Over the past few months South China Morning Post has been writing extensively on the international efforts to financially isolate the Islamic Republic of Iran Shipping Lines (IRISL) from the international financial system. I have also written a number of times about the United States Department of the Treasury Office of Foreign Assets Control’s (OFAC) targeting of IRISL front companies and vessels through the use of Specially Designated National (SDN) designations. The dreaded SDN designation serves to prohibit U.S. persons from engaging in transactions with the designated party and freezes all assets of the designated party under U.S. jurisdiction.

An article from the South China Morning Post published last Friday raised a couple of interesting issues. First, they mention that four recently designated companies’ affiliated with IRISL have their corporate secretary listed as Sovereign Corporate Services Limited, a company half-owned by David John Beaves, of the Hong Kong office of UK-based law firm Ince & Co.

What was more interesting, however, was South China Morning Post’s reporting that despite U.S. efforts to constrain IRISL’s activities, blocked vessels previously owned by the shipping line have changed ownership to a variety of companies that all share the same address with one another and with the Hong Kong offices of the UK-based law firm Holman, Fenwick and Willan (HFW).

Moreover, the corporate secretary of the companies is HFW Secretarial Limited, whose directors are Chi Man-fung, Paul John Hatzer, Richard John Wilmot and Pui Choi-yeung, all partners at the law firm. HFW’s commercial director James Huckle said that IRISL in 2008 requested that Holman Fenwick and Willan set up companies for the purposes of registering the 20 ships in Hong Kong.

In all fairness, when the EU passed unilateral sanctions in July of that year, the law firm instructed IRISL that it was no longer willing to provide company secretarial services for them and asked the shipping line to move registration as soon as possible, however, that has yet to occur.

This article basically shines a spotlight on the fact that HFW have been assisting the IRISL in evading the consequences of the U.S. SDN Designations. Given the attorneys provision of secretarial services to companies owned or controlled by parties designated as SDNs it is a wonder that OFAC has not taken action to designate those HFW attorneys involved with providing such services to IRISL.

Certainly this wouldn’t be the first time that OFAC has targeted individual attorneys for providing legal services to SDNs. I have worked on a couple of OFAC SDN removal cases involving attorneys who merely incorporated companies which were later found to be serving as front companies for designated narcotics traffickers in Central America. In those cases, the attorneys assisted in incorporating the businesses before any of the parties with whom they dealt were designated as SDNs. It seems the case with HFW is more egregious since IRISL was designated prior to the rendering of some of the legal services.

Nonetheless, I doubt OFAC will designate these attorneys now that they have publically taken steps to terminate their relationship with IRISL. However, it should be a warning to attorneys out there engaged in representing parties with significant exposure to potential SDN designation; they can be designated alongside their client for providing material assistance to the client’s activities.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.