The US Treasury Department is currently investigating JPMorgan Chase & Co. (NYSE:) for its business dealings with Ocean Leonid Investments Ltd., a hedge fund linked to Iranian oil trader Hossein Shamkhani, Bloomberg News reported. The inquiry is focused on whether the New York-based bank adhered to regulations in its relationship with the client, which has been suspended by Dubai’s financial free zone.
The investigation, still in its initial phase, was spurred by a report on October 24 that identified Ocean Leonid as a hedge fund with offices in London, Dubai, and Geneva, allegedly overseen by Shamkhani. JPMorgan, along with ABN Amro Bank NV and Marex Group Plc, reportedly provided leverage to Ocean Leonid.
Both JPMorgan and the US Treasury have declined to comment on the ongoing probe. Similarly, representatives for Ocean Leonid and Shamkhani, who was approached through his lawyer, have not provided any statements.
An Ocean Leonid spokesperson had previously refuted claims of Shamkhani’s involvement with the hedge fund, a position echoed by Shamkhani’s attorney, denying any connection between Shamkhani and the firm.
Sources indicate that JPMorgan is not currently required to sever ties with Ocean Leonid, as neither the company nor Shamkhani are on any sanctions lists. The Treasury’s probe is primarily concerned with Shamkhani’s actions, though the potential for compliance lapses at the bank is also under review. The Federal Reserve is similarly assessing Western financial institutions’ exposure to Shamkhani’s network but has not issued a statement regarding the matter.
US regulations mandate that banks within its jurisdiction conduct thorough client screenings to prevent money laundering and terrorist financing, and to report any suspicious activities to the authorities. Agencies such as the Office of the Comptroller of the Currency and the Federal Reserve are responsible for ensuring that financial institutions have robust systems to comply with these legal obligations.
It is noteworthy that Shamkhani’s father, Ali Shamkhani, a senior advisor to Iran’s Supreme Leader Ayatollah Ali Khamenei, was sanctioned in January 2020 by the US Treasury’s Office of Foreign Assets Control for his significant role in Iran’s defense policies and coordination of various national activities.
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