Daniel A. Tadros, J.D., Chief Legal Officer for the Managers of the American P&I Club, reviews the latest developments in the area of sanctions and compliance that all vessel operators need to be aware of as they emerge from lockdown and return to business as usual.
Sanctions are a huge part of the geopolitical and economic landscape of today’s shipping industry, while the US’ latest actions demonstrate its commitment to prevent invasion, smuggling, criminal activity and facilitation of terrorist activities.
The US has already implemented sanctions to Venezuela, Iran and Cuba, as well as to vessels transferring fuel to these countries.
The Club notes that it is of high importance to be in line with the sanctions and comply,
Compliance Program A: Internal policies and procedures
It is crucial that companies recognise and be aware of the sanctions laws that have been applicable to them and to the trade of their vessels.
Compliance Program B: Due Diligence KYC and KYCC
A due diligence investigation should be part of every compliance program. In addition, Know Your Customer (KYC) and Know Your Customer’s Customer (KYCC) can be addressed through asking nine questions:
- The name of the vessel, the IMO number and flag.
- Has there been a recent ownership change and what are the details of that change.
- What countries are involved in the trade.
- What is the origin and destination of the cargo.
- What is the nature and the type of the cargo.
- What is the identity and the domicile of the cargo shippers and receivers.
- What is the identity and the domicile of any charterer(s) or sub-charterers involved in the voyage.
- What is the purpose for which the cargo is to be used.
- What is the identity and the domicile of any bank in connection with issuance of bank guarantees and letters of credit relating to the voyage.
Sanctions compliance: Due diligence. A two or three-pronged inquiry
Daniel A. Tadros questions whether do EU, UN or UK sanctions apply. If so, he recommends to use the nine questions.