INTRODUCTION
On May 14 2020, the Office of Foreign Assets Controls (OFAC) has published a Guidance to address illicit shipping and sanction evasion practices
https://home.treasury.gov/system/files/126/05142020_global_advisory_v1.pdf
In light of this new advisory, MAR INT DMCC Group and/or its affiliates (the “Company”) expects that all of its employees will comply with this new guidance. In order to comply with this guidance, the Company has invested in a shipping screening & tracking software: PurpleTrac.
I. DEFINITION OF TERMS & LEGISLATIONS
- Sanctions, Trade Restrictions & Boycott: Are rules set out by international organizations and/or countries in order to advance this organization’s or country’s geopolitical goals, such as but not limited to, the United Nations Security Council, the Office of Foreign Assets Control, the European Union, the Swiss SECO, the Arab League, etc…
- United Nations Security Council: in charge of issuing sanctions on its own behalf and that of other UN Security Council members. https://www.un.org/securitycouncil/sanctions/information
- OFAC: is the Office of Foreign Assets Controls and is the office in charge of managing the United States sanctions regimes.
https://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx - EU: the European Union is in charge of issuing the sanctions on behalf of all EU members.
- https://data.europa.eu/euodp/en/data/dataset/consolidated-list-of-persons-groups-and-entities-subject-to-eufinancial-sanctions
- Q88: “Questionnaire 88, widely referred to as “Q88”, was first issued in 1988, and is used to assess vessel suitability and risk when chartering tankers. The questionnaire, now in its fifth version, has long been the established industry standard for information on ships for commercial screening (vetting) purposes”.
- SECO: Secretariat for Economic Affairs is the office in charge of managing the Swiss sanctions regime.
https://www.seco.admin.ch/seco/en/home.html - Risk Based Approach: as defined under FATF, is an approach to due diligence which should focus on the specific risks associated with a transaction. In other words, when conducting KYC, trading companies should focus where risks are most likely to materialise.
- STS: Ship-to-ship transfer. Known sanctionable STS zones are (but not limited to): North China Sea, Arabian/Persian Gulf, Straight of Hormuz, Northern Arabian Sea and Caribbean Sea.
- TC: Time chartering is different to voyage chartering, when a vessel is on TC the vessel’s services are hired for a specific period of time and not a specific voyage.
- Shipping Ultra-High-Risk & High-Risk Countries: are countries that pose extreme compliance risk, primarily (but not limited to) because of exposure to sanctions. The Ultra-High-Risk countries when it comes to sanctions are (but not limited to):
- Shipping Ultra-High-Risk Countries (UHRC): Iran, North Korea, Syria, Venezuela, Yemen (Houthi Controlled) and Cuba.
- Shipping High Risk Countries (HRC): Myanmar (aka: Burma), North Sudan, Nicaragua, Russia/Ukraine (Crimea in particular), Democratic Republic of the Congo, Iraq, Somalia and Lebanon.
II. PURPOSE
This policy & procedure has the purpose of:
- Ensuring that the Company is compliant with US sanctions.
- Ensuring that all vessels chartered are suitable from a US sanctions perspective.
III. ROLES & RESPONSIBILITIES
Senior Management: to empower and to provide the resources necessary in order to allow the compliance department to perform checks on vessels.
Chartering department: to provide a valid Q88 to compliance. Each employee in charge of chartering is ultimately responsible for the suitability of his/her vessels.
Compliance Department: to collect KYC documentation from prospective business partners, perform checks following a Risk Based Approach on new business partners in compliance with the Company’s KYC procedure and maintaining records of the checks.
IV. SCOPE
All vessels that the company intends to charter on a voyage of TC basis.
V. THE PROCEDURE
Step 1: Before chartering any new vessel, an email request along with a valid/most recent Q88 (or at the very least an IMO number) must be sent to: trade@mar-int.com.
Step 2: Upon receipt of this email, compliance will enter the IMO number (or vessel name) into PurpleTrac.
Step 3: PurpleTrac will automatically screen the vessel’s IMO number and identify if:
- The vessel is linked to any sanctioned entities and/or individuals.
- The vessel has called ports in jurisdictions that hold significant sanction risk over the last 2 (two) years.
- The vessel has had AIS outages (has the vessel “gone dark”) over the last 2 (two) years.
- The vessel has not performed any STSs in breach of applicable sanctions.
- If a vessel has called a shipping UHRC during the last two years, the vessel must not be chartered as this would be a breach of US sanctions.
- If a vessel has a pattern of “going dark” and reporting draught changes close to a Shipping UHRC and/or a Shipping HRC and/or close to a known sanctionable STS area, the vessel must not be chartered as this would be a breach of US sanctions.
Step 4: Compliance receives an automatic report from PurpleTrac on the vessel screened.
Step 5: If the report raises “red/orange flags”, compliance will investigate these and may request more information either from the chartering department, the shipping broker and/or the vessel owner.
Step 6:
- If the vessel has no red/orange flags or if these were satisfactorily explained to compliance, compliance will approve the chartering of the vessel and email such approval to the chartering team.
- If the red flags could not be explained to the satisfaction of compliance, compliance will reject the request to charter the vessel.
- If disagreements arise between chartering and compliance, the decision to proceed or not with the new vessel will ultimately fall on senior management.
Step 7: Once the vessel has been chartered by the Company, the chartering department will immediately alert the compliance department who will commence tracking and monitoring of the vessel until the voyage is completed.
Step 8: If at any moment during the voyage of the vessel, compliance becomes aware of suspicious activities, compliance will report such activities to chartering, senior management and the legal department who will jointly decide on the correct course of action.
VI. VESSELS ON TC
In addition, all vessels hired on a TC basis will also be continuously tracked throughout the TC voyage in order to ensure compliance with US sanctions.
VII. RECORD KEEPING
Compliance shall maintain a record of:
- All PurpleTrac reports.
- All Q88s submitted.
- All communications relating to the screening of the vessel.
CONCLUSION:
By implementing this shipping & chartering compliance policy, the Company is ensuring that it complies with US sanctions as well as to the market best practices for KYC compliance procedures. In addition, thanks to this policy, the Company can demonstrate to its stakeholders that it takes a zero-tolerance approach to sanction non-compliance and strives to be compliant with all applicable sanctions.
