Sanctions Advisory to Maritime Industry Offers Guidance to Address Sanctions Evasion Practices and Outlines Common Deceptive Shipping Practices
The US Department of State, the US Department of the Treasury’s Office of Foreign Assets Control, and the US Coast Guard recently issued a sanctions advisory for the maritime industry, energy and metals sectors, and related communities. The advisory is 35 pages in length and can be found here.
The advisory offers guidance to address illicit shipping and sanctions evasion practices, and is another effort on the part of federal agencies to work with the private sector to prevent sanctions evasion. It also notes that approximately 90% of global trade involves maritime transportation and urges the private sector to continue to address sanctions risks and, as necessary, implement sanction controls to address any gaps in compliance programs.
The advisory focuses on Iran, North Korea, and Syria; discusses sanctions risks; and provides information on what are termed “common deceptive shipping practices.” The advisory outlines general approaches to aid in the refinement of due diligence and sanctions compliance policies, and provides guidance to ship owners, operators, managers and brokers, flag registries, port operators, freight forwarders, classification service providers, commodity traders, insurance companies, and financial institutions.
The advisory lists and summarizes several tactics used to facilitate sanctionable or illicit maritime trade linked to Iran, North Korea, and Syria, including:
Disabling or manipulating the automatic identification system (AIS) on vessels
Physically altering vessel identification
Falsifying cargo and vessel documents
Ship-to-Ship transfers (STS)
False flags and flag hopping
Complex ownership or management
The advisory recommends that “persons conducting any transportation or trade involving the maritime sector continue to be vigilant” against the above-listed tactics and notes that “[m]align actors constantly seek novel ways to exploit global supply chains for their benefit.” Annex A to the advisory highlights recommended components to an effective compliance program, including management commitment, risk assessment, internal controls, testing and auditing, and training.