Chinese Firm Takes U.S. Banks to Court Over Pre-Sanction Payment Freeze
Banks to Court Over Pre-Sanction Payment Freeze Chinese fuel trader HY Energy is suing U.S.
banking giants JP Morgan and Citigroup for blocked payments to a Chinese oil firm a year before the latter was sanctioned by the U.S.
Treasury for dealing with Iranian oil, Bloombergreports.
HY Energy, a regional fuel trader in eastern China, alleges in two separate lawsuits filed in Shanghai and Beijing that JP Morgan and Citi failed to process and complete transfers for a total of $40 million to China Oil and Petroleum Company Limited (COPC) back in 2023.
This was months before COPC wasdesignatedin by the U.S.
Department of the Treasury’s Office of Foreign Assets Control (OFAC) for being a front company for Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF).
China Oil and Petroleum Company was designated “for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the IRGC-QF,” the Treasury said in February 2024.
OFAC designated the Hong Kong-based front company for being “involved in the sale of hundreds of millions of dollars’ worth of Iranian commodities for the benefit of the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF).” In its lawsuits against JP Morgan and Citi, the Chinese fuel trader HY Energy alleges that the timing of the unprocessed payments precedes the sanctions against China Oil and Petroleum Company by months and thus lacks any basis.
banks informed HY Energy in May 2024 – that’s after the sanctions were placed – that the payments have been released to the OFAC.
The Chinese plaintiff alleges the banks should be held liable for the financial losses they have incurred to the Chinese firms.
Amid the ongoing Middle East crisis, the U.S.
has justescalated the sanctionson Chinese companies for buying Iranian oil by placing Hengli Petrochemical, one of China’s largest independent refiners, under sanctions.
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