment and components through dealings involving Russia, Iran and China, and of participating in attempted purchases of US defense articles through sanctions-evasion networks.
The sanctions also targeted Dubai-based Shams and Bahr Trading Company and two Iraqi businessmen associated with it. The Treasury said the exchange had been used to transfer millions of dollars from Iraq to Iran through the UAE.
In Lebanon, Washington focused on what it described as a cash-smuggling network used to move proceeds from Iranian oil sales to Hezbollah.
The Treasury said the Revolutionary Guards’ Quds Force used front companies and regional exchange houses to transfer the money, alleging that two Lebanese businessmen moved hundreds of millions of dollars from the Quds Force to Hezbollah between May and September 2025.
It also targeted gold and currency exchange businesses that it said formed part of the network, including operations involving the purchase of gold in Dubai and its movement into Lebanon by couriers.
The measures are part of Operation Economic Outcast, announced by Bessent on August 24 as Washington sought to sever Iran’s remaining sources of revenue, increase the cost of sanctions evasion and expand secondary sanctions exposure for companies continuing to do business with Tehran.
Alongside the new designations, the Treasury tightened its Iran licensing policy, saying applications for specific licenses covering otherwise prohibited Iran-related transactions would now generally face a presumption of denial, except in limited circumstances.
OFAC also announced a separate $1.43 million settlement with an individual accused of violating Iran sanctions by providing consulting and advisory services to an Iranian software company, receiving Iranian-origin dividends through US bank accounts and acquiring property in Iran.
The barter-like arrangement allowed Tehran to turn payments for Iranian oil into credits for Chinese imports without sending money directly through international banking channels, Reuters said, citing two senior Iranian sources and three other people familiar with the mechanism.
Iran used the system to buy medicines, vehicles and communications equipment, while it was also used in connection with contracts worth millions of dollars to supply Iran with air defense equipment over the past year, the sources said.
Billions routed outside normal banking channels
The mechanism has been operating since at least 2021 but has become more important as Washington tightened sanctions on Iran and companies doing business with Tehran, according to the report.
A buyer acting on behalf of Chinese state-owned oil trader Zhuhai Zhenrong had, at least until this year, deposited hundreds of millions of dollars a month with a China-based financial entity known as ChuXin, three people familiar with the arrangement told Reuters.
Those payments covered Iranian oil purchases. ChuXin then sent funds to Chinese exporters and companies involved in infrastructure projects in Iran, likely through other Chinese financial institutions, Reuters reported.
Around 70% of the Iranian oil proceeds handled through the arrangement went to infrastructure projects, while the rest entered accounts belonging to a special purpose vehicle, or SPV, used to pay suppliers of goods to Iran, the sources said.
The two Iranian sources confirmed the existence of the SPV, which Reuters said had not previously been reported.
Oil exchanged for access to Chinese goods
The SPV is managed by two entities, one acting on behalf of China's Ministry of Commerce and another linked to Iran's central bank, according to all five sources.
When Iran's central bank approves an importer to use funds held in the SPV, the Iran-linked entity informs its Chinese counterpart so payments can be made to suppliers, three of the sources said.
The structure gives Chinese manufacturers access to payment without dealing directly with Iran, according to the report. Reuters said there was no indication that the Chinese manufacturers supplying civilian goods had broken sanctions.
Reuters could find no record of a financial institution called ChuXin in Chinese corporate registries, and one source said it may exist only on a spreadsheet.
China says unaware of arrangement
China's foreign ministry told Reuters it was "not familiar with the situation you describe" when asked about the mechanism.
"China has consistently opposed unilateral sanctions that have no basis in international law and have not been authorized by the United Nations Security Council," the ministry said.
Iran's UN missions in New York and Geneva did not respond to Reuters requests for comment. Iran's central bank, China's commerce ministry, the National Iranian Oil Company and Zhuhai Zhenrong also did not respond to questions about their reported roles.
US pressure raises stakes
China has long been the main buyer of Iranian oil. More than 80% of Iran's shipped crude went to China in 2025, averaging around 1.4 million barrels per day, according to Kpler data cited by Reuters.
The arrangement has helped Tehran keep trade flowing despite years of sanctions, while giving China access to discounted Iranian crude.
Its importance has grown as the United States has increased economic pressure on Iran during the six-month-old war. Treasury Secretary Scott Bessent warned countries in August to cut business ties with Tehran or risk losing access to the dollar-based financial system.
Reuters said it could not determine how the US naval blockade on Iranian oil exports had affected the China trade mechanism. No Iranian crude cargoes had successfully passed through the Strait of Hormuz to China since the blockade was reinstated on July 14, according to the news agency.
A UN embargo on exports of most major conventional weapons to Iran was restored in September 2025 along with other sanctions.
Andrea Ghiselli, an international politics lecturer at the University of Exeter who studies China's relations with the Middle East, told Reuters that Beijing wanted to resist US pressure without putting major Chinese banks and companies at risk of exclusion from the international financial system.
"They want plausible deniability," he said.
One document, a confidential letter from the Supreme National Security Council’s protection unit to the Oil Ministry, raises concerns over the ministry’s decision to hand large volumes of crude to four trusted intermediaries, known as trustees, on credit and at steep discounts.
The crude was allocated after a new oil sales team took control in July, according to the letter.
The former chief executive of Naftiran Intertrade Company (NICO) had identified the intermediaries as carrying large debts and failing to return billions of dollars from previous oil sales, the document says.
The ministry nevertheless offered the intermediaries a discount of $8.50 per barrel, a level the confidential letter described as unusual.
The documents and two Oil Ministry sources point to Mohammad Javad Bavand, a former Revolutionary Guards intelligence official appointed to oversee oil trading, as a central figure in the new arrangement.
Disputed cargo tied to sanctioned tankers
A second confidential document records a closed Oil Ministry meeting on June 28 concerning Iranian crude exported to China aboard three sanctioned tankers linked to Hossein Shamkhani, also known as Hector, an oil trader and son of Ali Shamkhani, a former adviser to slain Supreme Leader Ali Khamenei.
Two million barrels of crude were shipped through a front company aboard the tanker Lily to China’s Dongjiakou port on March 24, according to the document.
The owner of Lily subsequently took control of the cargo, citing a financial dispute with Panel Good Wholesalers, the company involved in the shipment, the document says.
Lily belongs to a shipping network and shadow fleet controlled by Hossein Shamkhani that has been sanctioned by the US Treasury. Dubai-registered Panel Good Wholesalers is also one of Shamkhani’s companies used for oil trading.
Oil trader Mohammad Hadi Momenin recovered the two-million-barrel cargo at NICO’s request and stored it in tanks at Dongjiakou, participants at the June meeting were told, according to the document.
Momenin then sought $33 million in compensation from the Iranian oil company, including $27 million for the loss in value of the tanker Covenio following US sanctions and $6 million for charter costs involving another tanker, Jaya.
Bavand instructed Momenin to return ownership of the cargo to the Oil Ministry and, through one of Momenin’s companies, charter Covenio for one year at $90,000 per day, according to the meeting record.
Both Covenio and Jaya belong to Shamkhani’s sanctioned shadow fleet.
Iran International reported three weeks ago that Momenin was a member of an Intelligence Ministry network known as the Shayan network. Momenin, born in 1989, has failed to return about $2 billion in Iranian oil proceeds, according to Iran International’s previous investigation.
Five traders form Bavand’s network
Momenin is one of five trustees in an oil trading network assembled by Bavand following his return to the Oil Ministry, two ministry sources told Iran International.
Another member is Mostafa Niazazari, the fifth defendant in the corruption case involving former senior judiciary official Akbar Tabari.
Niazazari was accused in the case of giving Tabari 15,000 square meters of land as a bribe. After fleeing to Canada, he returned to Iran four years ago and has since resumed oil trading while residing in a European country.
Niazazari is the son of Kioumars Niazazari, a former Intelligence Ministry director-general in Mazandaran province.
Two businessmen known for importing essential commodities have also joined Bavand’s network after entering the oil trade during the tenure of former NICO chief executive Saeed Sadeghi, according to the Oil Ministry sources.
Hassan Afrashtehpour, also known as Dariush and the owner of Afra Holding, has for years controlled imports of some essential commodities. An Iranian court sentenced him to 25 years in prison for economic corruption in 1997, but he was released four years later.
Masoud Modallal, a major importer of cooking oil and animal feed who has faced large banking debts, is another member of the network, the sources said.
Modallal previously received $985 million in preferential-rate foreign currency for essential-goods imports and owed 5.75 trillion rials to Sarmayeh Bank and 7.82 trillion rials to Pasargad Bank.
Modallal shifted his focus toward oil trading after Iran ended preferential currency allocations, according to the sources.
The fifth member is Ali Bayandorian, a trader sanctioned by the United States six years ago over what Washington described as financing for the Revolutionary Guards’ Quds Force.
Bayandorian uses a network of companies registered in Iran and Southeast Asia to sell oil and petrochemical products outside conventional markets, according to the sources.
Together, the five traders make up what the Oil Ministry sources described as Bavand’s new trustee network.
The two confidential documents obtained by Iran International show members of this network continuing to receive Iranian oil despite outstanding proceeds from previous sales.
From Guards intelligence to oil sales
Bavand studied at Imam Sadiq University, known for combining Islamic studies with modern social sciences, and until 2021, served as deputy to Mostafa Ahadi, the economic deputy of the Revolutionary Guards Intelligence Organization.
Ahadi is a nephew of Ali Akbar Hosseini Mehrab, a security official whose name has appeared in major Iranian corruption cases, including the Crescent gas dispute.
Bavand entered a Supreme National Security Council committee in 2018 following the US withdrawal from the nuclear agreement and Washington’s restoration of sanctions on Iranian oil.
The council created a working group to manage oil sales designed to bypass the restrictions, alongside a security committee composed of representatives from Iranian military and intelligence organizations.
The Revolutionary Guards Intelligence Organization sent Bavand, then deputy head of its economic division, to the security committee.
Bavand built a network of trusted oil intermediaries during his time on the committee, including Majid Azami, chief executive of Sepehr Energy Jahan Nama Pars, Majid Taj, brother of Iranian Football Federation president Mehdi Taj, and trader Hamed Kachoui.
Iran’s oil sales structure changed further after Ebrahim Raisi became president in 2021 and his government authorized the armed forces to participate formally in oil trading.
The Revolutionary Guards subsequently sent Bavand to the Oil Ministry, where he took responsibility for trading oil under sanctions.
A significant part of the problems involving trustees and unreturned oil proceeds emerged during that period.
Following Raisi’s death, Oil Minister Mohsen Paknejad initially entrusted management of sanctioned oil sales to officials with previous links to Shayan, an Intelligence Ministry official involved in fuel operations.
Bavand returned to the Oil Ministry following Shayan’s removal.
Paknejad appointed Bavand special assistant to the oil minister for supervision of oil trading after the previous NICO chief executive was removed following disclosures concerning trustees and unreturned oil proceeds.
Bavand is also related to Hossein Taeb, the former head of the Revolutionary Guards Intelligence Organization, who is currently the commander of the Basij paramilitary unit, and a figure close to Supreme Leader Mojtaba Khamenei.
Bavand now plays a central role in decisions over sanctioned oil sales and has assembled a new group of trusted intermediaries.
The documents show that traders carrying large outstanding debts from earlier oil sales have again been entrusted with millions of barrels of Iranian crude, placing Bavand and his network at the center of the system used to sell Iran’s oil under sanctions.
Mahmoud Siadat told Iran's ILNA news agency that restrictions on exports of petrochemicals, steel, food and other goods had contributed to the decline, including limits imposed because of war damage and domestic demand.
Siadat said the greater concern was the speed at which other countries were moving into the market while Iranian trade was shrinking.
Rivals gain ground
"The more important problem is that during the same period in which we faced a decline in exports to Afghanistan, our competitors entered the Afghan market very seriously," Siadat said.
He said Uzbekistan's exports to Afghanistan had risen 42% this year, adding that the growth was rapidly reducing Iran's share of the Afghan market. He also pointed to what he described as a multibillion-dollar Saudi gas extraction agreement near Iran's border.
Saudi Arabia-based Delta Energy International signed an agreement with Afghanistan's Ministry of Mines and Petroleum this week to explore and extract oil and gas in the Kushk-Tirpul basin in the western provinces of Herat and Badghis.
Afghan authorities put the initial investment at $200 million, while Delta has said a wider energy program could involve tens of billions of dollars in potential investment if exploration and feasibility studies support further development.
The decline comes amid a broader contraction in Iran's foreign trade since the war began. An Iranian trade official has said non-oil exports and imports fell by about 30% in the first four months of the current fiscal year, while customs data from China and Turkey showed steep declines in trade with Iran. Indian exports to Iran also fell sharply, although India's imports from Iran rose on higher purchases of Iranian crude oil and liquefied petroleum gas.
Trucks wait for up to 15 days
Siadat said Iran was also hurting its position in Afghanistan through long delays at its own borders, with hundreds of trucks waiting to cross at Milak and Dogharoun.
He said some trucks were being held for between 12 and 15 days before leaving Iran, while traffic moved much more smoothly on the Afghan side.
"There is no logic in our trucks being held for 13, 14 and sometimes 15 days at the border with Afghanistan," he said. "Long stops at the border cause an unusual increase in transport costs and freight rates and reduce our competitiveness in the Afghan market."
Siadat broadened his criticism beyond border management, saying the problem reflected wider weaknesses in Iran's state structure and fragmented decision-making.
"Many of the organizations that are not even directly under the government's supervision play a fundamental role in creating this problem," he said, adding that regulatory and military bodies needed to reach a common position.
He also criticized the limited role of businesses in policymaking. "The private sector in Iran is, in many cases, largely a ceremonial presence in decision-making," he said. "It only hears promises but sees no action."
US pressure adds to wider trade strain
Siadat said, however, that sanctions were making Iranian goods more expensive in export markets, adding another layer of pressure on businesses already dealing with transport restrictions.
The United States has intensified economic pressure on Iran through an oil export blockade and expanded secondary sanctions aimed at restricting Tehran's access to dollars, foreign financing and international trade channels. Iran's total trade has fallen by between 25% and 35%, according to President Masoud Pezeshkian.
Washington has continued to add measures. The US Treasury on Tuesday imposed a new round of Iran-related sanctions targeting the country's aviation sector and companies and intermediaries in several countries, part of the Trump administration's wider economic pressure campaign.
Siadat said Afghanistan had become more important because problems at Iran's southern ports and other trade routes had cut or reduced transit flows.
"Afghanistan's border is currently one of the few borders through which we can work," he said, warning that delays on the Iranian side were putting one of the country's remaining export outlets at risk.
Minister of State Stephen Doughty said the government was introducing legislation to tighten financial and trade restrictions, widen powers to sanction ships linked to Iran and bar Iranian aircraft from landing in the UK unless exemptions apply.
“Today we are laying legislation which will tackle Iranian nuclear activity and other hostile Iranian activity,” Doughty said in a written statement to parliament.
Focus on nuclear program
Doughty said Iran had expanded its nuclear program in ways that had no credible civilian justification and pointed to its stockpile of more than 400 kg of uranium enriched to 60%.
“Iran is the only country without nuclear weapons to enrich uranium to this level,” he said.
Britain restored UN sanctions on Iran in October 2025 after the snapback mechanism was triggered and also designated 71 people and entities linked to Iran's nuclear program, including financial institutions and energy companies.
Wider trade and financial restrictions
The new rules expand restrictions on goods, technology and services tied to sectors including energy, software, metals and gold, as well as shipping, insurance and banking.
They also ban exports of additional goods and technology that Britain says could support Iran's conventional weapons and nuclear capabilities.
Doughty said the financial measures would “further reduce the Government of Iran’s ability to access the UK financial system and raise funds in support of its nuclear programme.”
Shipping and aviation targeted
Britain will also gain broader powers to sanction ships that it says enable or facilitate Iran's nuclear program or other destabilizing activity.
Iranian aircraft will be barred from landing in the UK unless exemptions apply, following Britain's termination of bilateral air service arrangements with Iran in 2024.
The legislation includes exemptions to allow continued operations at the Shah Deniz gas field in Azerbaijan, which supplies energy to European countries.
Doughty said Britain remained committed to diplomacy, saying a negotiated outcome was “the only long-term solution” to the dispute over Iran's nuclear program.
