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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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Sunday, 07 June 20
A SCRUBBER FITTED 61,000 ULTRAMAX WAS FIXED DELIVERY PHILIPPINES TRIP VIA SOUTH AFRICA REDELIVERY VIETNAM AT $9,500 - BALTIC BRIEFING
Capesize
The small flicker of hope at the beginning of this week has kindled a small fire under the Capesize market. At a paltry $3369 from the ...
Saturday, 06 June 20
KOREA SOUTH-EAST POWER CO INVITED COAL BIDS FOR MIN 5600 NCV COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 270,000 Tons (MT) min. 5600 NCV co ...
Friday, 05 June 20
COAL INDIA ESTIMATES PRODUCTION GROWTH BY OVERBURDEN REMOVAL - FINANCIAL EXPRESS
PSU miner Coal India (CIL) has now limited mining only to Overburden Removal (OBR) with falling demand of coal. The mining behemoth is now keeping ...
Friday, 05 June 20
IN THE FIRST 5 MONTHS OF 2020 AUSTRALIA SHIPPED 6.8 MLN TONNES TO VIETNAM - BANCHERO COSTA
In the first 5 months of 2020, global seaborne coal trade declined by as much as -8% year-on-year, according to vessel tracking data from Ref ...
Thursday, 04 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 ...
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Showing 926 to 930 news of total 6871 |
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- Australian Coal Association
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- Georgia Ports Authority, United States
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- The State Trading Corporation of India Ltd
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indian Energy Exchange, India
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Ministry of Mines - Canada
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- Makarim & Taira - Indonesia
- Siam City Cement - Thailand
- Posco Energy - South Korea
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- Singapore Mercantile Exchange
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
- CNBM International Corporation - China
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- London Commodity Brokers - England
- Planning Commission, India
- Marubeni Corporation - India
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Larsen & Toubro Limited - India
- Latin American Coal - Colombia
- Gujarat Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Madhucon Powers Ltd - India
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