The White House has issued an Executive Order "Blocking Property of Certain Persons Contributing to the Conflict in Somalia". Among other things, the Order prohibits US persons (including US branches of overseas businesses) from making direct or indirect payments to certain specified individuals and organisations who have "engaged in acts that…threaten the peace, security or stability of Somalia". The Order includes acts of piracy as threats to peace, security and stability.
This will be of concern to the global shipping industry (including marine insurers and reinsurers as well as shipowners and charterers) as there is a risk that ransom payments made to Somali pirates in order to secure the release of cargo or crew would be caught by the Order (violation of which is a criminal offence). Even where ransom payments are not directly made to persons specified under the Order, there would always be a risk that a specified person would 'benefit' from the payment. Click here to view our briefing.