Last month, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued updated guidance to help the global shipping and maritime industry detect and mitigate risks associated with sanctions evasion practices related to the shipment of Iranian-origin petroleum, petroleum products, and petrochemical products. This guidance, along with several other recent actions by OFAC, supports the implementation of President Trump’s February 4, 2025, National Security Presidential Memorandum (NSPM-2), “Imposing Maximum Pressure on the Government of the Islamic Republic of Iran, Denying Iran All Paths to a Nuclear Weapon, and Countering Iran’s Malign Influence,” directing Treasury to “implement a robust and continual sanctions enforcement campaign with respect to Iran that denies the regime and its terror proxies access to revenue.”
One of the most significant steps OFAC has taken is with respect to Iranian oil. OFAC’s actions are intended to counter Iran’s oil sales, the revenues of which support activities such as Iran’s nuclear weapons and ballistic missile programs that are seen as threats to the national interests of the United States and its allies and partners. As such, shipments of Iranian oil “create significant sanctions risks for the maritime industry, including, but not limited to, shipping companies, vessel owners, managers, operators, insurers, port operators, port service providers, and financial institutions.” OFAC’s guidance: (1) describes Iran’s deceptive trade practices to evade sanctions; (2) advises maritime stakeholders on ways to identify and mitigate against sanctions risks; and (3) describes the consequences associated with violating U.S. sanctions.
OFAC Focus on Practices to Evade Sanctions on Oil Shipments
As described in the guidance issued by OFAC, Iran engages in several deceptive international trade practices to evade sanctions, disguise the origin of its petroleum and petroleum products, and sell its products at a discount. OFAC specifically focuses on the following practices:
- Disguising oil shipments by employing a “shadow fleet” of tankers, “generally comprise{d} of older, poorly maintained vessels that operate outside of standard maritime regulations,” as well as a separate fleet of gas carriers that engages in similar practices to transport liquified petroleum gas shipments, primarily to China.
- The utilization of ship-to-ship (STS) transfers by sanctioned Iranian tankers to non-sanctioned vessels outside of territorial waters to transport Iranian petroleum to third-country buyers, typically using three to five STS transfers in a single shipment to conceal the origin of crude oil and/or the use of sanctioned tankers.
- Falsification of vessel and cargo documents by Iranian-linked networks, such as bills of lading, certificates of origin, invoices, packing lists, proof of adequate insurance, and lists of last ports of call, to conceal the origin and destination of petroleum shipments.
- Manipulation of vessel location and identification data by vessels carrying Iranian-origin petroleum by intentionally disabling AIS transponders or modifying transponder data, concealing port calls and STS transfers in certain waters.
- The use of shell companies and vessel-owning special purpose vehicles (SPVs) by Iranian-linked networks “in high-risk, low-transparency, and low-regulation jurisdictions.”
- Facilitation by oil brokers outside Iran in the sale and transport of Iranian petroleum and petroleum products to foreign end users, notably in China.
Identifying and Mitigating Sanctions Risks
Given the risks associated with the deceptive practices listed above, OFAC recommends maritime stakeholders review their sanctions compliance programs and consider implementing enhanced due diligence requirements and additional internal controls. Such measures may include:
- Verifying the origin of petroleum or petroleum product shipments.
- Verifying that vessels have adequate and legitimate insurance coverage.
- Requesting additional documentation on vessel’s ownership, voyage history, and flag history.
- Reviewing all applicable shipping documentation to ensure it reflects the details of the underlying voyage and the relevant vessel(s), flagging information, cargo details, origin, and destination.
- Conducting appropriate due diligence on customers, customers’ counterparties, and associated vessels.
- Monitoring and investigating vessels that appear to have manipulated AIS data, or to have displayed AIS abnormalities while sailing in jurisdictions known to be high-risk for sanctions evasion.
- Receiving contractually contingent assurances or warranties from counterparties in the maritime petroleum supply chain that they are not engaging in activity that would violate, or cause a U.S. person to violate, U.S. sanctions laws and regulations.
- Refusing service or port entry to sanctioned vessels.
- Utilizing a variety of open-source databases as well as information from organizations that provide commercial shipping data, to conduct due diligence.
The Application of “Maximum Pressure” on Iran
There have been several rounds of sanctions on Iranian oil sales since the announcement of “maximum pressure” on Tehran in February, targeting private and public sector entities around the world that are involved in transporting and selling petroleum and petroleum products from Iran to China and elsewhere. From December 2024 through April 2025, OFAC has sanctioned 86 individuals and entities in more than 25 countries and identified 85 tankers as blocked property involved in the shipment and sale of Iranian oil. Since the publication of its guidance, OFAC has sanctioned an additional 31 individuals and entities and 10 tankers, including targeting Chinese importers of Iranian oil and an Iranian liquified petroleum gas magnate and his corporate network.
In addition to its focus on Iranian oil, the Trump Administration has significantly ramped up other sanctions actions against Iran in furtherance of U.S. policy. On April 9, OFAC added six individuals and entities based in Iran to the Specially Designated Nationals (SDN) List for their support to key entities that manage and oversee Iran’s nuclear program, including the Atomic Energy Organization of Iran the Iran Centrifuge Technology Company. On April 29, OFAC added another 12 individuals and entities based in Iran and China to the SDN List for their role in a network procuring ballistic missile propellant ingredients on behalf of Iran’s Islamic Revolutionary Guard Corps.
U.S. persons are generally prohibited from engaging in transactions with blocked persons, as well as transactions involving Iranian-origin petroleum, petroleum products, and petrochemical products. In addition, non-U.S. persons may be subject to secondary sanctions, and are also prohibited from causing or conspiring to cause U.S. persons to wittingly or unwittingly violate U.S. sanctions, as well as engaging in conduct that evades U.S. sanctions. Violations of Iran sanctions could result in civil enforcement actions or criminal penalties for persons or transactions subject to U.S. jurisdiction. OFAC advises that any persons engaged in transactions that may involve Iran, particularly with respect to shipments of petroleum and petroleum products, should scrutinize their due diligence polices and procedures, and consider all aspects of any relevant potential transactions.
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Cassidy Levy Kent’s attorneys, compliance professionals, economists, and licensed customs brokers have experience assisting clients navigating sanctions issues, export controls, and tariff changes. We expect further developments in this space and will continue to provide updates. Please contact us with any questions.