meta_id 3107578

On April 28, 2026, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) issued an alert to financial institutions regarding sanctions risks associated with independent "teapot" oil refineries in China, particularly in Shandong Province, due to their continued importation and refining of Iranian crude oil. China purchases approximately 90 percent of Iran's oil exports, with teapot refineries accounting for the majority of these imports. Revenue from this trade benefits the Iranian regime, its weapons programs, and military activities. Some Chinese teapot refineries have utilised the U.S. financial system to conduct dollar-denominated transactions and procure U.S. goods. OFAC identified common evasion tactics employed in this trade, including the use of front companies in Asia and the United Arab Emirates, intermediary brokers, and a "shadow fleet" using deceptive shipping practices such as ship-to-ship transfers, falsified documentation, and vessel identity manipulation. The alert directs financial institutions to implement risk-based controls to avoid facilitating transactions involving designated teapot refineries or other refineries importing Iranian oil; conduct enhanced due diligence on transactions involving China-based refineries, particularly in Shandong Province; and implement clear communication of sanctions compliance expectations to correspondent banks. Since March 2025, OFAC has designated multiple China-based teapot refineries that have collectively processed billions of dollars' worth of Iranian-origin oil. The Treasury indicated it is prepared to deploy secondary sanctions against foreign financial institutions that continue to support Iran's activities. Financial institutions should review the full alert and implement appropriate compliance measures immediately.