On Monday, 25 March 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.
On the heels of its recent North Korean sanctions update, OFAC’s Syria update adds to the list of tactics used to obfuscate the destination and recipient of oil shipments ultimately destined for Syria. It emphasizes that parties in the petroleum shipping community should be mindful of the following practices:
- Falsifying cargo and vessel documents, including bills of lading, certificates of origin, invoices, packing lists, proof of insurance and lists of last ports of call.
- Engaging in ship-to-ship (STS) transfers to conceal the origin or destination of cargo.
- Disabling the automatic identification system (AIS) to mask the destination of cargo destined for the government of Syria – vessels carrying petroleum to Syria have been known to intentionally disable their AIS transponders to mask their movements, which is a breach of international regulations.
- Changing vessel names to make identification more difficult and obfuscate prior illicit activity.
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.