US Treasury sanctions law firm over Iran shadow-fleet role, alleging obscuring beneficial ownership

The US Department of the Treasury has sanctioned the Panama- and Greece-based law firm Karnakis and Karnakis for its alleged role in building the corporate architecture of Iran’s “shadow fleet.”

• The action, announced on 21 October 2026 as part of Operation Economic Outcast, targets the firm and five associated individuals for operating in the Iranian petroleum and petrochemical sectors.

• Treasury states that Karnakis and Karnakis has for years registered shipping companies owning vessels that moved hundreds of millions of dollars’ worth of Iranian steel, petroleum, petrochemicals and other goods. It previously set up companies already designated by the Office of Foreign Assets Control (OFAC), including Skyros Maritime and Trading S.A., Corfu Maritime and Trading S.A., and Elias Shipping and Trading Group S.A.

• The firm is also said to have played a critical role in establishing the shipping network of Iranian LPG magnate Seyed Asadoollah Emamjomeh and to have served as corporate agent for entities linked to Iranian commodity trade.

• Employees are alleged to have acted as directors and officers of the companies they registered, obscuring beneficial ownership.

• Related designations covered the cargo operator Roxette Maritime Shipping and Trading S.A. (for which the firm acted as agent) and several of its vessels, plus shipping agents Amigoz Singapore and Whales Shipping Line.

• The measures block US-linked property of the designated parties and prohibit transactions with them by US persons, with secondary-sanctions risks for others.

Treasury Secretary Scott Bessent said:

• “Whether you are conducting illegal oil transfers at sea or sitting in the corner office of a law firm, if you are supporting the Iranian regime, we will find you and sanction you.”

• He added that facilitators “must make a choice: Either you are with us or against us.”

Context for firms in IFSCs such as Jersey and Mauritius

• International Financial Services Centres (IFSCs), including Jersey and Mauritius, are frequently used for the incorporation of shipping companies, special-purpose vehicles and other offshore structures that can appear in shadow-fleet networks.

• The Karnakis action shows that OFAC is prepared to designate professional service providers—law firms, corporate agents and company-formation specialists—when it concludes they have knowingly or repeatedly supplied the legal and corporate infrastructure that enables sanctioned Iranian commodity trade.

• For firms in Jersey, Mauritius and comparable centres this raises practical compliance exposure.

• Registered-agent and company-administration work that involves Iranian-linked clients, frequent changes of ownership or name for vessels, or structures designed to conceal beneficial owners of oil- or petrochemical-carrying ships can attract designation risk under Executive Order 13902 and related authorities.

• Secondary sanctions and correspondent-banking restrictions can follow even for non-US persons. FinCEN’s parallel use of administrative subpoenas and information requests involving European banks further indicates that financial institutions servicing these jurisdictions are under heightened scrutiny for Iranian ties.

• Service providers that continue to form or maintain shell companies used in Iranian oil or shadow-fleet activity therefore face a clearer and more personalised enforcement signal: Treasury has publicly stated it will identify and sanction such facilitators. Routine maritime and commercial company formation remains lawful, but structures connected to sanctioned Iranian petroleum or petrochemical flows do not.

Sources for verification

• Official US Treasury press release (21 October 2026): https://home.treasury.gov/news/press-releases/sb0664

• FinCEN news release: https://www.fincen.gov/news/news-releases/operation-economic-outcast-targets-irans-shadow-fleet-networks

• US Virtual Embassy Iran statement: https://ir.usembassy.gov/unmasking-service-providers-facilitating-irans-shadow-fleet-operations/

• The Maritime Executive: https://maritime-executive.com/article/u-s-treasury-sanctions-two-lawyers-for-alleged-shadow-fleet-services

• Seatrade Maritime: https://www.seatrade-maritime.com/regulations/us-sanctions-law-firm-shipping-agents-linked-to-iran-s-shadow-fleet

• Times of Israel: https://www.timesofisrael.com/us-treasury-sanctions-greek-panamanian-law-firm-over-aid-to-iranian-shipping/

• Gulf News: https://gulfnews.com/world/mena/us-sanctions-law-firm-and-shipping-agents-over-irans-shadow-fleet-1.500719120

• AML Intelligence: https://www.amlintelligence.com/2026/10/latest-us-sanctions-greece-and-panama-based-law-firm-amid-iran-shadow-fleet-crackdown/

• gCaptain: https://gcaptain.com/u-s-sanctions-law-firm-shipping-agents-and-nine-vessels-in-iran-shadow-fleet-crackdown/

• Lloyd’s List: https://www.lloydslist.com/LL1158774/US-targets-law-firm-that-helped-build-Iranian-LPG-magnate%E2%80%99s-shipping-network

These are the primary and contemporary reporting sources used for the facts above.