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Illicit Shipping and Sanctions Evasion Practices are Focus of OFAC Advisory

Monday, May 18, 2020
Sandler, Travis & Rosenberg Trade Report

The Treasury Department’s Office of Foreign Assets Control, together with the Department of State and the Coast Guard, has issued an advisory providing further information and tools to counter current and emerging trends related to illicit shipping and sanctions evasion.

This advisory, which updates and expands previous advisories on shipping involving North Korea, Iran, and Syria, includes information on the deceptive practices used to evade sanctions. These include falsifying cargo and vessel documents and ship-to-ship transfers as well as disabling or manipulating the automatic identification system on vessels, physically altering vessel identification, voyage irregularities, false flags and flag hopping, and complex ownership or management.

The advisory also provides policies and procedures that 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 may wish to consider adopting as part of a risk-based sanctions compliance program. These include knowing your customers and counterparties and exercising supply chain due diligence as well as establishing AIS best practices and contractual requirements, monitoring ships throughout the entire transaction life cycle, and industry information sharing.

Entities and individuals involved in the supply chains of trade in the energy and metals sectors, including crude oil, refined petroleum, petrochemicals, steel, iron, aluminum, copper, sand, and coal, should also review this advisory and take appropriate action as deemed necessary or advisable.

Clients and potential clients requiring support related to sanctions compliance should contact export attorney Kristine Pirnia.

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