Fragmented World: Iran’s Exploitation of Geopolitical and Technological Gaps for Illicit Activity

The global order is being reshaped by two converging forces: deepening geopolitical fragmentation and relentless technological acceleration. In the ACAMS Global AFC Threats Report 2026, we highlight this as one of the most consequential drivers of risk for anti-financial crime (AFC) professionals worldwide.

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This trend is especially evident in Iran, where leveraging a fragmented international environment and using cryptocurrencies has enabled the country to circumvent sanctions and provide support to proxy entities and designated groups—actions that helped lead to the current conflict. This article explores how Iran uses geopolitical divisions and technology to facilitate illicit activities via proxies and financial intermediaries.

Iran’s Proxy Network: Funding, Operations and Evasion Strategies

The Iranian regime extends its influence in the Middle East and beyond by supporting armed proxy groups such as Hizballah, the Houthis, Hamas, and other allied militias. Recently, these proxies have been linked to the October 7, 2023 attack on Israel, Red Sea shipping attacks affecting global trade, and numerous drone strikes on U.S. forces. 

Iran uses the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF), a parallel organization to Iran’s regular military, as its main channel to back these groups, providing funding, training, weapons, and equipment. Iran's primary revenue for the IRGC-QF and its proxies comes from oil exports, with China being the largest importer of Iranian oil.

Due to economic sanctions imposed on Iran by several jurisdictions, Iran is unable to sell oil openly on global markets. As a result, it must hide its participation in both sales and related financial transactions. To achieve this, the regime relies on a "shadow fleet"—typically comprised of old and often poorly maintained vessels—to transport oil worldwide. Additionally, it uses a complex, multijurisdictional "shadow banking" network made up of financial intermediaries such as exchange houses, trading companies, and front companies to sell oil and fund its proxies.

Global Fragmentation: How Iran Exploits Gaps in Sanctions and Oversight

The current multipolar and fragmented geopolitical environment has played a pivotal role in facilitating Iran’s ability to evade sanctions and provide support to its proxies. While the United States, European Union, United Kingdom, and others have imposed sanctions, there is no global consensus. For example, China maintains trade relations with Iran and is its largest oil buyer. Moreover, many other jurisdictions either offer direct support to the Iranian regime or overlook financial transactions that contribute to its activities.

This lack of consensus and consistent regulatory standards within the international community affects more than just the enforcement of sanctions. Iran frequently establishes front companies in jurisdictions where such entities can be formed with relative ease and are subject to minimal oversight. These entities often open bank and cryptocurrency accounts at financial institutions operating in countries with weak anti-money laundering (AML) laws and insufficient regulatory enforcement. Transactions are routed through multiple nations, exploiting delays and limitations in cross-border information sharing among law enforcement agencies and private-sector entities responsible for tracking illicit financial flows.

The Sa-id al Jamal network, which has faced numerous rounds of economic sanctions, is a clear example of how these operations work in practice. Sa-id al Jamal is an Iranian-based Houthi financier that generates tens of millions of dollars in revenue from the sale of Iranian oil and petroleum. His process involved collaborating with a company in Liberia that owned a Panamanian-flagged vessel used to transport oil from Iran to China. To hide the origins of the oil, he employed an India-based firm to forge shipping documents, making it difficult to trace the commodities’ source. A shipping specialist based in the UAE, who is an Indian national, managed the shipping logistics. Subsequently, al Jamal used a Yemeni accountant located in Türkiye to oversee payments and finances. This accountant set up multiple shell companies and opened bank accounts in various countries, enabling complex money flows that eventually reached a Turkish-owned trading company in the UAE. From there, the funds moved through another intricate web of front companies and financial institutions before ultimately ending up with the Houthis.

How Iran and Its Proxies Leverage Crypto to Evade Sanctions

Amid global fragmentation, a technological revolution powered by AI, blockchain, and cryptocurrencies is reshaping the payments infrastructure. While these innovations promise greater efficiency and financial inclusion, they also bring new risks—especially when it comes to combating financial crime—which certain groups, including the Iranian regime, have attempted to exploit.

The IRGC-QF is increasingly using cryptocurrencies to support its proxies. This move is driven by the perception of reduced risks compared to cash or banks, faster and cheaper international transactions, weaker regulations and AML controls in some areas, and greater difficulty in tracing illicit activities.

While figures differ among blockchain analytics companies, it is estimated that Iran’s crypto ecosystem was between $8 billion and $11 billion in 2025. According to blockchain analytics firm Chainalysis, as much as 50% of the Iranian crypto ecosystem could be linked to the IRGC. The following are some examples from recent years:

• In April 2023, Israel seized 189 cryptocurrency wallet addresses linked to Gaza and Türkiye exchanges that transferred tens of millions of dollars from IRGC-QF to Hamas, according to the U.S. Treasury Department.
• FinCEN reports that from January 2020 to October 2023, U.S. financial institutions filed about $165 million in suspicious activity linked to Hamas and cryptocurrency, covering over 200 wallet addresses, though the dollar amount may be overstated as it could include a mix of fiat and crypto transactions.
• In March 2024, a Syrian money exchanger in Lebanon was sanctioned for supplying Hizballah with digital wallets linked to IRGC-QF commodity sales and facilitating cryptocurrency transfers for Hizballah officials and other sanctioned entities.
• According to the U.S. Treasury Department, between 2023 and 2025, two Iranian citizens facilitated the purchase of more than $100 million in cryptocurrency to conduct oil sales on behalf of the Iranian government.
• In January 2026, the U.S. Treasury Department imposed sanctions on two cryptocurrency exchanges registered in the United Kingdom for processing significant volumes of funds linked to IRGC-affiliated entities. This action marked the first instance of the Treasury designating a cryptocurrency exchange for its involvement in Iran's financial sector. According to blockchain analytics firm TRM Labs, one of these exchanges facilitated transactions exceeding $1 billion for parties under IRGC control, predominantly utilizing the stablecoin USDT on the Tron blockchain.

Beyond Iran: Adapting to the Broader Threat Landscape

Technological advancements and shifts in global politics have reshaped illicit finance, creating new risks and challenges for governments and financial institutions worldwide. These developments extend far beyond Iran, affecting a wide spectrum of threats—from scam compounds in Southeast Asia and sophisticated money laundering networks to international drug cartels and more. To keep pace, intelligence, agility and collaboration are no longer optional — they define success.

Explore more member-exclusive resources on this topic 

• Read the latest report for deeper insights on the Changing World Order: Geopolitical Fragmentation and Technological Transformation threat and more.
• Watch a Masterclass webinar on Predictions for Global Sanctions in 2026.
• Read a briefing on Fraud Planning Assumptions 2026-2030.
• Enhance your understanding of ownership and control with the AntiFinancial Crime Toolkit on Ownership and Control.
• Watch the ACAMS Connect session on how Venezuelan criminals laundered more than US$1 billion in illicit funds using cryptocurrency.