On Monday, March 25, 2019, the U.S. Department of the
Treasury's Office of Foreign Assets Control (OFAC) updated the
advisory document it published in November 2018 on the risks for
parties involved in petroleum shipments to Syria. The update adds
to the list of deceptive shipping practices used to obfuscate the
destination of petroleum bound for Syria and the measures that
members of the petroleum shipping community can take to mitigate
these risks. This guidance follows the United States'
continuing efforts to isolate the Assad regime and its supporters
from the global financial and trade system and cut supplies of
Iranian oil into Syria.
In light of these tactics, OFAC recommends that all parties
involved in the petroleum shipping community do the following to
mitigate the risk of engaging in prohibited activity:
- Research vessels by not only name,
but also IMO number.
- Extend KYC due diligence beyond
counterparty companies (and/or individuals) to owners and operators
involved in any contracts, shipments or related maritime
commerce.
- Request all relevant documentation to
identify the full details of the underlying voyage (origin,
destination, cargo, flagging and vessels) and investigate any sign
of manipulated documents before proceeding further with the
relevant activity.
- Monitor disablement of AIS and, where
AIS has been disabled while a vessel is operating in the
Mediterranean or Red Sea, investigate the issue fully before
engaging in any service related to that vessel.
- Financial institutions and
non-financial gatekeepers servicing the industry are strongly
encouraged to adopt measures consistent with the Financial Action
Task Force standards to strengthen their Anti-Money
Laundering/Countering the Financing of Terrorism (AML/CFT)
compliance.
- Ensure clear communication with
international partners as to U.S. and UN sanctions-related
obligations and the steps required to ensure compliance with
them.
- Make full use of the available
resources providing commercial shipping data, ship registry and
ship flagging information, including those provided by OFAC, the UN
and the U.S. Coast Guard.
The updated guidance also highlights the sanctions risk to
insurance and reinsurance services providers who serve certain
Syrian and Iranian maritime-related persons or activities.
The document is supplemented by three annexes of which two were
not included in the original advisory document. All three are
non-exhaustive lists of vessels, the first being an update to the
list of vessels that have delivered petroleum to Syria. The new
lists are of those vessels engaged in STS transfers of petroleum
destined for Syria and vessels that have exported Syrian petroleum
since 2016.
To view the full text of the updated guidance document and
related annexes, visit www.treasury.gov.
How Reed Smith can help
Reed Smith's Sanctions team has experience representing
companies before OFAC. A global firm, Reed Smith is particularly
well positioned to provide guidance on U.S. sanctions and to
represent your company before OFAC and other federal agencies
implementing U.S. sanctions, such as the U.S. Department of
Commerce and the U.S. Department of State, with highly experienced
sanctions lawyers from both the United States and the EU available
to you, 24/7. Contact one of the authors listed above or your usual
Reed Smith lawyer, and we will be more than happy to help you
navigate the implications of these significant events for your
business.
Client Alert 2019-074
This article is presented for informational purposes only
and is not intended to constitute legal advice.
