Swinging the hammer

OFAC ties Chinese entities to illegal transfer of weapons technology to Iran    The Treasury Department’s Office of Foreign Assets Control (OFAC) has dropped the hammer on a Chinese business network that has allegedly supplied Iran’s military with millions of dollars’ worth of missile-applicable items, making a clutch of companies off limits to U.S. exporters.
   Specifically, OFAC placed on its specially designated list Chinese national Ruan Runling and three related Chinese companies for their weapons proliferation activities. The companies include Shanghai North Begins International, Shangai Gang Quan Trade Co., and Shanghai North Transway International Trading Co.
   OFAC said Ruan was sanctioned because he has “provided, or attempted to provide, financial, material, technological, or other support for, or goods or services in support of Iran’s Shiraz Electronics Industries (SEI).”
   OFAC identified SEI Sept. 17, 2008 as being owned or controlled by Iran’s Ministry of Defense and Armed Forces Logistics, and placed it on its specially designated list Oct. 25, 2007. SEI has participated in the production of various electronics equipment for Iran’s military, including missile guidance technology.
   The missile-related technology supplied by Ruan has included U.S.-origin goods, OFAC said. Since at least 2015, the agency alleged Ruan has supplied SEI a wide range of missile-related technologies and goods that include gyroscopes and other missile-applicable navigation technology. Gyroscopes can be utilized in missile systems for navigational, guidance, or stabilization purposes.
   According to OFAC, Ruan used Shanghai North Begins International to sell $17 million worth of navigation-applicable technology and guidance systems, as well as other dual-use technology to SEI. Ruan, via Shangai Gang Quan Trade, also sold goods to SEI, and he enlisted Shanghai North Transway to sell more than $1 million worth of items to the Iranian company.
   The Iranian persons and entities sanctioned by OFAC in this case include Iranian defense industry officials Morteza Farasatpour and Rahim Ahmadi, and the firm Matin Sanat Nik Andishan for their work in Iran’s ballistic missile program.
   The OFAC sanctions against the Chinese firms should serve as a wake-up call for any U.S. exporter dealing directly or indirectly with Chinese trading company. While these companies may handle numerous legitimate transactions, U.S. companies must exercise due diligence in order to avoid putting themselves at risk of diversion schemes involving U.S.-origin goods to persons and entities in embargoed countries such as Iran.