We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Friday, 05 June 20
U.S. SANCTIONS COMPLIANCE GUIDANCE RELEASED FOR THE GLOBAL MARITIME, ENERGY AND METALS SECTORS - AKIN GUMP
 Key Points
-
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.
-
The guidance highlights certain deceptive practices employed in maritime activity that could signal sanctions evasion.
-
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.
-
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:
-
Disabling or manipulating the Automatic Identification System (AIS) on vessels to conceal a vessel’s port of call or other information regarding its voyage.
-
Physically altering vessel identification to obscure the identities of sanctioned vessels or vessels engaging in sanctionable activities.
-
Falsifying cargo and vessel documents, particularly with respect to shipments involving petrochemicals, petroleum, petroleum products, metals (steel, iron) or sand to disguise their origin.
-
Ship-to-Ship (STS) Transfers used to conceal origin/destination of products.
-
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.
-
False flags and flag hopping (i.e., repeatedly registering vessels with new flag states).
-
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:
-
Institutionalizing a sanctions compliance program, including through the implementation of written standardized operational compliance policies, procedures, standards of conduct and safeguards.
-
Establishing AIS best practices and contractual requirements that make disabling/manipulating AIS for illegitimate reasons grounds for termination of contracts or investigations.
-
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.
-
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).”
-
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.
-
Incorporating the above “best practices” into contracts.
-
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:
-
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.
-
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.
-
Protect employees who reveal illegal or sanctionable behavior from retaliation.
-
Incorporate data into due diligence practices from organizations that provide commercial shipping data.
-
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:
-
Ensure deck officers are aware of the International Maritime Organization’s (IMO) AIS regulations, including the requirement to consistently broadcast AIS transmissions.
-
Communicate to ship owners and charterers that vessels are monitored for AIS disablement and that any occurrences of AIS disablement will be investigated.
-
Understand vessels’ AIS history to determine whether they may have been involved in illicit activities.
-
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:
-
Ensure crewmembers are aware of IMO guidance in relation to illicit shipping and the reasons why certain practices are unsafe.
-
Communicate to clients that crews are monitored for AIS disablement and that any occurrences of AIS disablement will be investigated.
-
Understand vessels’ AIS history to determine whether it may have been involved in illicit activities.
-
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.
|
|
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
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Wednesday, 21 June 23
CHINA'S MAY COAL IMPORTS FROM AUSTRALIA RECOVER TO PRE-BAN LEVELS - REUTERS
Australian coal sales to China increased in May, as trade resumed between them even as overall coal demand weakened against an uncertain macroecono ...
Monday, 19 June 23
DROUGHT-DEPLETED HYDROPOWER DRIVES CHINA TO TURN TO COAL - REUTERS
China has leant hard on coal-fired power plants as well as wind and solar generators to make up for a shortfall in hydroelectric generation as a re ...
Monday, 19 June 23
CHINA COAL OUTPUT UP 4.2 PCT IN MAY - XINHUA
China’s raw coal output posted steady growth in May, official data showed.
The country produced 390 million tonnes of raw coal ...
Wednesday, 24 May 23
AMMONIA-FUELLED BULK CARRIERS WITHIN FIVE YEARS - BALTIC EXCHANGE
Within five years, ships powered by clean ammonia could be a feature on the iron ore trade routes between West Australia and East Asia.
A study ...
Tuesday, 23 May 23
CHINA'S APRIL COAL OUTPUT LEAPS 11% ON YEAR, BUT DEMAND DOWNTURN LOOMS - REUTERS
China’s daily coal output in April jumped 11% from the same month a year earlier, boosted by Beijing’s order to increase supply to ensu ...
|
|
|
Showing 96 to 100 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Neyveli Lignite Corporation Ltd, - India
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Meralco Power Generation, Philippines
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- White Energy Company Limited
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- Aditya Birla Group - India
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement - Thailand
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Larsen & Toubro Limited - India
- PTC India Limited - India
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Uttam Galva Steels Limited - India
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- SMG Consultants - Indonesia
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- Meenaskhi Energy Private Limited - India
|
| |
| |
|
