US Treasury Sanctions Law Firm Karnakis and Karnakis Under Operation Economic Outcast Targeting Iran Shadow Fleet

The U.S. Treasury Department sanctioned Panama- and Greece-based law firm Karnakis and Karnakis on October 21 under a broader enforcement push called Operation Economic Outcast, accusing the firm of supporting illicit Iranian shipping activity for years and indirectly helping Tehran fund its military, weapons, and nuclear programs. Three shipping companies were also designated as part of the same action. Treasury Secretary Scott Bessent framed the move as a warning to all of Iran's commercial facilitators, saying the U.S. knows who they are and what they are doing.

The Office of Foreign Assets Control issued two wind-down general licenses, giving Karnakis and Karnakis clients one month to exit relationships with the firm before facing exposure to secondary liability. The Financial Crimes Enforcement Network simultaneously issued subpoenas and multiple requests for information to several European banks over potential ties to sanctioned Iranian financial institutions, broadening the sweep of the action beyond the shipping sector.

Operation Economic Outcast is specifically aimed at the law firms, corporate service providers, and shipping agents that establish shell and front companies used to trade in sanctioned Iranian commodities, cutting at the infrastructure that makes Iran's shadow fleet viable rather than targeting individual vessels alone.