JPMorgan Chase & Co. is under investigation by the U.S. Treasury Department for its relationship with Ocean Leonid Investments Ltd., a hedge fund reportedly linked to Iranian oil trader Hossein Shamkhani, according to Bloomberg News. The inquiry, still in its early stages, seeks to determine whether JPMorgan adhered to all regulatory requirements when onboarding Ocean Leonid as a client. The hedge fund, which has offices in London, Dubai, and Geneva, was recently suspended by Dubai's financial regulatory authority amid growing concerns about its operations.
The Treasury Department's investigation is focused primarily on Shamkhani's activities but also examines potential compliance lapses at JPMorgan. Federal Reserve officials are similarly probing Western financial institutions' exposure to Shamkhani's network. Neither Shamkhani nor Ocean Leonid currently appears on U.S. sanctions lists, which means JPMorgan is not legally required to sever ties with the hedge fund.
Bloomberg previously reported on Ocean Leonid's suspected role in a network of entities controlled by Shamkhani. In response, a representative for the hedge fund stated that the company "categorically rejects" allegations of Shamkhani's involvement. A lawyer for Shamkhani also denied that he has any connection to Ocean Leonid.
JPMorgan's potential exposure to Shamkhani's network highlights the critical importance of compliance for major financial institutions. U.S. laws require banks to monitor clients vigilantly to detect potential money laundering and terrorist financing and to report suspicious transactions to federal authorities. The Federal Reserve and other regulatory agencies are tasked with ensuring that these systems are properly implemented.
Shamkhani's father, Ali Shamkhani, a close ally of Iranian Supreme Leader Ayatollah Ali Khamenei, has been under U.S. sanctions since 2020. The Treasury Department's Office of Foreign Assets Control cited his "key role" in coordinating Iran's defense and foreign policies. This connection further complicates the ongoing scrutiny of Hossein Shamkhani's activities.
Recent actions by international regulators have added pressure to the situation. The Dubai International Financial Center recently suspended firms reportedly tied to Shamkhani's network amid increasing regulatory scrutiny. These developments underscore the challenges JPMorgan faces in maintaining compliance while managing complex client relationships.
A spokesperson for JPMorgan declined to comment on the investigation, as did representatives from the U.S. Treasury and Ocean Leonid. The Federal Reserve also refrained from issuing a statement.
