International sanctions guidelines released by the United States for vessels worldwide: Five essential details
The United States Government has issued new sanctions guidance for international maritime operators, aiming to disrupt unlawful shipping activities, particularly those involving countries like Iran. The key points in this guidance emphasize targeting regime-linked shipping networks, enhancing transparency, and enforcing compliance.
The guidance focuses on designating individuals, entities, and vessels linked to illicit activities to block their operations and finances. This is exemplified by the largest Iran-related sanctions action since 2018, targeting a corrupt regime-linked shipping empire.
For private sector entities, the guidance advises strengthening sanctions compliance programs. This includes implementing comprehensive due diligence to identify sanctioned parties, enhancing monitoring and reporting mechanisms, maintaining updated knowledge of evolving sanctions regulations, adopting risk-based compliance frameworks, and cooperating with US government agencies.
Entities are encouraged to monitor ships throughout the entire transaction lifecycle. Parties should review the details of the underlying voyage, including the vessel, cargo, origin, destination, and parties to the transaction. Due diligence may include maintaining the names, passport ID numbers, addresses, phone numbers, email addresses, and copies of photo identification of each customer's beneficial owner(s). If necessary, parties should review relevant documents to demonstrate that the underlying goods were delivered to the port listed in the documentation and not diverted in an illicit or sanctions-evading scheme.
Vessel operators are encouraged to supplement the Automatic Identification System (AIS) with Long Range Identification and Tracking (LRIT) and receive periodic LRIT signals. AIS manipulation and disruption may indicate potential illicit or sanctionable activities.
Service providers may choose to terminate contracts where there is evidence of AIS manipulation for illegitimate reasons. Shipowners, managers, and charter companies are encouraged to continuously monitor vessels, including those leased to third parties. If a vessel's activity is determined to be illicit or sanctionable, port authorities are instructed to consider prohibiting that vessel from entering their port.
The guidance is primarily targeted at various entities including ship owners, insurers, financial institutions, and port operators. Entities should require their business counterparts to comply with US and United Nations sanctions, among other requirements. Reasonable, risk-based due diligence must be conducted by exporters and entities across the maritime supply chain. Parties should consider implementing controls that allow for verification-of-origin and recipient checks for ships that conduct STS transfers, particularly in high-risk areas.
Private sector entities are advised to assess their sanctions risk and implement compliance policies and procedures. For queries regarding the guidance or sanctions compliance, contact David Harris (London) or Stefan Reisinger (Washington, DC). Port authorities are advised to investigate vessels with inconsistent AIS history that may indicate sanctionable activities. Entities should identify consequences of non-compliance, encourage employee monitoring, and conduct third-party audits.
This new guidance reflects a broader US strategy to protect national security and economic interests by enhancing the resilience of maritime supply chains against illicit use by sanctioned parties. The guidance, while not detailed in a single document, can be inferred from recent Treasury and OFAC sanctions activities, public licensing announcements, and related compliance advisories. The U.S. Government issued this new sanctions guidance for international maritime operators on May 14, 2020.
- The guidance instructs financial institutions to take extra precautions while dealing with maritime operators, as it is crucial to avoid any unlawful transactions involving entities associated with sanctioned countries, like Iran, to circumvent the new sanctions.
- In the wake of stricter sanctions against sanctioned countries, entities need to reassess their financial operations, adopting effective technology-based systems for due diligence, monitoring, and reporting to ensure compliance with the guidelines and maintain their lifestyle, uninterrupted by illicit activities.
