On December 11, 2023, five US agencies (the Department of Justice, Commerce Department’s Bureau of Industry and Security, Department of Homeland Security’s Homeland Security Investigations, State Department’s Directorate of Defense Trade Controls, and Treasury Department’s Office of Foreign Assets Control) released a joint compliance note “Know Your Cargo” (“the Compliance Note”), highlighting tactics commonly deployed by malign actors in the transportation sector and best practices for the maritime and other transportation industries as well as examples of enforcement actions, according to Grad.
Best Practices
The Compliance Note builds further on previous guidance from OFAC relating to sanctions evasion in the maritime industry, including the Sanctions Advisory for the Maritime Industry published on May 14, 2020, and the Advisory for the Maritime Oil Industry published on October 12, 2023.
It reiterates best practices including:
• Develop, implement, and adhere to written risk-based operational compliance policies,
procedures, standards of conduct, and safeguards;
• Conduct risk-based due diligence on the location history of vessels or vehicles, to identify
prior manipulation or disabling of location or identification tracking data;
• Implement robust know-your-customer due diligence;
• Exercise of risk-based supply chain due diligence to verify “the true nature, origin, and
destination of the cargo they are involved in transporting”;
• Share information across industries and supply chains, as appropriate.
Red Flags
The Compliance Note identifies several red flags that may indicate attempts to evade sanctions and export controls:
• Manipulation of location or vessel identification data;
• Falsification of cargo and vessel documents;
• Ship-to-ship transfers at night or conducted in high-risk areas;
• Voyage irregularities and use of abnormal shipping routes that appear to be done without a legitimate reason;
• Frequent registration updates (flag hopping); and
• Obscure ownership structures or frequent changes in ownership.
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Source: Grad
