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SANCTIONS & COMPLIANCE In association with American Steamship Owners
Sanctions compliance: emerges The new as norm in shipping Daniel A. Tadros, Chief Legal Officer of Shipowners Claims Bureau, Managers of American Steamship Owners Mutual Protection & Indemnity Association, reviews the latest developments in the critical area of sanctions and compliance, that all shipowners need to be aware of as they emerge from lockdown and try to return to business as normal. Recent advisories and pronouncements by the US demonstrate the US government’s commitment to prevent sanctions evasion, smuggling, criminal activity and facilitation of terrorist activities with a focus on Iran, North Korea, Cuba and Syria. However, the US is now also using sanctions as a means to force changes in the regime of Venezuela. Ultimately, and as a result of the use of sanctions by the US as a weapon to effect global political change, the need for the maritime community to assess their sanctions risks and to implement compliance controls, has become of paramount importance.
GLOBAL MARITIME ADVISORY On May 14, 2020, the US issued a comprehensive Global Maritime Advisory that set forth new guidelines for the maritime industry. Although not legally binding, the Advisory outlines the expectations of measures that the industry should be taking to ensure that shipowners, marine insurers, flag states and classification societies, among others, collectively adhere to sanctions laws. The feeling in Washington under the current administration has been that the shipping industry lags behind best compliance practices, like those in place in the banking industry, but yet, shipping accounts for a very large percentage of the world’s trade. The Marine Insurer P&I Special Edition | July 2020
The Advisory no doubt was the product of the US government’s desire to improve the maritime industry’s compliance practices while targeting “bad actors” who consistently ignore sanctions legislation.1 The end result is that the maritime industry has no choice but to put in place comprehensive compliance programs.
COMPLIANCE PROGRAMMES As a result of the scrutiny now placed on the industry, owners, operators, charterers, flag states, insurers, and others, must have internal policies and procedures that are robust and not merely for show. The first step in any compliance program, is the recognition of what sanctions laws apply to a company and the trade of its vessels. Knowing whether US, EU, United Nations, or UK sanctions apply, and being aware of the parameters of the applicable sanctions, dictating how a marine operator conducts its business.2 The next step in a compliance program is the due diligence investigation. Such an investigation can be summarized as: Know your Customer (KYC) and Know your Customer’s Customer (KYCC). Knowing one’s customer and knowing one’s customer’s customer involves seeking answers to the following non-exhaustive list of questions:
