OFAC Targets Iranian Shadow Banking And Militia Networks In Continued Maximum Pressure Campaign

Overview

On September 16 and October 9, 2025, the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") announced coordinated sanctions actions targeting Iranian financial facilitators and militia-linked entities operating across the Middle East. The actions build upon an increased focus on the region under National Security Presidential Memorandum-2 ("NSPM-2"), which directs a campaign of maximum economic pressure on Iran and its proxies. These designations reflect OFAC's continued efforts to disrupt Iran's shadow banking infrastructure, weapons procurement networks, and militia financing operations that threaten U.S. national security and regional stability.The designations focus on:

1. A shadow banking network laundering proceeds from Iranian oil sales via cryptocurrency and front companies.
2. Iran-backed militia groups and corrupt banking officials in Iraq supporting terrorism and destabilizing the region.

Both actions were taken pursuant to Executive Order 13224, which targets terrorists and their supporters. We last reported on Iranian focused action by OFAC on September 12, 2025, in relation to numerous designations announced in relation to an Iranian oil smuggling scheme.

Key Findings: Actions Targeting Iranian Shadow Banking Network (September 16 Action)

OFAC designated Iranian nationals Alireza Derakhshan and Arash Estaki Alivand for allegedly facilitating over $100 million in cryptocurrency purchases for Iranian oil sales between 2023 and 2025. Following the press release, Alivand also brokered oil sales for the Syria-based Al-Qatirji Company, and coordinated transactions with Tawfiq Muhammad Sa'id al-Law, a Hizballah-associated money changer. Further, Derakhshan remained in contact with sanctioned currency exchanger Ramin Jalalian, who manages UAE-based Powell Raw Materials Trading L.L.C and Powell International FZE.

Derakhshan also allegedly oversees a group of UAE- and Hong Kong-based front companies, including Alpa Trading – FZCO, which reportedly collectively handle hundreds of millions of dollars in illicit transactions. Commenting on the September 16th action, Under Secretary Hurley stated: "Iranian entities rely on shadow banking networks to evade sanctions and move millions through the international financial system. Under President Trump's leadership, we will continue to disrupt these key financial streams that fund Iran's weapons programs and malign activities in the Middle East and beyond."

Key Findings: Iran-Backed Militia and Corruption in Iraq (October 9 Action)

On October 9, 2025, OFAC designated individuals and entities allegedly assisting the Iranian regime in evading U.S. sanctions, smuggling weapons, and engaging in widespread corruption in Iraq. These designations targeted Iran's use of militia proxies, particularly Kata'ib Hizballah, a U.S.-designated Foreign Terrorist Organization, to infiltrate Iraq's security forces and economy, undermine governance, and threaten U.S. personnel and interests across the region.

Notable entities designated include:

• Muhandis General Company, a front for Kata'ib Hizballah, was created to facilitate the formation of a PMF-run conglomerate. The company allegedly diverts Iraqi government funds through sub-contracting and plays a central role in weapons smuggling under the guise of agricultural and industrial contracting following the press report.
• Baladna Agricultural Investments, a reported commercial front for Muhandis General Company, was used to mask illicit financial and logistical support for Iran-backed militias.

OFAC also targeted key figures in Iraq's banking sector:

• Ali Mohammed Ghulam Hussein Al Anssari ("Ali Ghulam"), a senior Iraqi banker, who allegedly provided financial services to the IRGC-QF, Kata'ib Hizballah, and Asa'ib Ahl al-Haq. According to the press report, he enabled these groups to access U.S. dollars, launder funds using counterfeit documentation, and invest militia leaders' assets abroad, all while evading accountability through judicial bribery.
• Ali Meften Khafeef Al Baidani and Aqeel Meften Khafeef Al Baidani, brothers who allegedly own and manage an IRGC-QF-associated Iraqi bank, were designated for laundering tens of millions of dollars for Iran, smuggling oil and narcotics, and exploiting their positions to support militia financing and political corruption.

Additionally, OFAC designated:

• Hasan Qahtan Al-Sa'idi, a Kata'ib Hizballah a reported leader operating a source network that gathers intelligence on U.S. forces in Iraq on behalf of the IRGC.
• Muhammad Qahtan Al-Sa'idi and Haytham Sabih Sa'id, reported members of the Popular Mobilization Forces, who allegedly participated in intelligence collection for the IRGC.

These designations reflect OFAC's continued efforts to dismantle the financial and operational infrastructure of Iran-backed militias that destabilize Iraq and endanger U.S. personnel. Remarking on this action, Under Secretary Hurley stated the "Treasury is targeting Iran-backed militia groups responsible for the deaths of U.S. personnel. Under Secretary Bessent's leadership, we are working to dismantle the financial networks that enable these terrorist groups to operate. Cutting off their financial flows is essential to protecting American lives and our national security."

U.S. Policy Context

As with previous sanctions actions against Iran, the latest designations are taken pursuant to Executive Order 13902 and in furtherance of NSPM-2, which directs a campaign of maximum economic pressure on Iran. These actions underscore OFAC's continued focus on disrupting Iran's financial infrastructure supporting terrorism, weapons proliferation, and regional destabilization. Companies in finance, commodities, shipping, and digital assets should assess exposure to the designated individuals and entities.

Next Steps

This action underscores OFAC's continued focus on Iran-related sanctions programs and secondary sanctions targeting non-U.S. actors involved in key sectors in Iran. Companies in shipping, finance, energy, insurance, and commodities trading should assess potential exposure to the designated entities and vessels.

OFAC Designation Implications

As with prior OFAC designations, all property and interests in property of the designated individuals and entities that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Entities owned 50 percent or more by one or more blocked persons are also blocked under OFAC's 50% Rule.

All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

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