Malaysia rejects US over oil sales to Iran and says it only recognizes UN sanctions

KUALA LUMPUR – Malaysia will recognize sanctions imposed by the United Nations only and not by individual countries, Interior Minister Saifuddin Nasution Ismail said on May 9, following claims by a senior US official that Iran has relied on Malaysian service providers to sell oil sanctioned by the United States. in the region.

“I emphasized that we will only recognize sanctions if they are imposed by the United Nations Security Council.

“The US delegation respected our stance,” Datuk Seri Saifuddin told reporters after a meeting with the US Treasury Department’s top sanctions official Brian Nelson, who was visiting Kuala Lumpur.

Washington has imposed sanctions on Iran and its proxies, including the sale of Iranian oil, aimed at stifling money flows that it claimed were being used to fuel instability in the Middle East.

Nelson, speaking to local media after the meeting, said of Washington’s claims against Malaysian service providers: “I would just say that we have seen and we have enacted some kind of guidance for the (Malaysian) maritime sector on the type of services they are performing.

“These are ship-to-ship transfers, especially at night, that we see from time to time.

“They are actually designed to hide the origin of the commodity, in this case, Iranian oil,” he told Malaysiakini.

Nelson had said Iran’s ability to move its oil depended on parties such as port managers and tugboat operators.

“Typical markers we see are when they turn off their tracking device and when they try to hide the name of the vessel, or falsify or falsify critical documents about the products that were issued,” he added.

A recent Reuters report quoted an unnamed senior US Treasury official as saying there has been an increase in the movement of money to Iran and its proxies, including Hamas, through Malaysia’s financial system.

In the meeting with Nelson, Saifuddin said he underlined Malaysia’s commitment to combating the financing of terrorism, with a clear strategic plan to address illicit financing activities and money laundering.

The minister also acknowledged concerns raised by US officials about possible money laundering activities involving certain individuals and organizations in Malaysia with alleged links to Iran and its proxies such as Hamas, and said these needed verification.

Malaysian government spokesman Fahmi Fadzil, speaking to reporters on May 8, said the country would comply with UN sanctions, but not necessarily those imposed by individual countries.

“We want to affirm that Malaysia, as a sovereign nation, we comply with the UN sanctions,” Fahmi told reporters.

“But when it comes to unilaterally applied sanctions, I think we have to evaluate this situation.”

Commenting on the issue, economics professor Geoffrey Williams of the University of Science and Technology Malaysia said: “Malaysian companies can do business with anyone unless there are UN sanctions regulations preventing it, but the US cannot. may prevent Malaysian companies from doing business with others.

“However, if Malaysian companies engage in activities that the United States does not like, then Americans may stop doing business with them,” he said.

Malaysian Prime Minister Anwar Ibrahim has openly expressed his support for Hamas amid the ongoing war in Gaza, even at the risk of US sanctions against those who support the group that Washington has deemed a terrorist organization.

Meanwhile, Nelson, who visited Singapore earlier, said sanctions imposed in 2023 against four Malaysian companies accused of aiding Iran’s drone production have had an impact, while highlighting the issue of the illicit sale of Iranian oil in the region.

“Malaysia clearly does not want its financial institutions and shipping industry to be abused by rogue nations and external actors. We don’t want that because of Malaysia’s central importance, as a trading nation and as a financial center, and given the significant U.S. business presence here,” said Nelson, undersecretary for terrorism and financial intelligence at the U.S. Treasury Department. he told reporters on May 9.

Halmie Azrie Abdul Halim, senior analyst at political risk consultancy Vriens and Partners, said the US delegation’s trip to Malaysia is an “intimidation tactic” due to Datuk Seri Anwar’s pro-Palestine stance.

Still, “the United States would also not want to lose the support of Malaysia, which is one of its key ASEAN partners, as the country will assume the role of ASEAN chair next year,” he said.

Malaysia is among the United States’ top 20 trading partners, and bilateral trade between the two nations will reach US$78.3 billion (S$106 billion) in 2022.