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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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Friday, 02 February 24
DRY BULK MARKET: THE DOWNWARD REVISION IN THE GROWTH OF CAPESIZE TONNE DAYS IN JANUARY WITH THE BCI DROPPING - MARIA BERTZELETOU
In the last week of January, the dry freight market sustained weakness in the Capesize segment, while the number of ballasters in the Southeast (SE ...
Friday, 02 February 24
COAL INDIA ACHIEVES NEARLY 80% OF ITS FY24 PRODUCTION TARGET IN TEN MONTHS - CNBCTV18
For the month of January, the company’s production grew by 9.1% from the same period last year to 78.4 Million Tonnes (MT), from 71.9 MT last ...
Thursday, 01 February 24
CHINA'S WIND, SOLAR CAPACITY TO OVERTAKE COAL IN 2024 - INDUSTRY BODY, REUTERS REPORTED
China’s installed wind and solar capacity is expected to overtake coal for the first time this year, according to industry forecasts.
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Thursday, 01 February 24
ANTI-DEDUCTION CLAUSES: CAN A CHARTERER WITHHOLD HIRE WITHOUT AN OWNER'S CONSENT? - SKULD
KNOWLEDGE TO ELEVATE
Summary
In The Anna Dorothea, the Court found that where a charterparty provides that no deduction from hire may be m ...
Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
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Showing 41 to 45 news of total 6871 |
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- Eastern Coal Council - USA
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Madhucon Powers Ltd - India
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Toyota Tsusho Corporation, Japan
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- PTC India Limited - India
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Anglo American - United Kingdom
- TeaM Sual Corporation - Philippines
- Ministry of Mines - Canada
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Mintek Dendrill Indonesia
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- SMG Consultants - Indonesia
- The Treasury - Australian Government
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
- LBH Netherlands Bv - Netherlands
- IHS Mccloskey Coal Group - USA
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- VISA Power Limited - India
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Bhatia International Limited - India
- Coal and Oil Company - UAE
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Goldman Sachs - Singapore
- Australian Coal Association
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
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