Maritime compliance: key regulations and best practices

Overview

As the requirement for international sanctions becomes more common, companies face complex challenges to understand and navigate a shifting regulatory environment.

As such, it has become increasingly crucial for companies and individuals to remain vigilant, meet regulatory standards and mitigate potential risks – or face severe financial and reputational repercussions.

In order to avoid compliance violations, regulators have outlined a set of best practices that companies are encouraged to adopt.

These practices include the implementation of a rigorous KYC (Know Your Customer) due diligence programme, as well as exercising supply chain due diligence, such as conducting thorough KYCC (Know Your Customer’s Counterparties) checks.

While these practices are not exhaustive, they serve as key measures that companies must take to ensure compliance and uphold regulatory standards.

We’ve highlighted some important regulations that companies should consider.

United States (US) regulations

• In May 2020, the US Department of Treasury, the US Department of State and the US Coast Guard issued an advisory called “Guidance to Address Illicit Shipping and Sanctions Evasion Practices” to all those operating in the maritime industry (from ship owners, managers, operators, brokers and ship captains to insurance companies and financial institutions) to address illicit shipping and sanctions evasion practices
• On 23 December 2022, the US Congress passed the Anti-Money Laundering Whistleblower Improvement Act (“the Act”), expanding whistleblower protections and strengthening incentives for reporting

United Kingdom (UK) regulations

• On 16 March 2023, the UK’s Office of Financial Sanctions Implementation (OFSI), released its latest guidance OFSI enforcement and monetary penalties for breaches of financial sanctions, detailing their approach to assessing breaches of financial sanctions where an incorrect assessment of ownership and control of an entity is relevant to the commission of the breach
• The UK Bribery Act 2010 brought to the forefront the heightened requirement to conduct due diligence on an organisation’s associated parties – this requirement was compounded by rounds of anti-money laundering (AML) regulations from the EU

European Union (EU) regulations

• EU sanctions do not target a country or population, but are always targeted at specific policies or activities, the means to conduct them and those responsible for them
• For the majority of sanctions regimes, measures are targeted at individuals and entities and consist of asset freezes and travel bans
• The EU can also adopt sectoral measures, such as economic and financial measures (e.g. import and export restrictions, restrictions on banking services) or arms embargoes (prohibition on exporting goods set out in the EU’s common military list)

These are three regulations from a list of five that we cover in the guide.

You can read the full guide for all the regulations here.