Page 56: of Maritime Reporter Magazine (August 2020)

The Final Word: Shipping Sanctions

Shipping Community Beware ...

Sanctions scrutiny is stepping up a gear

By David Loeser, Senior Director, Accuity

Earlier this year, The U.S. Depart- tion, red ? ags and tools to counter cur- involved in the compliance and due ment of State, the U.S. Department of rent and emerging trends in sanctions diligence process, widening the net in the Treasury’s Of? ce of Foreign Assets evasion related to shipping and associ- this way has created an environment

Control (OFAC), and the U.S. Coast ated services. in which organizations such as port

Guard issued a new advisory to pro- Previous advisories have varied authorities, logistics companies, and vide those engaged or involved in trade widely in focus. The 2018 advisories freight forwarders are subject to a much in the maritime industry with further focused primarily on the North Korea higher standard of due diligence than information and tools to counter illicit and Syrian trade and sanctions compli- they are used to. shipping and sanctions evasion. ance, targeting prevalent tactics in the These issues are complex, even for ? -

The advisory is representative of the region, such as falsifying information, nancial institutions that are used to this

U.S. Government’s increasingly de- physically altering ship registrations, level of compliance. Trade ? nance is tailed efforts towards addressing these ship to ship transfers and disabling AIS one of the areas that requires a robust issues, as illustrated by OFAC’s recent transponders; all of which still apply as due diligence and screening process, in sanctions actions which show a trend key issues. order to detect potential sanctions risks. of incremental but clear extension of This year’s advisory was however However, trade compliance screening oversight. For example, new sanctions both broader and more detailed, looking comes with a number of complexities, imposed in June this year against the Is- at comprehensive supply chain due dili- including: lamic Republic of Iran Shipping Lines gence and Know Your Customer (KYC) and its Shanghai-based subsidiary E- counterparties (things ? nancial institu- • Trade ? nance transactions often in-

Sail Shipping went into effect, impact- tions have been doing for 20 years), but volve a large number of counterparties ing previously exempt humanitarian also offering guidance to the full gamut that all need to undergo KYC checks; activities. of those involved with the shipping in- • Much of the data and documenta-

The challenge however is that with dustry including insurers, ? ag registry tion used in trade ? nance is still paper- the sanctions, fraud and money laun- and port control. based or in an unstructured format, dering landscape becoming more com- Importantly, what the most recent ad- making it dif? cult to digitalize the pro- plex, more organizations are being held visory has done, other than upping the cess; to account for trying to stop them from ante signi? cantly for all parties in the • There are numerous international happening, which includes businesses supply chain when it comes to monitor- reference lists to manage to ensure the that may not have previously maintain ing sanctions compliance, is signal a screening process is as accurate and up ed rigorous due diligence and compli- shift in position for OFAC. What seems to date as possible.

ance programs. apparent is that OFAC’s focus is now to This is just one side of the coin. When

What then does this new advisory tell collaborate with industry participants you look at the rapidly moving sanctions us, and how does the full shipping sup- by providing them with more prescrip- landscape, operating to this standard of ply chain need to respond? tive guidance to combat illicit activ- compliance is going to very quickly be- ity. This shift towards a private-public come overwhelming for many.

What’s new in the 2020 advisory? partnership is a long way from the re- Moreover, OFAC doesn’t have all the

Over the past few years OFAC has lationship of 10-15 years ago, in which answers as keeping track of changes released ? ve advisories regarding the OFAC seemed to approach the chal- (even between advisories) manually can maritime industry, each one further lenge with adversarial oversight rather be challenging. For instance, the vessel de? ning and alerting the industry to than collaboration. named “SAM MA 2” that was listed the varied deceptive shipping practices on the 2018 OFAC advisory has since used to evade sanctions. The intention? Meeting the challenge changed its name to “MYONG SIN”

To provide those that utilize the mari- While the intention to have all orga- and was listed on the 2019 advisory. time industry for trade with informa- nizations on the shipping supply chain By waiting for new advisory notices 56 Maritime Reporter & Engineering News • August 2020

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