U.S. Sanctions Firms Supplying Drone Parts

On March 9, the United States sanctioned five companies and one woman based in China for supporting Iran’s efforts to procure drone components. The network was linked to Iran Aircraft Manufacturing Industrial Company (HESA), which produced Shahed-136 suicide drones. The unmanned aerial vehicles (UAVs) were used by Iran to attack oil tankers and exported to Russia for the war in Ukraine. “Iran is directly implicated in the Ukrainian civilian casualties that result from Russia’s use of Iranian UAVs in Ukraine,” said Under Secretary of the Treasury Brian Nelson. “The United States will continue to target global Iranian procurement networks that supply Russia with deadly UAVs for use in its illegal war in Ukraine.”

Shahed-136 InfographicThe move marked the sixth round of U.S. sanctions on Iran’s drone program since Tehran began exporting drones to Russia in August 2022. The network had sold and shipped thousands of aerospace parts—including some that could be used in UAVs—to HESA. The Iranian firm was sanctioned in 2008 for links to the Iranian Defense Ministry and the Islamic Revolutionary Guard Corps.

Iran has an extensive drone fleet, but some models depend on foreign technology and parts. For example, 40 out of 52 components extracted from a Shahed-136 drone were manufactured by American companies, according to Ukrainian intelligence.

Related Material: American Parts in Iranian Drones

The sanctions froze all assets of the designated person and organizations in the United States and restricted any transactions using dollars or the American financial system. They were imposed under Executive Order 13382, which applied to entities accused of supporting Iran’s nuclear proliferation and missile-related activities. The following is a list of those cited and statements from the State Treasury Departments.

  • Hangzhou Fuyang Koto Machinery Co., Ltd, which facilitated the sale and shipment of components that included light aircraft engines to HESA
  • Raven International Trade Limited, which facilitated millions of dollars in transactions involving aerospace parts
  • Guilin Alpha Rubber & Plastics Technology Co., Ltd, which facilitated the sale and transfer of thousands of parts to HESA
  • Shenzhen Caspro Technology Co., Ltd, which facilitated the sale and transfer of thousands of parts to HESA
  • S&C Trade PTY Co., Ltd, which facilitated the sale and transfer of thousands of parts to HESA
  • Yun Xia Yuan, an employee of S&C Trade

 

Secretary of State Blinken

Blinken
Secretary of State Blinken

The United States is designating five entities and one individual based in the People’s Republic of China for sanctions pursuant to Executive Order (E.O.) 13382, which targets proliferators of weapons of mass destruction and their means of delivery. 

This network is responsible for the sale and shipment of thousands of components, including those used in Shahed-series UAVs, to the Iran Aircraft Manufacturing Industrial Company (HESA), which was designated pursuant to E.O. 13382 in September 2008. Those designated today facilitated transactions for components for fixed-wing, rotorcraft, and UAV applications.

The United States will continue to use every tool at our disposal to disrupt these efforts and work with allies and partners to hold Iran accountable for its actions.

 

 

Treasury Department

Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is designating a network of five companies and one individual for supporting Iran’s unmanned aerial vehicle (UAV) procurement efforts. This People’s Republic of China-based network is responsible for the sale and shipment of thousands of aerospace components, including components that can be used for UAV applications, to the Iran Aircraft Manufacturing Industrial Company (HESA). HESA has been involved in the production of the Shahed-136 UAV model that Iran has used to attack oil tankers and has exported to Russia. HESA was designated pursuant to Executive Order (E.O.) 13382 on September 17, 2008 for being owned or controlled by Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) and for having provided support to Iran’s Islamic Revolutionary Guard Corps (IRGC).

Seal of the Treasury“Iran is directly implicated in the Ukrainian civilian casualties that result from Russia’s use of Iranian UAVs in Ukraine,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “The United States will continue to target global Iranian procurement networks that supply Russia with deadly UAVs for use in its illegal war in Ukraine.”

Today’s actions are taken pursuant to E.O. 13382, which targets weapons of mass destruction proliferators and their supporters. Since September 2022, the United States has issued six rounds of designations of individuals and entities involved in the production and transfer of Iranian UAVs.

SALE AND SHIPMENT OF UAV COMPONENTS TO IRAN

Hangzhou Fuyang Koto Machinery Co., Ltd (Koto Machinery), a China-based company, used its business infrastructure to facilitate the sale and shipment of aerospace components, including light aircraft engines applicable for Iran’s Shahed series UAVs, to HESA in Iran. To obscure its activity, Koto Machinery used Hong Kong-based front company, Raven International Trade Limited (Raven), to facilitate transactions worth millions of dollars for aerospace components.

China-based Guilin Alpha Rubber & Plastics Technology Co., Ltd (Guilin Alpha) has facilitated the sale and shipment of thousands of aerospace components worth over a million dollars to HESA in Iran.  

China-based S&C Trade PTY Co., Ltd (S&C Trade), its China-based employee Yun Xia Yuan, and China-based Shenzhen Caspro Technology Co., Ltd (Caspro), have facilitated the sale and shipment of thousands of aerospace components worth hundreds of thousands of dollars for fixed-wing, rotorcraft, and UAV applications to HESA in Iran.

Koto Machinery, Raven, Guilin Alpha, S&C Trade and Caspro are all being designated pursuant to E.O. 13382 for having provided, or attempted to provide, financial, material, technological or other support for, or goods or services in support of, HESA. Yun Xia Yuan is being designated pursuant to E.O. 13382 for acting or purporting to act for or on behalf of, directly or indirectly, S&C Trade.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the individuals and entities that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within the United States (including transactions transiting the United States) that involve any property or interests in property of blocked or designated persons are prohibited.

In addition, persons that engage in certain transactions with the individuals or entities designated today may themselves be exposed to sanctions. Furthermore, any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals or entities designated today pursuant to E.O. 13382 could be subject to U.S. sanctions.

The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the SDN List but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s FAQ 897.

Click here for identifying information on the individuals and entities designated today.