US Sanctions – OFAC Advisory to Petroleum Shipping Community on Iran risks
13 September 2019
Members will be already be aware of the recent Club Circular (click here) concerning the Guidance on the United States Sanctions Compliance Programmes published by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC). OFAC have now additionally published an Advisory to the Maritime Petroleum Shipping Community dated 4 September 2019. The Advisory appears to be further evidence of the US intent to enforce the Iranian sanctions aggressively, including against non-US persons.
US law firm, Freehill Hogan and Mahar LLP (Freehills), have indicated that the Advisory:
1. Warns anyone who knowingly engages in a significant transaction for the purchase, acquisition, sale, transport, or marketing of petroleum or petroleum products from Iran or of Iranian-origin or who knowingly provides significant support to an Iranian person on the Specially Designated Nationals (“SDN”) list are at “serious risk” of being targeted by the US for sanctions, “regardless of the location or nationality of those engaging in such activities”;
2. Warns that persons providing bunkering services to vessels transporting petroleum or petroleum products from Iran risk being subject to sanctions themselves unless an applicable waiver or exception applies. The sanctions that can be imposed include being listed on the SDN list;
3. Outlines the steps being taken to classify vessels as SDNs for sanctions breaches as well as listing the common deceptive practices being engaged in by vessels, which include:
• Falsifying cargo and vessel documents
• Ship to ship (STS) transfers
• Disabling Automatic Identification System (AIS)
• Vessel name changes
4. Warns that there is a sanctions risk related to the provision of underwriting services or insurance or reinsurance to certain Iranian energy or maritime related persons or activity.
In doing so it provides guidance to the shipping community about steps that can potentially mitigate the sanctions risk. These are:
• Verification of cargo origin
• Strengthening Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) Compliance
• Monitoring for AIS Manipulation
• Reviewing applicable ship documentation
• ‘Know Your Client’ procedures
• Communicating with International Partners
• Leveraging available resources.
Freehills also advise that OFAC have updated their FAQs on 5 September 2019 with a particular focus on bunkering. In their view, these FAQs provide clear warning to those operating in the bunkering sector to avoid providing fuel to blacklisted Iranian vessels or to those which may be participating in sanctionable conduct; and, guidance to shipowners, who are engaged in non-sanctionable Iran trade, that care should be exercised in regards to bunkering to ensure the guidance described in the FAQs is followed. The relevant FAQs are 296, 691 & 692.
The full Client Alert from Freehills can be accessed by clicking here.
For a copy of the OFAC Advisory to the Maritime Petroleum Shipping Community, click here.
For access to the OFAC FAQs, click here.