KUALA LUMPUR: The United States believes that waters off Malaysia and in the region are being used as a point for Iranian oil to be sold to buyers to escape the US sanctions on Iran.
Brian Nelson, who is the US Treasury Under Secretary for Terrorism and Financial Intelligence, said the US had been monitoring ship-to-ship oil transfers in Malaysian waters.
He said his visit to the Southeast Asian region from May 6 to 9 had revolved around two key priority issues, namely disrupting Russia's ability to sustain its war in Ukraine as well as countering terrorist financing by Iran and its proxies.
"We know that one of the main ways that the Iranian regime raises its money to perpetuate violence and instability is through illicit oil sales to buyers in East Asia.
"Many of these are loaded onto questionably seaworthy vessels that pose major environmental and safety risks.
"We are extremely concerned about anyone providing services to these ships, especially those conducting ship-to-ship transfers of illicit oil.
"These risky manoeuvres can lead to disastrous accidents or oil spills threatening Malaysia's coast, even if they occur in international waters," he said in an interview with selected Malaysian media here today.
Nelson said based on their observations, such incidences usually occur during nighttime. Evidence of this, he said, is seen by vessels turning off their location devices or falsify documents to mask the commodities' origins.
"We're doing everything we can to alert both to the threat, but also to the sort of critical mitigating steps that each industry actor can and should take in order to prevent those type of practices from continuing," he said.
He said it is important that Malaysia, which plays an important role in global trade and finance, does not become a jurisdiction where "bad actors" hide and move their funds.
"Malaysia is an important partner for the US, and hundreds of our firms have a presence here employing hundreds of thousands of Malaysians in good, high paying jobs.
"American companies, no matter where they operate, want to know that when they are doing business, they are not putting their operations at risk of violating us law by engaging in a financial system that is tainted by illicit finance," he said.
Nelson said he had 'open and frank' discussions with Malaysian government officials to make clear its concerns and identify ways forward.
He said working with partners is the most effective way to address such challenges over money-laundering or financing of terrorism.
"But at the end of the day, we also are always prepared to use our tools and authorities that the Treasury has to address those challenges as well," he said.
Nelson acknowledged that the US and Malaysian government feel differently about Hamas as an organisation.
However, he noted that no one wants their financial systems abused.
Hamas, he said, does not raise funds overtly, and uses "typical money laundering typologies" to raise money.
He said from the US perspective, there is a difference between Hamas and the Palestinian people.
"We are focused on doing everything we can to support humanitarian assistance going to the Palestinian people. One way we can do that is to work with jurisdictions that we know Hamas and other groups have historically sought to utilise to raise funds. For a lot of reasons, we think it's key to ending this conflict.
"But the more fundamental reason is making sure that those resources are actually making it to the Palestinian people and not in service of this conflict.
"We urge those who wish to support humanitarian assistance in Gaza to do so through established, reputable charity sources to ensure that it is not diverted," he said.
Nelson also said that sanctions imposed in Dec on four Malaysia-based companies, which were accused of aiding Iran's drones production, were impactful and are still in place.
"But I think the more impactful thing at the end of the day is the partnership with jurisdictions and the capacity to make anti-money laundering and countering the financing of terrorism 'regimes' more resilient."