On October 31st, 2024, the Office of Foreign Assets Control (OFAC) issued an updated guidance outlining essential compliance measures for maritime industry participants to manage sanctions risks. This update encourages a proactive, risk-based approach to compliance, addressing tactics such as location data manipulation, document falsification, and complex ownership structures.
 

Mitigating Deceptive Shipping Practices: 

The guidance highlights deceptive tactics like AIS (Automatic Identification System) spoofing, which hides the actual location to hide the origin of cargo. In this regard, OFAC recommends performing rigorous due diligence on vessel origins and its routing, as well as verifying documents for authenticity to ensure alignment with sanctions policies. 
 

Increased Vigilance for SDNs:

The OFAC advises implementing enhanced protocols when SDNs appear in trade documentation, as engaging with these individuals or entities exposes parties to being subject to secondary sanctions from the U.S. This requires strict review of trade documents to avoid unintended exposure. Access the SDN List and screening tools.
 

Complex Ownership Structures: 

A third area of concern is the use of unclear ownership structures, which particularly applies for insurers and buyers. OFAC advises caution with vessels under complex ownership arrangements to avoid hidden associations with sanctioned entities.

Addressing Sanctions Risks Mid-Voyage:

In situations where sanctions concerns emerge mid-voyage, OFAC recommendation is to establish continuous monitoring. Moreover, stakeholders may need to apply for OFAC licenses to disengage from transactions with sanctioned entities, ensuring compliance and mitigating mid-voyage risks. 

Ensuring Transparency in Vessel Purchases: 

In transactions involving vessels, it is critical to verify ultimate beneficial ownership to prevent engagement with sanctioned individuals or entities. This verification process is particularly needed within purchase agreements to limit sanctions exposure.
 

Compliance Clauses in Contracts: 
OFAC’s guidance also emphasizes the importance of including contract clauses that allow for termination if sanctions risks are identified. This clause in contracts gives the stakeholders flexibility to cope with the dynamic nature of compliance requirements in the maritime sector. 

Overall, OFAC guidance provides essential strategies that stakeholders in the maritime industry can use to strengthen sanctions compliance, to better manage sanctions exposure and to align their practices with U.S. regulatory expectations. Visit OFAC compliance resources for further details.