U.S. Sanctions Chinese Companies Supplying Parts for Iranian Drones

The U.S. Department of the Treasury slapped sanctions against Chinese companies that allegedly supplied Iran with spare parts for military drones, including the Shahed-136 that has widely been used by the Russian side in the ongoing war.

In an official statement on March 9, the Office of Foreign Assets Control (OFAC) said it was “designating a network of five companies and one individual for supporting Iran's unmanned aerial vehicle (UAV) procurement efforts.”

The list includes Koto Machinery, Raven, Guilin Alpha, S&C Trade, and Caspro.

The network is responsible for the sale and shipment of components that can be used for the production of combat drones. In particular, they are used by the Iranian Aircraft Manufacturing Industrial Company HESA (sanctioned earlier), which produces Shahed-136 kamikaze drones, the department claimed.

“This People’s Republic of China-based network is responsible for the sale and shipment of thousands of aerospace components, including components that can be used for UAV applications, to the Iran Aircraft Manufacturing Industrial Company (HESA). HESA has been involved in the production of the Shahed-136 UAV model that Iran has used to attack oil tankers and has exported to Russia,” the statement said.

Hangzhou Fuyang Koto Machinery Co., Ltd (Koto Machinery), used its business infrastructure to facilitate the sale and shipment of aerospace components, including light aircraft engines applicable for Iran’s Shahed series UAVs, to HESA in Iran. To obscure its activity, Koto Machinery used Hong Kong-based front company, Raven International Trade Limited (Raven), to facilitate transactions worth millions of dollars for aerospace components.

The other companies also sold thousands of aerospace components worth over millions of dollars to HESA.

“Iran is directly implicated in the Ukrainian civilian casualties that result from Russia’s use of Iranian UAVs in Ukraine,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “The United States will continue to target global Iranian procurement networks that supply Russia with deadly UAVs for use in its illegal war in Ukraine.”