The complexity of the maritime sanctions landscape is not one to underestimate. Careful consideration needs to be taken by the entire maritime industry. With the trading world merchant fleet projected to reach 79,282 vessels by the end of 2025, it is important that industry players are aware of the tactics used to evade sanctions (including but not limited to concealing of identities, and vessel identity laundering, exploiting disparities between countries amongst others).
Counterparty due diligence (CDD)
To mitigate the risk of sanctions evasions it is important that counterparty due diligence (CDD) is performed to ensure that individuals and companies know who they are doing business with.
OFAC’s 50 Percent Rule states that the property and interests in property of entities directly or indirectly owned 50 per cent or more in the aggregate by one or more blocked persons are considered blocked.
‘Owned or controlled’ rule
Moreover, one of the key features of the UK Government’s sanctions legislation is a new ‘owned or controlled’ rule which gives the UK government new powers to control how broadly asset freezes are to be applied and to prevent circumvention.
This means that where any individual or company is sanctioned, not only are their assets frozen but also those of any entity that they own or control, directly or indirectly.
In effect, therefore, the entity becomes subject to financial sanctions too even though its name may not appear on any sanctions list.
Want to learn more about maritime sanctions compliance?
Further details of the areas discussed within this article can be found within our latest report ‘Maritime Compliance – The rapidly changing maritime sanctions compliance landscape’. This guide to industry includes discussion on the landscape as well as sanctions compliance measures and how best to mitigate against the many associated risks.