US Sanctions Chinese Companies Supplying Iranian Maker of Drones Sold to Russia

Bloomberg-March 9th 2023

Nick Wadhams 

The US Treasury Department imposed sanctions on five Chinese companies, and one person, accused of supplying aerospace components to an Iranian maker of drones sold to Russia and used in attacks on oil tankers.

Hangzhou Fuyang Koto Machinery Co. facilitated the shipment of millions of dollars of components including light aircraft engines to Iran Aircraft Manufacturing Industrial Co., which makes the Shahed-136 drone and has been under sanction since 2008, the department said in a statement.

The US Defense Intelligence Agency said last month that Iran used the Shahed-136 in a 2021 attack against the tanker MT Mercer Street as it sailed off Oman and has sent the system to Houthi fighters in Yemen. It also said the Shahed-136, renamed Geran-2 by the Russians, has been used in Ukraine.

“Iran is directly implicated in the Ukrainian civilian casualties that result from Russia’s use of Iranian UAVs in Ukraine,” Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson said in a statement Thursday, using an acronym for unmanned aerial vehicle.

Iranian Drones Hitting Ukraine Struck a Tanker Earlier, US Says

The US has repeatedly sought to disrupt the procurement and trade network that’s allowed Iran, which already faces comprehensive US sanctions, to produce the drones and sell them on. So far, however, it has been largely unable to stem the flow of parts to Iran.

Also Thursday, Treasury announced penalties against 39 entities it said made up a significant shadow-banking network that allowed Iran to evade financial sanctions and gain access to global financial networks.

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