Treasury sanctions the law firm that registered Iran's shadow fleet companies

What happened

On 21 October 2026, the US Treasury designated Karnakis and Karnakis, a law firm based in Panama and Greece, under Executive Order 13902 as part of Operation Economic Outcast. According to Treasury, the firm has for years registered shipping companies that own shadow fleet vessels carrying hundreds of millions of dollars’ worth of Iranian steel, petroleum, and petrochemicals. Its owners, Sofianos and Konstantinos Karnakis Kosmas, and three of its employees were designated alongside it.

Treasury says the firm’s employees act as directors and officers of many of the companies it registers “in order to obfuscate the true beneficial owners.” Companies it set up include Skyros Maritime and Trading S.A., Corfu Maritime and Trading S.A., and Elias Shipping and Trading Group S.A., all previously designated by the Office of Foreign Assets Control (OFAC). Treasury also says the firm built the corporate structure for the shipping business of Iranian liquefied petroleum gas trader Seyed Asadoollah Emamjomeh.

The same action designated Roxette Maritime Shipping and Trading S.A., for which the law firm is corporate agent, and identified seven Panama-flagged cargo vessels it operates as blocked property. OFAC also designated two shipping agents, Singapore-based Amigoz Singapore PTE. Ltd. and Dubai-based Whales Shipping Line LLC.

The Financial Crimes Enforcement Network (FinCEN) said it had issued its first administrative subpoena under 31 U.S.C. § 5318(k) of the Bank Secrecy Act, to advance an investigation into a Greek bank’s potential ties to Iran and its proxies. FinCEN has also issued multiple requests for information about banks’ relationships with OFAC-designated Iranian financial institutions.

Why it matters

Treasury is going after the people who build the structures, as well as the ships. Its release says Operation Economic Outcast targets law firms and corporate service providers that set up shell and front companies for trade in sanctioned Iranian products. Nominee directors drawn from a firm’s own staff are one of the simplest ways to put distance between a vessel and its real owner.

The subpoena is the bigger signal for banks outside the United States. Under the statute, Treasury or the Attorney General can subpoena any foreign bank that keeps a correspondent account in the United States, including for records held outside the country. The law says a conflict with foreign secrecy rules cannot by itself be the reason a court quashes such a subpoena. FinCEN has now shown it will use the power.

US banks have a duty here too. A covered institution with a correspondent account for a foreign bank must keep records of that bank’s owners and a US agent for service. It must hand them to federal law enforcement within 7 days of a written request.

Practitioner angle

• Load the new entries, including the seven Roxette vessels by IMO number and the two UAE-flagged support vessels owned by Whales Shipping Line LLC.
• Search customer, counterparty, and beneficial ownership records for the designated employees by name, not only for the firm. Treasury says they sit as directors and officers of companies the firm registers.
• Review shipping and trading clients whose corporate agent is a Panama or Greece law firm, and ask for the people behind any director who holds many similar appointments.
• If you hold a correspondent account for a foreign bank, confirm you can produce its ownership records and US service agent within 7 days.
• If you are a foreign bank with a US correspondent account, test how fast you could pull account records held abroad.

Begin with the director-name search. A screening tool that only checks company names will miss the people Treasury has just designated.