US warning on Hormuz ‘toll’ raises risk of sanctions

• Payments to Iran are unauthorised
• Ships paying up to $2m for passage
• Operators could face penalties

A new US warning on Strait of Hormuz “toll” payments to Iran raises sanctions risks for foreign firms, a legal expert has warned.

The update from the US Office of Foreign Assets Control (Ofac) on April 28 makes clear that payments to the Iranian government for safe passage through the contested waterway are not authorised under fresh rules.

While the restriction applies directly to US persons and entities, the guidance highlights “significant sanctions exposure” for non-US firms engaging in such transactions, including banks and shipping firms.

Ofac, a department of the US Treasury, enforces sanctions on a strict liability basis through civil and criminal monetary penalties that vary based on the number of violations, transaction values and the egregiousness of the conduct. 

Secondary sanctions authorise Ofac to block non-US parties that transact with targeted parties in industries such as the financial, petroleum and petrochemicals sectors.

James Mullion, a UK-based sanctions expert at Janes Solicitors, said the US may now interpret payments-for-passage through the chokepoint as a potential sanctions breach.

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This could apply, he said, on transactions outside its jurisdiction. “US secondary sanctions have global reach. Even when activity occurs outside US territory, Washington can still impose measures and effectively cut companies off from the US financial system,” Mullion said.

Since mid-March dozens of vessels have been rerouting north of the strait through a so-called “Tehran toll booth” close to Larak Island. The maritime intelligence firm Lloyd’s List reported that some ships have paid the Islamic Revolutionary Guard Corps up to $2 million for safe passage, using yuan and cryptocurrency.

Gulf producers have made clear a toll-charge arrangement in the strait would be unacceptable.

Anwar Gargash, a UAE presidential adviser, said on Friday in a post on media platform X that no unilateral Iranian arrangements can be trusted or relied upon regarding freedom of navigation through the chokepoint.

Mullion said the practical impact was that operators will choose to comply with US sanctions regardless of where they are based.

“This is not because they have to under local law, but because they want continued access to the US dollar system,” he said. “That is the real leverage.”

But he accepted that the wide-ranging warning raised questions over how far US reach could extend. “Enforceability is a question,” Mullion said. “Monitoring and policing every vessel and transaction is a significant challenge, even for US authorities.”

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Nevertheless, he cautioned that companies should not assume the risks are theoretical.

“Sanctions are ultimately an instrument of foreign policy. They are political tools with legal consequences,” he said.

Asked whether this specific move signalled a shift in US policy, he replied: “Ofac publishes only a limited commentary on their actions.

“But if secondary sanctions are enforced more aggressively, companies will have to make a straightforward calculation. If you want access to the US financial system, you comply. If not, you take the risk.”