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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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- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Indonesian Coal Mining Association
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- Karaikal Port Pvt Ltd - India
- Grasim Industreis Ltd - India
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Indian Oil Corporation Limited
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- SMC Global Power, Philippines
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Alfred C Toepfer International GmbH - Germany
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Planning Commission, India
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- Maheswari Brothers Coal Limited - India
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- GMR Energy Limited - India
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
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