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Friday, 05 June 20
U.S. SANCTIONS COMPLIANCE GUIDANCE RELEASED FOR THE GLOBAL MARITIME, ENERGY AND METALS SECTORS - AKIN GUMP
 Key Points
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On May 14, 2020, OFAC, the Department of State and the U.S. Coast Guard jointly released guidance for persons involved in the maritime industry regarding common deceptive shipping practices used to subvert U.S. and United Nations sanctions programs targeting Iran, North Korea and Syria.
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The guidance highlights certain deceptive practices employed in maritime activity that could signal sanctions evasion.
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The guidance also contains specific measures that the maritime industry and energy and metals sectors can take to tailor their sanctions compliance programs to avoid sanctions violations or otherwise supporting illicit shipping activities.
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This Guidance is part of a sustained focus on the international shipping industry, including the U.S. Government’s latest enforcement actions in the shipping sector on June 2, 2020.
The Guidance
On May 14, 2020, the Department of the Treasury’s Office of Foreign Assets Control (OFAC), the Department of State and the U.S. Coast Guard jointly released guidance (the “Guidance”) regarding common deceptive shipping practices in order to aid persons involved in the maritime industry, and energy and metals sectors, in tailoring their due diligence and sanctions compliance policies and procedures. The Guidance is particularly targeted towards ship owners, managers, operators, brokers, ship chandlers, flag registries, port operators, shipping companies, freight forwarders, classification service providers, commodity traders, insurance companies and financial institutions. The shipping industry continues to present particularly challenging issues associated with U.S. sanctions compliance, including the involvement of numerous parties in particular voyages all with different, yet overlapping risks.
The Guidance continues a further and concerted effort by OFAC to focus in particular on the shipping industry and builds on prior advisories that it has issued directed at the shipping industry, including one issued on September 4, 2019, entitled “Sanctions Risks Related to Shipping Petroleum and Petroleum Products from Iran” that also identified specific deceptive shipping practices and risk mitigation measures for the industry. As the U.S. Government’s latest enforcement actions on June 2, 2020 demonstrate, OFAC sanctions enforcement attention is squarely focused on the international shipping industry.
The Guidance also provides important insights for companies operating in the maritime sector regarding the criteria that OFAC applies when evaluating an effective sanctions compliance program for such companies.
Below we summarize key points from the Guidance that are relevant for the shipping sector, including a summary of deceptive practices highlighted in the Guidance, a summary of general practices for effective identification of potential sanctions evasion and summaries of guidance for certain actors in the maritime industry and country-specific guidance.
Deceptive Shipping Practices
The Guidance provides a summary of common tactics utilized to facilitate sanctionable or illicit maritime trade linked to Iran, North Korea and Syria, including:
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Disabling or manipulating the Automatic Identification System (AIS) on vessels to conceal a vessel’s port of call or other information regarding its voyage.
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Physically altering vessel identification to obscure the identities of sanctioned vessels or vessels engaging in sanctionable activities.
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Falsifying cargo and vessel documents, particularly with respect to shipments involving petrochemicals, petroleum, petroleum products, metals (steel, iron) or sand to disguise their origin.
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Ship-to-Ship (STS) Transfers used to conceal origin/destination of products.
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Voyage irregularities to disguise the ultimate destination or origin of cargo, including indirect routing, unscheduled detours or transit or transshipment of cargo through third countries.
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False flags and flag hopping (i.e., repeatedly registering vessels with new flag states).
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Use of complex ownership or management to disguise the ultimate beneficial owner of cargo or commodities in order to avoid sanctions or other enforcement actions.
General Practices for Effective Identification of Sanctions Evasion
The Guidance also highlights, and provides details regarding, the following practices for effective identification of potential sanctions evasion:
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Institutionalizing a sanctions compliance program, including through the implementation of written standardized operational compliance policies, procedures, standards of conduct and safeguards.
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Establishing AIS best practices and contractual requirements that make disabling/manipulating AIS for illegitimate reasons grounds for termination of contracts or investigations.
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Monitoring ships throughout the entire transaction lifecycle, including through supplementing AIS with Long Range Identification and Tracking (LRIT) and receiving periodic LRIT signals on a frequency informed by the entity’s risk assessment.
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Conducting “Know Your Customer” due diligence on customers and counterparties, which could include “maintaining the names, passport ID numbers, address(es), phone number(s), email address(es), and copies of photo identification of each customer’s beneficial owner(s).”
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Exercising supply chain due diligence, including, as appropriate, conducting due diligence to ensure that recipients and counterparties to a transaction are not sending or receiving commodities that may trigger sanctions, such as Iranian petroleum or North Korea-origin coal, and implementing controls that allow for verification-of-origin and recipient checks for ships that conduct STS transfers.
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Incorporating the above “best practices” into contracts.
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Sharing information about sanctions evasion techniques and threats amongst industry groups.
Annex A: Actor-specific Guidance
In Annex A, the Guidance provides bulleted lists of guidance and information for particular actors within the maritime industry, including: maritime insurance companies, flag registry managers, port state control authorities, shipping industry associations, regional and global commodity trading, supplier, and brokering companies, financial institutions, ship owners, operators, and charterers, classification societies, vessel captains and crewing companies.
Below we summarize the guidance with respect to ship owners, operators and charterers, vessel captains and crewing companies.
Ship Owners, Operators, and Charterers:
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Identify vessels that, in the past two years, have a pattern of AIS manipulation not consistent with the International Convention for the Safety of Life at Sea and terminating business relationships with clients that continue to use those vessels.
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Keep and analyze records, including, where possible, photographs, of delivery and recipient vessels and/or recipients located at ports when possible, to enhance end-use verification.
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Protect employees who reveal illegal or sanctionable behavior from retaliation.
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Incorporate data into due diligence practices from organizations that provide commercial shipping data.
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Communicate to counterparts as necessary and appropriate (e.g., ship owners, managers, charterers, operators) an expectation that they have adequate and appropriate compliance policies.
Vessel Captains:
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Ensure deck officers are aware of the International Maritime Organization’s (IMO) AIS regulations, including the requirement to consistently broadcast AIS transmissions.
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Communicate to ship owners and charterers that vessels are monitored for AIS disablement and that any occurrences of AIS disablement will be investigated.
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Understand vessels’ AIS history to determine whether they may have been involved in illicit activities.
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Before engaging in ship-to-ship transfers, verify the other vessel’s name, IMO number and flag, and ensure there is a legitimate business purpose for the transfer.
Crewing Companies:
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Ensure crewmembers are aware of IMO guidance in relation to illicit shipping and the reasons why certain practices are unsafe.
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Communicate to clients that crews are monitored for AIS disablement and that any occurrences of AIS disablement will be investigated.
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Understand vessels’ AIS history to determine whether it may have been involved in illicit activities.
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Ensure that crewmembers who reveal illegal or sanctionable activity are protected from retaliation and providing a confidential mechanism for reporting sanctionable conduct.
Annex B: Country Guidance
In Annex B, the Guidance summarizes relevant provisions of U.S. and U.N. sanctions programs concerning North Korea, Iran and Syria and actions prohibited under said programs relevant to the maritime industry. It also highlights a few points with respect to recent deceptive practices to facilitate illicit shipping to North Korea, Syria, and Iran which are summarized below.
North Korea:
North Korea reportedly exported 3.7 million metric tons of coal between January and August 2019, in violation of U.N. sanctions. Further, while under United Nations Security Council Resolution 2397, North Korea is limited to importing a maximum of 500,000 barrels of petroleum per year, from January to October 2019. North Korea ports received 221 tanker deliveries, which, if fully laden, would result in approximately 3.89 million barrels of imports. According to the Guidance, these illicit exports and imports are primarily effectuated via ship-to-ship transfers in Chinese territorial seas. Image 1 below depicts the most common areas in which such ship-to-ship transfers take place.
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Common Locations of Ship-to-Ship Transfers subverting North Korean Sanctions1 |
North Korea is also reportedly acquiring vessels destined for scrapping and non-ocean-going barges that do not transmit AIS signals to engage in illicit import/export operations.
Syria:
The Guidance notes that “the supply chain and petroleum-related shipments [to Syria] create significant sanctions risk for those in the maritime industry.” As an example, it highlights the September 2019 OFAC action against Maritime Assistance LLC for facilitating the sale and delivery of jet fuel to Russian military forces operating in Syria. It also highlights the OFAC action in the November 2018 scheme in which Iranian and Russian entities engaged in a payment offsetting arrangement in which the sale and shipment of Iranian oil to Syria provided funding to Iran and proxy groups such as Hizballah, the Islamic Resistance Movement (HAMAS) and the Islamic Revolutionary Guard Corps-Quds Force (IRGC-QF).
Iran:
The Guidance did not provide specific guidance with respect to deceptive shipping practices used to subvert Iran-related sanctions—rather, it noted that the IRGC-QF continues to try to evade U.S. sanctions “by obfuscating the origin, destination, and recipient of oil shipments,” stating that “the use of such deceptive tactics is unique neither to Iran nor to Iran’s petroleum industry.”
Companies in the shipping industry or whose businesses intersect the shipping sector should assess their sanctions risk in light of this latest U.S. government guidance and make necessary modifications or enhancements to their compliance programs to mitigate this risk.
Source: Akin Gump, Strauss Hauer & Feld LLP
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Thursday, 11 June 20
JAN-MAY, INDONESIA SHIPPED 175.15 MILLION TONS OF COAL TO ITS OVERSEAS BUYERS
Indonesia's coal production for the first 5 months of this year have reached 228 million tons. January – May 2020, Indonesia shipped US$ ...
Thursday, 11 June 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Wednesday, 10 June 20
OPEC+ CUTS EXTENSION TO ACCELERATE MARKET REBALANCING - FITCH RATINGS
Fitch Ratings-London-08 June 2020: The OPEC+ agreement to extend by one month record oil production cuts should accelerate market rebalancing, Fitc ...
Wednesday, 10 June 20
MARKET INSIGHT - INTERMODAL
In contrast to the economic projections of the past two years for the first half of 2020, the oil & gas industry and those involved in it faced ...
Wednesday, 10 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.19 PCT - XINHUA
China Taiyuan coal transaction price index stood at 123.71 points Monday, down 0.19 percent week on week.
The index, released by Chi ...
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Showing 916 to 920 news of total 6871 |
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- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- Kobexindo Tractors - Indoneisa
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- Minerals Council of Australia
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Semirara Mining Corp, Philippines
- Rio Tinto Coal - Australia
- Coal and Oil Company - UAE
- Economic Council, Georgia
- Trasteel International SA, Italy
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Medco Energi Mining Internasional
- Australian Coal Association
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Siam City Cement - Thailand
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Merrill Lynch Commodities Europe
- Banpu Public Company Limited - Thailand
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Sojitz Corporation - Japan
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Marubeni Corporation - India
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
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