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Iran's Shadow Fleet: A Panama and Greece Law Firm Sanctioned for Building Front Companies

By GlobalKYCS Compliance TeamPublished Updated

The US Treasury sanctioned the law firm Karnakis and Karnakis for setting up Iranian shadow fleet companies. What it means for KYC, beneficial ownership and the region.

KYC/AML: when the corporate agent is the risk

On 21 October 2026 the US Treasury designated, under Operation Economic Outcast, the law firm Karnakis and Karnakis, based in Panama and Greece, along with ship manager Roxette Maritime Shipping and Trading S.A., the Singapore agency Amigoz and Dubai-based Whales Shipping Line. Nine vessels were blocked. According to the release, the firm set up companies that owned shadow fleet vessels carrying Iranian steel, petroleum and petrochemicals worth hundreds of millions of dollars, and its employees served as directors and officers, which hid the true beneficial owners.

FinCEN, for its part, is investigating an unnamed Greek bank through its first administrative subpoena under section 5318(k) of the Bank Secrecy Act, and has sent requests for information about relationships with already designated Iranian financial institutions. For KYC the lesson is plain: the customer is not only the shipowner but also whoever incorporates and manages it. Nominee directors, shared addresses and registered agents that recur across many structures are red flags. OFAC's 50 percent rule also applies in the aggregate, so ownership held by all blocked persons must be added up.

GAFILAT

GAFILAT reported the eighth drill on targeted financial sanctions linked to terrorist financing, the first in the Cayman Islands, held on 3 and 4 September 2026 with the OSAIF office. Without advance notice, it tested prompt implementation of the UN Security Council Resolution 1267 regime: list dissemination, communication to obliged entities and asset freezing. Financial and non-financial institutions and virtual asset service providers took part. The message for the private sector is that sanctions compliance is tested in practice, not only in the manual.

Dominican Republic

The Financial Analysis Unit (UAF) has the IX International Congress against Money Laundering on its calendar for 23 October, in person and online, and on 29 October a session on money laundering risks in virtual assets and virtual asset service providers. It is a good moment for compliance officers to align their risk assessments with the topics the authority is putting forward. In parallel, the Superintendency of Banks published circular CSB-REG-2026000019 on 16 October, updating the technical study requirements for securities issuance requests. It is not an AML rule, but it affects supervised entities preparing those files.

LatAm

Panama is the regional link in the case: the firm that registered the companies operated from there. Banks and corporate service providers in the region should review their portfolios for Panamanian companies tied to shipping firms, and check that no registered agent, director or officer matches the designated persons. In Argentina, the UIF strengthened its relationship with US agencies on 13 October through working sessions in Washington, a sign of growing cooperation on financial intelligence.

Practical conclusion

This week, do three things: screen your customer and counterparty base against the persons and vessels designated on 21 October, review cases where the same agent or director appears across many companies, and document beneficial ownership beyond the first layer of the structure. Whatever cannot be explained with a document gets escalated.

Sources