US Sanctions on Iranian Oil: Overview
As of May 2, any party involved in the consumption or facilitation of Iranian oil risks being targeted by the US government for undermining US sanctions. This heightened risk follows the White House’s surprise announcement that it will not renew “Significant Reduction Exceptions” (waivers) for half a dozen countries that had been major importers of Iranian oil.
Maritime Supply Chain Challenges
The White House announcement puts maritime supply chain participants in the spotlight, as they grapple with how to avoid inadvertently facilitating sanctions-busting shipments. Parties involved in the maritime ecosystem, including energy traders, banks, and entities involved in bunkering (refueling ships at sea), seek to minimize the risk of becoming mired in maritime sanctions evasion.
Compliance Controls and Screening
To achieve compliance, parties commonly screen vessels and fleets against lists of restricted parties and vessels from OFAC, the EU, UK, and UN. This list-based screening involves reviewing vessels and counterparties against these lists to identify red flags that may indicate sanctions evasion risk. However, the Advisories make it clear that this method of compliance is no longer fit for purpose.
The Advisories emphasize the need for parties to update their compliance controls to account for specific types of vessel behaviors that are red flags for sanctions evasion, including Ship-to-Ship transfers (STS), Dark Activity, and Identity Tampering. Identifying such behaviors requires obtaining and performing deep contextual analysis of Automatic Identification System (AIS) transmission data and other vessel behavioral data.
Challenges in Data Processing
According to OFAC, commercial shipping data, such as ship location, registry information, and flagging information, should be incorporated into due diligence practices. However, this mandate presents significant practical challenges, including the need to process large volumes of AIS data to identify suspicious patterns of activity.
Conclusion: Adapting to New Compliance Requirements
The industry impact of these new expectations is significant. Parties involved in maritime transactions must update their compliance controls to account for vessel behavior and incorporate commercial shipping data into their due diligence practices. Failure to do so may result in being targeted by the US government for sanctions evasion.
In conclusion, the recent developments in maritime sanctions compliance requirements present a complex landscape that requires parties to adapt their compliance controls to address new risks and challenges. The use of behavioral analysis and commercial shipping data is now essential for minimizing the risk of sanctions evasion and ensuring business continuity in the face of these heightened expectations.
Original Article: Navigating new maritime sanctions compliance requirements — Windward