U.S. Treasury sanctions Karnakis and Karnakis in Iran shipping crackdown

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U.S. Treasury Iran shipping sanctions

Highlights

The U.S. Treasury sanctioned law firm Karnakis and Karnakis, along with shipping agents in Singapore and the UAE, for allegedly enabling illicit Iranian shipping tied to military funding.
Operation Economic Outcast intensifies international pressure on maritime service and intermediary businesses facilitating Iranian sanctioned trade flows, expanding Treasury coordination with Europe.
FinCEN, collaborating with European partners, launched a probe into a Greek bank’s links to Iran and issued subpoenas under the Bank Secrecy Act, raising compliance risks for exposed financial entities.

Sanctions expand pressure on shipping networks

As reported by the Financial Crimes Enforcement Network, the U.S. Department of the Treasury is sanctioning law firm Karnakis and Karnakis for allegedly supporting illicit Iranian shipping activity over several years. Treasury says that support indirectly helps Tehran generate revenue for its military, weapons and nuclear programs, while the department also designates shipping agents based in Singapore and the UAE that it says directly aid Iranian shadow fleet operations.

The measures form part of Operation Economic Outcast, a broader effort by Treasury to work with counterparts in Europe and other regions to cut off what it describes as the Iranian regime’s remaining economic lifelines. The action underscores a continued focus on maritime services and intermediary businesses that facilitate sanctioned trade flows.

FinCEN probe adds banking scrutiny

FinCEN is also acting in close coordination with European partners, including in Greece, as it advances an investigation into a Greek bank’s potential ties to Iran and its proxies. The agency says it is using existing legal authorities, including its first issuance of an administrative subpoena under 31 U.S.C. § 5318(k) of the Bank Secrecy Act.

In parallel, FinCEN has issued multiple requests for information concerning banks’ relationships with Iranian financial institutions designated by the Office of Foreign Assets Control. The combined enforcement and investigative steps signal rising compliance risk for banks, legal advisers and shipping service providers with exposure to cross-border Iran-linked transactions.

Our earlier article on WTO warnings about lasting trade shifts explained how the wars in Ukraine and the Middle East are driving companies to redesign supply chains and reroute shipping, often toward costlier but more resilient alternatives. It also highlighted the WTO’s forecast of a sharp 2024 contraction in Middle East trade and the view that repeated disruptions could make diversification of routes and partners a longer-term feature even after conflicts ease.

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