US banks “unwittingly” processed some US$2bn in payments for Iranian oil exports banned by Washington’s sanctions regime, according to newly unsealed charges.

The Department of Justice (DoJ) on February 2 revealed charges against a network of individuals in Iran and Turkey who they say spearheaded schemes, beginning in 2018, to export crude oil to China, Russia and Syria while hiding its Iranian origin.

Proceeds from the oil sales went into the coffers of Iran’s elite Quds Force, the DoJ says. It has charged seven defendants with terrorism, sanctions evasion, fraud and money laundering offences.

The US has a wide-ranging sanctions regime against Iranian oil exports in an attempt to stifle Tehran’s export income and force the country to negotiate over its nuclear programme and what the US government describes as its “malign influence” in the Middle East.

Under the presidency of Donald Trump, the US unilaterally pulled out of the 2015 nuclear accord with Iran. Negotiations between US and Iranian officials restarted in 2022 but have been frozen since Iran backed Hamas’ attack on Israel in October last year.

“Iran utilizes the proceeds of its black-market oil sales to fund its criminal activities, including its support of the IRGC [Islamic Revolutionary Guard Corps], Hamas, Hezbollah, and other Iranian aligned terrorist groups,” US Attorney General Merrick B. Garland says in a statement.

Damian Williams, US attorney for the southern district of New York, says: “This alleged scheme to finance the Quds Force succeeds through the complicity of wealthy businessmen in countries like Turkey who are eager to turn a corrupt profit from supporting terror groups.”

In the indictment, prosecutors allege that from 2018 Quds Force commander Rostam Ghasemi was the central figure in three separate but similar arrangements to evade US sanctions by procuring shipping services and payment for exports of Iranian crude.

Turkish companies Baslam Nakliyat and Baslam Petrol, which are part of the ASB group of companies owned by businessman Sitki Ayan and sanctioned in 2022, were used as fronts for the shipments to help disguise their Iranian origin, according to the indictment.

In the first scheme, a Lebanese broker and an unnamed Indian shipping services company were used to export Iranian crude to Syria, beginning in 2018.

The second scheme involved the sale of Iranian oil to Chinese buyers between 2019 and 2021, underpinned by a memorandum of understanding signed by Ghasemi and ASB.

Prosecutors allege a vessel called the Oman Pride was used to ferry oil from Iranian export terminals to the Gulf of Oman, where it was placed onto other vessels for transport to China. In at least one case a cargo was further transferred onto another vessel in Malaysian waters, en route to China.

At a 2019 meeting in Warsaw, an unnamed Swiss company agreed to provide a bank guarantee to facilitate the sale of Iranian oil cargo to China using a ship-to-ship transfer off Oman, the DoJ alleges. The deal was later finalised at a meeting in Istanbul attended by the Swiss firm, a Chinese company and “US guests”.

Payments for at least some of the shipping and bunkering services for these voyages were wired to or through US bank accounts, according to the indictment. In 2021, for example, a Chinese buyer paid around US$17mn into the German bank account of a Marshall Islands company, for which a US correspondent bank account was used.

Since 2019, the China Oil and Petroleum Company, which the DoJ says is an Iranian front company, has been involved in the transfer of more than US$2bn through the US financial system. The US has also seized US$108mn which officials say the China Oil and Petroleum Company “attempted to launder through correspondent transaction accounts at U.S. financial institutions”.

A contract cited in the indictment, between the Chinese firm and Turkey’s ASB, said the parties would disguise the origins of the oil by using “a full set of Somo documentation”, referring to Iraq’s state oil marketing agency.

The third set of deals described in the indictment facilitated the sale of Iranian crude oil to a Russian buyer via Uzbekistan. Prosecutors allege that Baslam Nakliyat and a Cypriot company called OGC Victoria also played a role in facilitating the exports to disguise Iran’s involvement from service providers such as banks.

UAE firm CGN Trade, which US officials suspect of receiving the proceeds from the oil sales on behalf of Iran, sent and received US$12.9mn between February 2020 and November 2021, all of which was wired through US correspondent accounts.

The evidence in the indictment largely relies on emails from within the ASB group, which US investigators appear to have gained access to. Emails leaked from the company were also published by the WikiIran website in October 2022.

None of the defendants have yet filed defences. ASB Group and Ayan did not respond to emailed requests for comment. Ghasemi, who was also Iran’s transport and urban development minister, reportedly died from cancer in December 2022.

The charges offer a rare insight into how sanctions evasion schemes operate. For example, the indictment includes messages purportedly from an Iranian shipping official to the master of the Grace 1, a vessel detained by British special forces soldiers when it stopped in Gibraltar en route to Syria.

Following its release, the official told the captain to broadcast its destination as the Greek port of Kalamata but to change course for the Syrian port of Tartus, while keeping the real destination in Lebanon or Syria secret from the rest of the crew. He also offered the captain US$500,000 if he proceeded directly to Tartus instead of stopping in Beirut to change crews, according to the indictment.

In late 2020, a dispute erupted between the Iranian and Turkish network and an unnamed shipping company which apparently took delivery by ship-to-ship transfer of a cargo of Iranian oil, without permission from Ghasemi.

After hearing that the vessel operated by the shipping company was “trying to leave” the Omani port of Sohar, Ghasemi sent an email “on behalf of the Qods Force of IRGC from Iran” and requesting that the company “cooperate with us in china case right now”.

“This is the last chance not to make trouble,” he wrote