On November 20, 2018, OFAC along with the State Department and Coast Guard, issued an extensive advisory on “Sanctions Risks Related to Shipping Petroleum to Syria” (the Advisory).
The Advisory alerts “persons globally to the significant US sanctions risks for parties involved in petroleum shipments to Syria.” In terms similar to the previous Advisory highlighting North Korea’s deceptive shipping practices, the Advisory notes that deceptive shipping practices in the petroleum shipping industry may “create significant sanctions risk for entities and individuals in the shipping industry, including insurers, shipping companies, financial institutions, and vessel owners, managers, and operators.”
The Advisory also sets forth certain risk mitigation measures that parties should consider implementing to reduce the risk of engaging in prohibited activities resulting from the petroleum shipping industry’s deceptive practices. The Advisory provides a non-exclusive list of deceptive practices that persons in the petroleum shipping industry have deployed:
- Falsifying Cargo and Vessel Documents: Complete and accurate shipping documentation is critical to ensuring all parties to a transaction understand the parties, goods, and vessels involved in a given shipment. Bills of lading, certificates of origin, invoices, packing lists, proof of insurance, and lists of last ports of call are examples of documentation that typically accompanies a shipping transaction. Shipping companies have been known to falsify vessel and cargo documents to obscure the destination of petroleum shipments.
- Ship to Ship (STS) Transfers: STS transfers are a method of transferring cargo from one ship to another while at sea rather than while located in port. STS transfers can conceal the origin or destination of cargo.
- Disabling Automatic Identification System (AIS): AIS is a collision avoidance system which transmits, at a minimum, a vessel's identification and select navigational and positional data via very high frequency (VHF) radio waves. While AIS was not specifically designed for vessel tracking, it is often used for this purpose via terrestrial and satellite receivers feeding this information to commercial ship tracking services. Ships meeting certain tonnage thresholds and engaged in international voyages are required to carry and operate AIS. However, vessels carrying petroleum to Syria have been known to intentionally disable their AIS transponders to mask their movements. This tactic can conceal the destination of cargo destined for Syria.
The Advisory recommends that parties consider implementing the following types of risk mitigation measures:
- Strengthen Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) compliance
- Monitor for AIS manipulation
- Review all applicable shipping documentation
- Clear communication with international partners and
- Leverage available resources
Lastly, the Advisory contains a non-exhaustive list of 35 vessels that have delivered petroleum to Syria since 2016. A vessel’s presence on this list “does not constitute a determination by OFAC that the vessel has been identified as property in which a blocked person has an interest.”