Navigating the choppy waters of sanctions with intelligent shipping data
Nigel Hook, our Chief Executive Officer and an alumni of the FBI Citizens Academy, explains why stakeholders across supply chains need comprehensive and intelligent vessel data to steer clear of sanctions lists as regulators take a hard-line approach.
Shipping lies at the heart of global trade with about 70% of goods by value carried around the world by vessels. For those working across maritime supply chains, it is crucial to have access to meaningful and intelligent shipping insights to ensure they are adhering to complex sanctions regimes.
Regulators are increasingly using sanctions as a strategic tool to economically cut off countries, entities and individuals that are involved in malign activities such as terrorism and illicit weapons programs, and which are considered national security threats. Illicit maritime trade and export of nations’ materials – oil and coal for instance – play a central role in funding such activities.
It is no secret that the US Treasury Departments’ Office of Foreign Assets Control (OFAC) was deemed heavy-handed in its approach to trade and economic sanctions under former president Donald Trump. Now with Joe Biden at the reins, OFAC shows no signs of letting up.
A quick scroll through its enforcement actions for this year on its website reveals dozens of entities, vessels and people sanctioned across countries including North Korea, Russia and China. In one action in May, 11 Russian-linked vessels were sanctioned along with three entities and two individuals.
In December, OFAC sanctioned six entities and four vessels for the export and transportation of North Korean coal. “The DPRK continues to circumvent the UN prohibition on the exportation of coal, a key revenue generator that helps fund its weapons of mass destruction programs,” said then Treasury Secretary, Steven Mnuchin.
OFAC, along with other regulators such as the UK’s Office of Financial Sanctions Implementation (OFSI), treats any breaches to maritime sanctions as a serious threat. Global regulators are imposing hefty fines across various target groups, naming and shaming those that do not abide by their rules.
The tough stance on maritime sanctions is here to stay – and stakeholders in trade must be able to quickly identify and assess warning signs of breaches if they are to avoid regulator action and reputational damage.
The complicated and changing web of sanctions in shipping can begin to be untangled by utilizing intelligent cargo data and tracking ships. This enables parties across the supply chain, from financiers to ship owners and port authorities, to better navigate expanding sanctions lists by cross-checking information and having more transparency into their wider operations.
Effective vessel screening should include several things: the shipping route, the origin and destination of the goods, whether the products are dual use, and a reasonable assertion that sanctioned individuals will not profit from shipped goods.
However, it is not that simple. Due diligence is difficult in the maritime industry given it relies on streams of data in various non-standard formats from different sources across the world, with no unilateral system to bring this data together and standardize it. Nonetheless, the onus is on parties to make sure they have the compliance systems in place to spot potential maritime sanctions breaches.
Earlier this year we partnered with ship tracking company MarineTraffic to reference their vessel screening data for TradeSun’s world-class AI trade platform that performs next generation compliance while automating the checking of trade finance documents.
With the TradeSun platform, vessel data is validated against multiple global sources, including MarineTraffic’s leading database, providing important information and decisioning to our users at the time of processing, which improves efficiency and reduces the risk of sanctions non-compliance.
Integrating data from stellar partners like MarineTraffic provides a comprehensive solution for those working in global trade – not to mention cost savings, faster processes and higher efficiency by reducing human error.
Sanctions will continue to drag on maritime trade, with global regulators taking an increasingly tough approach. Those who play a role in the shipping world must make sure they are thoroughly screening vessels and containers to steer clear of sanctions lists – or risk the consequences of non-compliance.
July 9, 2021