JPMorgan Chase & Co Under Investigation for Business Dealings with Hedge Fund Linked to Iranian Oil Trader
The US Treasury Department is currently investigating JPMorgan Chase & Co. for its business dealings with Ocean Leonid Investments Ltd., a hedge fund linked to Iranian oil trader Hossein Shamkhani. The inquiry is focused on whether the New York-based bank adhered to regulations in its relationship with the client, which has been suspended by Dubai’s financial free zone.
The investigation, prompted by a report on October 24 identifying Ocean Leonid as a hedge fund overseen by Shamkhani, alleges that JPMorgan, ABN Amro Bank NV, and Marex Group Plc provided leverage to the fund. Both JPMorgan and the US Treasury have declined to comment on the probe, as have Ocean Leonid and Shamkhani.
Sources indicate that JPMorgan is not required to sever ties with Ocean Leonid at this time, as neither the company nor Shamkhani are on any sanctions lists. The Treasury’s focus is on Shamkhani’s actions and potential compliance lapses at the bank. US regulations mandate thorough client screenings by banks to prevent money laundering and terrorist financing.
It is important to note that Shamkhani’s father, Ali Shamkhani, was sanctioned in January 2020 for his role in Iran’s defense policies. The Federal Reserve is also assessing Western financial institutions’ exposure to Shamkhani’s network.
In conclusion, the investigation into JPMorgan’s dealings with Ocean Leonid Investments Ltd. raises concerns about compliance with regulations and potential risks associated with doing business with entities linked to sanctioned individuals. Investors and financial institutions should be vigilant and ensure they are conducting thorough due diligence to mitigate any potential legal and reputational risks.