August 16, 2019

US seeks seizure and forfeiture of Singapore-registered vessel for Iran sanctions violations

On August 16, 2019, a complaint was unsealed in the US District Court for the District of Columbia for the seizure and forfeiture of the oil tanker Grace 1, its cargo of petroleum, and $995,000 in a US bank account.  The complaint for forfeiture in rem alleges that the property is subject to seizure and forfeiture pursuant to 18 USC § 98(a)(1)(A) and (C) as property derived from violations of the International Emergency Economic Powers Act, 50 USC § 1701 et seq. (IEEPA) or the bank fraud statute or money laundering statutes, 18 USC § 1344  and 18 USC § 1956 respectively; the complaint further alleges that the properties are subject to seizure and forfeiture as foreign assets connected to the Islamic Revolutionary Guard Corps (IRGC) pursuant to 18 USC § 981(a)(l)(GX1), and that the seizure and forfeiture are justified pursuant to Executive Orders 12957, 12959, and 13059 as implemented by the Iranian Transactions and Sanctions Regulations, 31 CFR sections 560.204 (ITSR), which generally prohibit the exportation, re-exportation, sale or supply of goods, technology or services to Iran by from the US or by US persons without a license from OFAC, if the goods or services are intended for Iran or the government of Iran.

According to the complaint, Grace 1 has been involved in secret and unconventional sales of Iranian oil, including some routed through the US banking system, and although it is owned, managed and crewed by different companies, it is ultimately controlled by the IRGC, which was designated by the US Department of the Treasury in October 2007 pursuant to Executive Order 13382, and as a Foreign Terrorist Organization in April 2019.  For example, a United Arab Emirates-controlled company based in Singapore that manages Grace 1 made at least six US dollar payments referencing the vessel; the payments were made to a US company in 2016, and totaled $34,108.79.  The complaint alleges ties between the US company, a group of companies based in the United Arab Emirates associated with the Al’Aquili Group, which was sanctioned for facilitating the evasion of US economic and trade sanctions, and the National Iranian Oil Company.  The complaint details efforts on the part of Grace 1’s ownership in 2018 and 2019 to conceal the location of the ship by deactivating the Automatic Identification System required for large vessels.  The complaint describes fraudulent shipping documents stating that Grace 1 had obtained oil from Basra Oil Terminal in Iraq, when in fact the vessel was loaded with Iranian oil from Kharg Island.  The complaint associates US dollar financial transactions through companies in St. Kitts and Nevis and elsewhere with Grace 1

Grace 1
was detained, and its captain and chief officer arrested, by British and Gibraltar authorities in July 2019.  According to the complaint, the vessel was en route to Port Banias, Syria, in violation of US sanctions.