Executive Briefings

Tech Is Becoming Critical As U.S. Sharpens Focus on Sanctions Violations

In the past year, political shakeups around the world have added new layers of complexity to the already complex ocean supply chain. Within this, trade sanctions in particular have evolved dramatically in the last few months, and are putting greater pressure on companies to remain compliant.

Tech Is Becoming Critical As U.S. Sharpens Focus on Sanctions Violations

While trade restrictions have been in place, and lifted, in various capacities for decades, the volume and velocity at which new sanctions have been imposed and against whom has quickly evolved, even within the last few months. Take the U.S. for example. In late summer, the government imposed hardline sanctions against Venezuela, Iran and Russia within a matter of days. In a blink of an eye, it became illegal for companies to do business with anyone or anything identified on the government’s denied party lists.

The maritime sector is in a particularly challenging position as it relates to trade sanctions, with mega fines hitting numerous parties within the ocean supply chain.

On the carrier-side, some of the world’s largest container shipping companies themselves have been cited by the Office of Foreign Asset Control (OFAC) for transporting cargo within restricted regions such as Sudan, Iran and Cuba, among others. These penalties, while later reduced, have been in the millions of dollars, resulting in negative media coverage and damage to brand reputation as a result.

In the U.S., vessels can be denied entry into a U.S. port if they are found to be on OFAC’s Specialty Designated Nationals (SDN) blocked list, even if they had to dock in an embargoed country for minor repairs. This Notice to Mariners provides an overview from OFAC, including a review of current sanctions programs, enforcement, and reporting procedures and requirements. In addition to OFAC, a number of other agencies are involved in ocean trade in the event of violations, including Bureau of Industry and Security (BIS), Customs Border and Protection (CBP), Transportation Security Administration (TSA) and U.S. Department of Commerce (DOC).

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While trade restrictions have been in place, and lifted, in various capacities for decades, the volume and velocity at which new sanctions have been imposed and against whom has quickly evolved, even within the last few months. Take the U.S. for example. In late summer, the government imposed hardline sanctions against Venezuela, Iran and Russia within a matter of days. In a blink of an eye, it became illegal for companies to do business with anyone or anything identified on the government’s denied party lists.

The maritime sector is in a particularly challenging position as it relates to trade sanctions, with mega fines hitting numerous parties within the ocean supply chain.

On the carrier-side, some of the world’s largest container shipping companies themselves have been cited by the Office of Foreign Asset Control (OFAC) for transporting cargo within restricted regions such as Sudan, Iran and Cuba, among others. These penalties, while later reduced, have been in the millions of dollars, resulting in negative media coverage and damage to brand reputation as a result.

In the U.S., vessels can be denied entry into a U.S. port if they are found to be on OFAC’s Specialty Designated Nationals (SDN) blocked list, even if they had to dock in an embargoed country for minor repairs. This Notice to Mariners provides an overview from OFAC, including a review of current sanctions programs, enforcement, and reporting procedures and requirements. In addition to OFAC, a number of other agencies are involved in ocean trade in the event of violations, including Bureau of Industry and Security (BIS), Customs Border and Protection (CBP), Transportation Security Administration (TSA) and U.S. Department of Commerce (DOC).

Read Full Article

Tech Is Becoming Critical As U.S. Sharpens Focus on Sanctions Violations