Sanctions Evasion: Pole Star Global Warns of Sophisticated Maritime Tactics
The implementation of Russia-related sanctions has led to an increase in deceptive shipping practices (DSPs), particularly in the form of AIS spoofing and dark fleet activity. According to the Research Team at Pole Star Global, in partnership with Blackstone Compliance, these DSPs have created a new era of sanctions compliance challenges that require sophisticated detection and mitigation strategies.
The challenge lies in maritime sanction evasion, where threat actors aim to deceive authorities and financial crime compliance programs via the creation of a shadow economy operating outside US, UK, EU, and G-7 law. Sanctions targets require access to allied countries’ markets, including commodities traders; financial institutions; flag registries; and ship charterers (“covered persons”) – all of whom have compliance obligations, including those relating to the price cap on Russian oil.
The Office of Foreign Assets Control (OFAC) has outlined an attestation process to document that Russian oil sales are within the Price Cap. However, this is not a mere record-keeping problem. The current price cap for oil leaves very little room for margin, making threat actors more likely to attempt falsifying documentation, passing goods off as being of non-Russian origin, or violating other sanctions outside the Price Cap.
The authorities have warned covered persons to be aware of evasion attempts. In April, OFAC singled out P&I clubs, ship owners, flag registries, and commodities brokers to remain vigilant for DSPs as evidence of sanctions evasion. The UK’s National Crime Agency has also warned the wider financial community that sanctions targets may use proxies and enablers to gain access to the financial system – access they would otherwise be denied.
Illicit dark fleet activity is a growing concern, with two primary methods emerging: the “dark fleet” and “AIS spoofing”. The dark fleet is a fleet of tankers owned and operated by persons outside of allied jurisdictions. These tankers are acquired for trading with Russia or other sanctioned countries. Owners will go to great lengths to disguise their stakes in these vessels.
Determining whether a vessel is part of the dark fleet is a subjective process, requiring consideration of several criteria and factors. A number of indicators must be considered before a ship can be categorized:
- Ownership: A vessel’s owner may be tied directly to Russia, Iran, or Venezuela. Threat actors may attempt to obfuscate their interest by owning the vessel through shell or front companies, or by making rapid changes to a vessel’s declared owners and operators.
- Movement: Dark fleet vessels may frequent Russian or sanctioned ports with deliveries to non-allied countries, and/or conduct ship-to-ship transfers in known high-risk zones, such as those used off the coast of Greece.
Pole Star Global advises covered persons to proceed cautiously when dealing with a dark fleet vessel and conduct enhanced due diligence on the provenance of the cargo, the buyer, and the seller.
In conclusion, as maritime sanctions evasion tactics continue to evolve, it is crucial for all stakeholders to remain vigilant and adapt their compliance strategies accordingly.
Original Article: Pole Star Global: Combatting a new era of maritime sanctions evasion — Safety4Sea