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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, 04 June 20
DON'T FORGET THE REAL PURPOSE OF RISK ASSESSMENTS - GARD
KNOWLEDGE TO ELEVATE
When doing a risk assessment, we often overcomplicate it and forget its real purpose.
Rather than ensuring that crew ...
Wednesday, 03 June 20
MARKET INSIGHT - INTERMODAL
Once again shipping is about to venture into uncharted waters and before the challenges of the past decade are forgotten, shipowners will have to o ...
Tuesday, 02 June 20
KOSPO LOOKING FOR 80000 MT OF 4200 NCV COAL FOR JULY
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 Metric Tons (MT) 4200 NCV coal for 12 - 21, July ...
Tuesday, 02 June 20
INDONESIAN COAL MINER BUMI RESOURCES Q1 OUTPUT UP 5% - REUTERS
Indonesia’s largest coal miner Bumi Resources posted a 5% increase in first-quarter output at 20.8 million tonnes, the company said in a stat ...
Tuesday, 02 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.86 PCT - XINHUA
China Taiyuan coal transaction price index stood at 123.95 points Monday, down 0.86 percent week on week.
The index, released by Chi ...
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Showing 931 to 935 news of total 6871 |
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- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Semirara Mining and Power Corporation, Philippines
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- White Energy Company Limited
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Indogreen Group - Indonesia
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Coalindo Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Sojitz Corporation - Japan
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Siam City Cement PLC, Thailand
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Coastal Gujarat Power Limited - India
- London Commodity Brokers - England
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Ministry of Mines - Canada
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- OPG Power Generation Pvt Ltd - India
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
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