US Seeks To Curb Iran’s Fundraising Capacity In Southeast Asia
American officials are meeting oil industry executives, regulators and financial institutions this week to prop up efforts to tighten restrictions on Iranian crude exports.
(Bloomberg) -- Washington is concerned about growing efforts by Iran and groups like Hamas to solicit money in Southeast Asia, a senior US Treasury official said on Tuesday during a visit intended to rally support for sanctions enforcement in the region.
American officials are meeting oil industry executives, regulators and financial institutions in Singapore and Malaysia this week to prop up US efforts to tighten restrictions on Iranian crude exports and to curb Russia’s ability to keep funding its costly war in Ukraine.
The official, who spoke to reporters on the condition of anonymity to discuss private conversations, said the US expressed concern that Russia continues to source unspecified critical components in Southeast Asia, using transfers to mask the ultimate destination. They include components being used on the battlefield.
Iran has been the main focus, however, given its historic ties to countries like Malaysia and the tighter restrictions on Tehran introduced by the US in response to an on Israel last month and support for groups like Hamas. A package of measures signed into law last month promises to extend coverage to include foreign ports, vessels and refineries that knowingly process or ship Iranian crude.
The new restrictions also expanded so-called secondary sanctions to cover all transactions with sanctioned Iranian banks used to purchase petroleum and oil-derived products.
Stepping up enforcement of sanctions on Iran has been challenging in part because of practices like transfers of Iranian oil from one tanker to another in waters around Malaysia, frequently to mask the origin of cargoes heading further east.
Read More: China’s Oil Buyers to Weather Tighter US Sanctions on Iran
Among other steps, the US team has pressed for action on money-laundering and raised the issue of risks associated with older vessels in the so-called “dark fleet.” In May last year, a 26-year-old oil tanker capable of carrying 700,000 barrels of oil exploded off the coast of Malaysia. It was empty at the time.
The dark fleet ships are often of questionable seaworthiness. raising the chance of a spill, the Treasury official said, mentioning one such vessel sanctioned by the Office of Foreign Assets Control in March that is currently traversing the South China Sea.
Sporadic sanctions on firms in Singapore and Malaysia last year for their roles in allegedly facilitating the sale and shipment of millions of dollars worth of petroleum and petrochemicals on behalf of a company with known connections to Iran have not dented activity.
No Iranian oil has been imported by China since mid-2022, according to official Chinese customs data.
In reality, China has taken an average of 1.2 million barrels a day of crude from Iran since the beginning of 2023, according to data compiled by Kpler. These flows are often passed off as cargoes originating elsewhere — including Malaysia.
“Since the beginning of this year, Treasury has taken several significant actions to combat and disrupt the illicit shipment of Iranian oil to buyers in East Asia, including shipments via ship-to-ship transfers in international waters near Singapore and Malaysia,” the US Treasury department said in a statement on May 3.
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