U.K. Sanctions Guidance Adds to Warnings for Maritime Sector
By Mengqi Sun
A U.K. enforcement agency is urging the maritime industry to be
on the lookout for illicit practices that could be used to evade
sanctions, the latest regulator to warn about compliance risks
facing the industry.
Guidance by the U.K.'s Office of Financial Sanctions
Implementation, which is part of the country's Treasury department,
indicates companies are susceptible to suspicious shipping
practices such as the intentional disabling of vessel-tracking
systems to conduct illegal trade and the falsifying of
documentation for maritime transactions.
Maritime insurance companies, charterers, customs and port state
controls, and flag registries are among the sectors exposed to the
risks, the agency said.
The guidance, which was issued last week and amplified in a
government blog post Monday, adds to a evolving list of guidelines
aimed at the maritime industry and underscores compliance
complexities facing those operating in the U.S., the U.K. and the
European Union, sanctions experts say.
Three U.S. agencies issued guidance for the maritime sector in
May, saying the industry may need to develop procedures to avoid
being exploited by terrorists and other illicit actors seeking to
trade with countries subject to U.S. sanctions.
The U.K. operates the largest share of the global maritime
insurance market, and 13 of the major international protection and
indemnity associations of marine insurance providers operate from
management offices in the U.K., the OFSI said.
Entities and individuals in the maritime sector need to assess
their own risks and conduct sufficient due diligence to ensure
compliance with sanctions, according to the agency, which
emphasized the importance of understanding sanctions regulations in
high-risk jurisdictions and using vessel-tracking systems and
subscription-based resources to verify ownership structures of
customers and business partners.
The guidance highlights the additional compliance obligations
for companies operating in the maritime industry as they navigate
the similar but different sanctions systems between the U.S. and
the U.K., said Eric Lorber, a vice president at advisory firm K2
Intelligence/Financial Integrity Network.
The U.K. is in the process of transitioning to its own set of
sanctions compliance guidelines as part of its departure from the
During the transition period, which ends Dec. 31, individuals
and companies in the U.K. are still required to comply with the
EU's sanctions policies, in addition to United Nations sanctions
and the U.K.'s own sanctions programs. The U.S. has its own
sanctions programs and follows UN sanctions as well.
A shipping company based in the U.K. that conducts U.S. dollar
transactions would need to comply with more than one sanctions
"It's the first time you're beginning to see this balancing act
by a number of institutions in the maritime industry between two
different regulatory jurisdictions that require similar actions but
don't line up one to one," he said. "It's really challenging for an
industry that doesn't have the sanctions expertise."
Write to Mengqi Sun at email@example.com
(END) Dow Jones Newswires
August 03, 2020 21:19 ET (01:19 GMT)
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