Forwarders, Brokers, Others Responsible for Ensuring Sanctions Compliance, Feds Say

A new compliance note from five federal agencies emphasizes that companies that move cargo have a responsibility to ensure their services are not being used to evade U.S. export and sanctions laws. The agencies said this note marks their first collective effort to inform the private sector about enforcement trends and provide guidance on compliance with these laws.

The note states that individuals and entities directly participating in and enabling the global transport of goods – vessel owners, charterers, exporters, managers, brokers, shipping companies, freight forwarders, commodities traders, and financial institutions – “must be responsible” for assessing their risk profiles for potential violations; implementing rigorous, internal compliance controls to mitigate those risks; and taking any other steps necessary to verify the true nature, origin, and destination of cargo being transported.

“Those who move cargo play a key role in helping to prevent sensitive goods and technologies from falling into the hands of proliferators, terrorists, and other malign actors,” said Assistant Secretary of Commerce for Export Enforcement Matthew Axelrod. “Across the federal government, we are united in our message – if you have a role in moving cargo, you have a responsibility to ensure your services are not being exploited by those who would do this country harm.”

Assistant Attorney General for National Security Matthew Olsen stressed that the federal government “will hold accountable companies that do not maintain rigorous compliance programs and violate the law.” Brad Smith, director of the Office of Foreign Assets Control, added that engaging with those seeking to evade sanctions “not only risks civil penalties for U.S. companies, but also non-U.S. companies that cause U.S. persons to violate sanctions.” To emphasize the potential consequences the note lists the five agencies’ various enforcement authorities as well as a number of criminal prosecutions and civil actions the U.S. has already brought.

To aid those in the transportation industry in their compliance efforts, the note sets forth a number of potential indicators of efforts to evade sanctions and export controls. These include manipulating location or identification data, falsifying cargo and vessel documents, ship-to-ship transfers, voyage irregularities and use of abnormal shipping routes, frequent registration changes, and complex ownership or management.