U.S. Treasury Investigates JPMorgan's Client Ties to Iranian Figure - Bloomberg

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U.S. Treasury Investigates JPMorgan's Client Ties to Iranian Figure - Bloomberg

According to Bloomberg News, the U.S. Treasury Department is currently investigating JPMorgan Chase (NYSE:JPM) & Co.'s business relationships with Ocean Leonid Investments Ltd., a hedge fund linked to Iranian oil trader Hossein Shamkhani. The inquiry focuses on whether the New York-based bank complied with regulations in its relationship with the customer, which has been suspended by Dubai's free financial zone.

The investigation, still in its early stages, was initiated following a report on October 24 that identified Ocean Leonid as a hedge fund with offices in London, Dubai, and Geneva, allegedly managed by Shamkhani. It has also been reported that ABN Amro Bank NV and Marex Group Plc provided leverage to Ocean Leonid alongside JPMorgan.

Both JPMorgan and the U.S. Treasury have declined to comment on the ongoing investigation. Similarly, representatives for Shamkhani reached through Ocean Leonid and his attorney have made no statements.

A spokesperson for Ocean Leonid had previously denied allegations of Shamkhani's involvement with the hedge fund, a stance reiterated by Shamkhani's attorney, who stated there was no connection between Shamkhani and the company.

Sources indicate that neither the company nor Shamkhani is listed on any sanctions list, suggesting that JPMorgan is not currently required to sever ties with Ocean Leonid. The Treasury's investigation primarily concerns Shamkhani's actions, but possible compliance shortcomings at the bank are also being examined. The Federal Reserve is similarly assessing whether Western financial institutions are exposed to Shamkhani's network, but has not issued a statement on the matter.

U.S. regulations require banks within jurisdiction to conduct comprehensive customer screenings to prevent money laundering and financing of terrorism, and to report suspicious activities to 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.

A notable point is that Shamkhani's father, Ali Shamkhani, was sanctioned by the U.S. Treasury's Office of Foreign Assets Control in January 2020 due to his significant role in Iran's defense policies and coordination of various national activities. Ali Shamkhani is a senior advisor to Iran's Supreme Leader Ayatollah Ali Khamenei.