U.S. designates Fardis Prison and sanctions Iranian officials and shadow-banking network

Fardis Prison is a detention facility in Karaj, near Tehran. The U.S. State Department calls it a “notorious” prison where women have been subjected to cruel, inhuman, and degrading treatment. The United States designated (sanctioned) the prison under its Iran human‑rights sanctions authority to penalize the institution for these serious abuses and to bar U.S. persons and much of the global financial system from doing business with it.

Ali Larijani is a long‑time Iranian politician and security figure: a former Revolutionary Guards member, ex‑parliament speaker (2008–2020), and senior adviser to Iran’s supreme leader. In August 2025 he was appointed secretary of Iran’s Supreme National Security Council (often called the Supreme Council for National Security, SCNS).

The SCNS/Supreme National Security Council is Iran’s top national‑security body. It is chaired by the president, but its decisions must be approved by the supreme leader. It coordinates policies on defense, intelligence, nuclear issues, and key foreign‑policy matters, and brings together senior military, intelligence, and political officials to set overall security strategy.

In this context, “shadow banking” refers to a clandestine, sanctions‑evading financial network Iran uses instead of normal, transparent banks to move money from oil and petrochemical sales.

According to the U.S. Treasury and State Department, these networks:

• Rely on Iran‑based currency‑exchange houses linked to brokers.
• Use dozens of front companies abroad (especially in the United Arab Emirates and Hong Kong) that hold bank accounts and appear to be ordinary trading firms.
• Receive payments from foreign buyers of Iranian oil or petrochemicals into those foreign accounts, then quietly route the funds back to Iranian state bodies, the military, or other sanctioned entities.
• Often fabricate invoices and shipping documents to disguise the true Iranian origin of the goods and the real beneficiaries.

Because Iran’s formal banks are heavily sanctioned, this “parallel” system allows the regime to keep earning and spending hard currency while avoiding direct use of its own blacklisted banks.

When the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctions an individual or entity:

• Their “property and interests in property” that are in the United States or held by U.S. persons anywhere are “blocked” (frozen) and must be reported to OFAC.
• U.S. persons (citizens, residents, U.S. companies, and their foreign branches) are generally prohibited from engaging in almost any transaction or service with them, unless specifically authorized.
• The designees are typically placed on the Specially Designated Nationals (SDN) List, which most global banks and companies screen against; this often cuts them off from much of the worldwide financial system.
• For Iran programs, foreign (non‑U.S.) banks and companies that knowingly conduct significant transactions for these designees risk “secondary sanctions,” such as losing access to U.S. correspondent banking or themselves being added to U.S. sanctions lists.
• Civil and criminal penalties can apply for violations; OFAC can impose civil penalties on a strict‑liability basis (no need to prove intent) and the Justice Department can bring criminal cases in egregious cases.

• Executive Order (E.O.) 13553 (2010): Authorizes blocking (freezing) the assets of Iranian officials and entities responsible for, or complicit in, “serious human rights abuses” by the Government of Iran, and prohibits most dealings with them.

• Executive Order 13876 (2019): Targets Iran’s supreme leader, his office, and associated individuals and entities, plus others who provide material support to them. It blocks their property under U.S. jurisdiction and bars most transactions with them.

• Executive Order 13902 (2020): Allows sanctions on persons operating in key sectors of Iran’s economy, initially including construction, mining, manufacturing, and textiles, and—via later determinations—its financial, petroleum, and petrochemical sectors. It is used to block entities that help Iran generate revenue from these sectors.

• Countering America’s Adversaries Through Sanctions Act (CAATSA) (2017 law): A federal statute that codifies and expands sanctions on Iran, Russia, and North Korea. For Iran, it mandates or authorizes sanctions on those involved in its ballistic‑missile program, support for terrorism, arms transfers, and human‑rights abuses, and provides for secondary sanctions on foreign parties that support designated Iranian sectors or actors.

National Security Presidential Memorandum‑2 (NSPM‑2), issued on February 4, 2025, directs U.S. agencies to run a renewed “maximum pressure” campaign against Iran. It orders tighter enforcement of existing sanctions and new measures to:

• Deny Iran “all paths” to a nuclear weapon and long‑range missiles.
• Sever or severely restrict Iran’s access to oil revenue and the international financial system.
• Counter Iran’s regional military and proxy activities.

State and Treasury explain that targeting Iran’s shadow‑banking networks, oil‑revenue channels, security officials, and abusive institutions like Fardis Prison are specific steps to carry out this directive—by disrupting how the regime earns, hides, and spends hard currency and by penalizing human‑rights abuses. The January 15, 2026 actions are explicitly described by State as “further implement[ing] National Security Presidential Memorandum‑2 of 2025.”

Officially, U.S. sanctions include exemptions and general licenses meant to allow humanitarian trade (food, medicine, and many medical devices) and personal remittances. In practice, broad financial and oil‑sector sanctions can still significantly affect ordinary Iranians through:

• Banking barriers: Foreign and Iranian banks often avoid any Iran‑linked transactions to reduce compliance risk, making it hard for families abroad to send remittances and for importers to pay for allowed goods.
• Higher prices and shortages: Restrictions on oil income, access to hard currency, and trade financing contribute to inflation and can make imported goods—including some specialized medicines and medical equipment—more expensive or intermittently unavailable.
• Health impacts: Human‑rights organizations and medical studies have documented cases where sanctions‑related financial and supply‑chain problems hindered access to treatments for conditions like cancer, thalassemia, and rare diseases, even though such items are formally exempt.

These effects stem from both U.S. measures (especially financial sanctions) and the Iranian government’s own economic mismanagement and corruption.

To deny Iran’s regime access to global banking, the United States uses a mix of legal tools and enforcement mechanisms:

• Listing Iranian institutions, officials, and front companies on sanctions lists (especially the SDN List) under authorities like E.O. 13599, 13553, 13876, and 13902, and publishing advisories that help banks detect Iranian oil‑ and shadow‑banking schemes.
• Pressuring foreign banks via “secondary sanctions” and the Iranian Financial Sanctions Regulations: foreign financial institutions that knowingly conduct significant transactions for designated Iranian parties can be cut off from U.S. correspondent or payable‑through accounts—effectively losing access to the U.S. dollar system.
• Monitoring cross‑border payments and shipping through OFAC, FinCEN advisories, and cooperation with foreign regulators and the SWIFT messaging system to identify suspicious Iran‑related flows.

Penalties for third‑party banks or companies that violate these sanctions can include:

• Placement on the SDN List or other sanctions lists.
• Restrictions or prohibitions on access to U.S. correspondent banking.
• Significant civil fines by OFAC and, in serious cases, criminal prosecution by the U.S. Department of Justice.

Treasury’s recent Iran shadow‑banking designations and updated advisories explicitly warn that both U.S. and foreign persons face civil or criminal penalties for sanctions violations.