Read the Maritime Compliance Report - written in association with maritime consultancy Thetius

Overview

The complexity of maritime sanctions is not one to underestimate – in fact, they have changed more in the last few months than in the past five years.

The sanctions landscape is rapidly evolving with sanctions lists, entities, activities and even sectoral sanctions now in play.

Despite the complexity, businesses and organisations are solely responsible for the protection and mitigation of attempted violations.

An awareness and understanding of sanctions compliance are critical to ensure that your business practices are compliant with the constantly evolving changes.

Understanding sanctions compliance

Sanctions are not a ‘one size fits all’ measure to change behaviour – they vary situationally, geographically and politically amongst a range of other factors.

As a result, there are different types of sanctions that can be enforced, including but not limited to environmental, diplomatic, military and economic.

Economic sanctions are often regarded as the most common type due to their frequency of use.

Economic sanctions are defined as the withdrawal of customary trade and financial relations for foreign and security policy purposes.

Sanctions can be imposed through the following ways:

• Tariff – a government-imposed tax on the import of goods and services from a country. This increase in price aims to make imports less desirable compared to domestic goods and services from other countries
• Quotas – limiting the number of goods that can be imported or exported from a country
• Asset freezes – the prevention of access to bank accounts and currency reserves, as well as the ability to block the sale of owned physical assets.
• Trade embargoes – often referred to as ‘the most severe form of sanction’ which involves an outright ban being enforced on specific trade with the sanctioned country

The impact of sanctions compliance on trade

An awareness and understanding of sanctions compliance is critical to ensure that business practices are compliant with the constantly evolving changes.

Needless to say, there is a substantially high level of risk associated with the lack of sanctions compliance mitigation measures.

The risks that come with overlooking the need to remain compliant are high, as well as the risk of penalties, whether enforced financially or through imprisonment.

Therefore, leaders must think carefully about implementing the right mitigation measures.

Sanctions compliance measures

As sanctions have expanded, insurance companies, classification societies, ship owners, ship operators, charterers, and logistics companies, among others, all need a high level of awareness and a framework in place to protect themselves.

Simultaneously, as sanctions implementation increases so do the tactics used to evade them, which in turn heightens the requirement even further for a strong compliance framework.

A sanctions compliance framework that allows flexibility and can be consistently used in risk mitigation for both new and existing customers and counterparties is important.

Below are the key steps you should take to create and maintain a strong sanctions compliance programme.

1. Raise awareness in your organisation
   It is important that everyone understands why compliance is important and how it is done effectively done. A positive compliance culture and effective training is also important.
   All staff should be aware of their responsibilities and what compliance best practices should be adopted like through sharing of knowledge as well as up-to-date training that is in line with continual changes.
2. Embed sanctions compliance into commercial operations
   As the volume, range, and speed of sanctions implementation increases, it is becoming impossible even for large compliance teams to fully conduct the right due diligence checks fast enough for the needs of the organisation.
   It is therefore important to embed sanctions compliance into commercial operations and give operations and commercial team members the tools and decision-making capacity to conduct basic due diligence themselves.

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