Maritime Trade Sanctions Compliance
- Understand what a sanction is and why they are utilized in international maritime trade
- Become familiar with the scope and powers of the various international trade sanction bodies and regimes
- Recognise the key ‘Red Flags’ to look for in sanction evasion/non-compliance
- Know what ‘Piercing the Corporate Veil’ means and why it is so important to sanctions compliance
- Gain awareness of the methodologies utilised to make ship ownership anonymous
- Be able to develop a sanctions compliance programme
- Understand the due diligence process and what to look for
- Have awareness of the different types of contractual sanction provisions that are commonly utilised internationally
Overview
This course aims to provide a comprehensive understanding of the complexities surrounding maritime trade, particularly in relation to international sanctions and compliance. It explores how unethical governments, criminal organizations, and terrorists may exploit maritime trade for their own gains, such as money laundering or fundraising. Participants will engage in interactive discussions, problem-solving activities, and case studies to gain insights into the challenges and mechanisms involved in sanction enforcement and compliance.
Course Content
There is little doubt that maritime trade represents the majority of international business trade contracted 24/7 globally. Cargos of every conceivable type are in continuous movement; providing the lifeblood for the beating heart of commercial commerce. Some actors upon this global stage however, may be governments and regimes that are considered unethical in their policies or behaviours and as a result, face sanctions as a punitive mechanism from the wider international community in an attempt to change such policies and behaviour. International criminal interests and terrorists may utilise the flow of maritime trade to further their own ends – perhaps by laundering money or to raise capital for funding. The sheer volume of maritime trade poses a double-sided conundrum. On one hand, like-minded governments may draft and ratify international sanctions, whilst on the other the implementation and enforcement of them is another matter wholly. This problem is further exacerbated for those who must ensure that they do not fall foul of sanction compliance requirements, whilst there are others who will seek to circumvent and avoid any such sanction measures. This course has been designed to provide the delegate with an in depth understanding of the components and issues that form this complex web of activities. The focus is on interactive dialogue throughout; problem solving and the examination of case studies.
Course Syllabus
Day 1
Topic 1: Overview
• What is a sanction.
• Why are they utilized.
• Assessing sanction risk.
• Understanding local requirements.
• Why the traditional ‘blacklist’ approach may not be effective.
Topic 2: Understanding the scope and powers of the different trade sanction regimes
• The United Kingdom – OFSI – Office of Financial Sanctions Implementation (UK) (2016).
• The United States of America – OFAC – Office of Foreign Assets Control (USA); the ‘Entity List’ (export control); Specially Designated Nationals (SDN) list (US).
• Case study – Commerzbank (March 2015).
• The United Nations.
• The European Union.
• OECD.
• ASEAN.
• JCPOA.
• Asset freezes.
• Anti-money laundering (AML).
• Bans and prohibitions (military and ‘dual-usage’ equipment).
• Case study: Examining sanctions on North Korea; Syria.
• Case study: The sanction consequences on maritime trade of Russia’s invasion of Ukraine.
Topic 3: Identifying Red Flags
• AIS manipulation/interference – ‘spoofing’ examined.
• Route information – origin/destination; indirect routing; ‘masking’ port calls; unscheduled deviations; transhipment of cargo through third party countries.
• Electronic warfare and cybersecurity – deliberate disruption/attack/attempting to safeguard against.
• Alteration of vessels’ physical identification (name; livery; IMO numbers); obtaining a ‘shell identity’.
• Falsifying documentation – documentation relating to both cargo and vessel – certificate of origin; insurance documents; packing lists; route history (last ports of call); bills of lading; invoices; customs and exportation documentation.
• Ship-to-ship (STS) operations/activities – location of anchorage (proximity to sanctioned countries); night operations; identity of counterparty.
• False flags/flag hopping.
• Opaque and complex business structures – ‘masking’ true beneficial owners; transfer and movement of vessels.
Topic 4: The issue of anonymity of ship ownership – ‘Corporate Camouflage?’
• ‘Piercing the corporate veil’.
• The range of corporate mechanisms – the ‘shell company’, the ‘shelf company’ and the ‘front company’; trusts; international business corporations and foundations; private and public limited companies; limited liability companies (LLCs).
• ‘Layering’; professional intermediaries and third parties – the issue of indirect control.
• ‘Open registers’.
• Common methodologies of obfuscation and concealment – bearer shares; nominee directors/shareholders; corporations acting as nominee directors.
• Multi-jurisdictional exploitation – deepening the shadows.
• ‘Linked’ territories.
Topic 5: Developing a sanctions compliance programme
• Understanding the challenges and threats.
• Engagement with sanctionable parties – contract termination provisions.
• Risk mitigation – creating an appropriate set of controls.
• Confidential reporting mechanisms.
• Whistleblowing and retaliation.
• Auditing a sanctions compliance programme (SCP).
• Stakeholder engagement strategy – owners; charterers; operators; management.
• Key factors of a SCP – compliance with international standards; trained and competent personnel; monitoring AIS; monitoring cargo loading/discharge; examination and confirmation of relevant documentation (such as bills of lading).
Topic 6: Conducting a due diligence programme
• Vessel and AIS history.
• Details of vessel beneficial ownership.
• Documentation checks – export licences; shipping documentation; bills of lading; certificate of origin; cargo destination; load port documents; port logs; ullage documentation.
• Voyage details – vessel; route; cargo; port of origin/destination; parties to contract.
• Updating contractual provisions, particularly regarding STS operations.
• Long-range identification tracking (LRIT) to supplement AIS.
• Supply chain monitoring.
Topic 7: Drafting sanction compliance provisions in contracts
• Warranties that no parties, cargo interests or associates are subject to sanctions and that the vessel will not be used contrary to sanctions.
• Targeted sanction clauses specifying origin and details of cargo are not subject to sanctions.
• Clauses covering the entire contractual performance, including any sub-charter party.
• Termination provisions in case of sanction breach – e.g., the BIMCO AIS clause (July 2021).
• Case study: Islamic Republic of Iran Shipping Lines v. Steamship Mutual Underwriting Association (Bermuda) Ltd.
• Provisions addressing sanctions arising mid-contract – e.g., refusal of STS operations, actions and redress mechanisms such as economic loss and damages.
• Case study: Examples of contractual sanction clauses examined, including a P&I Club perspective.
Additional Information
Christopher has 20 years of experience, he helped establish an anti-corrosion production facility in Aberdeen for casing tubulars – running the production facility initially before going on to create and manage the supply chain. He has set up distribution networks supporting the North Sea E&P industry within Aberdeen. He has managed (and continues to do so) a variety of ‘special projects’ internationally – normally strategic or change management focussed. He has worked/consulted extensively within the field of project management and supply chain management – is a contracts specialist and an international commercial arbitrator. He specialises in training commercial negotiators internationally. He has worked directly with a number of governments and energy ministers.
He is empanelled as both an Arbitrator and a Mediator at the Asian International Arbitration Centre (AIAC); has the Freedom of the City of London; is a Fellow of the Chartered Institute of Arbitrators; a Liveryman of the Worshipful Company of Arbitrators and a member of the Association of International Energy Negotiators. He holds an MBA and LLB from the University of Aberdeen, as well as the Chartered Institute of Arbitrators DipICArb. He has over 25 years teaching experience including a number of universities across a wide range of subjects. Universities include: The University of Aberdeen (School of Law; Postgraduate Business School (MBA programme); School of Engineering (MSc. In Project Management).
