US Probes JPMorgan’s Ties to Iranian Oil Kingpin’s Hedge Fund

(Bloomberg) — The US Treasury Department is examining JPMorgan Chase & Co.’s relationship with a hedge fund that’s said to be part of a network overseen by Iranian oil trader Hossein Shamkhani.

The probe is at an early stage as the agency scrutinizes whether the New York-based bank complied with all rules and regulations when it took on Ocean Leonid Investments Ltd. as a client, according to people familiar with the matter, who requested anonymity as the information isn’t public. The entity was recently suspended by Dubai’s financial free zone. 

Bloomberg News reported on Oct. 24 about Ocean Leonid’s role as a hedge fund with offices in London, Dubai and Geneva that’s overseen by Shamkhani. JPMorgan, ABN Amro Bank NV and Marex Group Plc were among the lenders that have offered the firm leverage, Bloomberg News reported.

Spokespeople for JPMorgan, the US Treasury and Ocean Leonid declined to comment. Shamkhani didn’t respond to a written request for comment sent to his lawyer. 

An Ocean Leonid representative previously said in response to the Bloomberg News investigation that the company categorically rejects the allegation that Shamkhani is involved in or oversees the entity. A lawyer for Shamkhani also previously denied that his client had any relationship with Ocean Leonid.

People familiar with the matter said there’s no obligation for JPMorgan to exit the client relationship because neither Shamkhani nor the company appear on any sanctions lists. 

The US Treasury is primarily interested in Shamkhani’s activities, though the possibility of bank compliance gaps is also a consideration, the people said. The Federal Reserve is also looking into Western financial exposure to the Iranian oil trader’s network, the people said.

A spokesperson for the Fed declined to comment.

The US requires banks operating within its jurisdiction to scrutinize clients to detect potential money laundering and terrorist financing while alerting authorities to suspicious transactions. 

The Treasury Department’s Office of the Comptroller of the Currency and the Fed are among the agencies tasked with ensuring financial institutions have adequate systems in place to fulfill those duties.

Shamkhani’s father Ali, a prominent adviser to Iranian Supreme Leader Ayatollah Ali Khamenei, was sanctioned in January 2020 by the US Treasury’s Office of Foreign Assets Control, which cited his “key role” in the Islamic Republic’s defense policies and his help coordinating political, intelligence, social and economic activities in accordance with the Supreme Leader’s guidelines.

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