The global maritime and transportation industries have historically played a crucial role in facilitating the movement of goods and people across borders. However, these industries face persistent threats from illicit actors attempting to transport contraband goods, evade sanctions, and launder money. In response to this growing concern, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued a call to action, urging heightened vigilance from stakeholders in these sectors. Captain Steve Bomgardner, VP Commercial Markets, Pole Star, delves into the deceptive shipping practices employed by malignant actors and explains how compliance measures recommended by OFAC can be strengthened through enhanced maritime intelligence to combat the challenges that the industry and sector face.
Deceptive Shipping Practices
Illicitactors employ various deceptive shipping practices to obscure the true nature, origin, or destination of their illicit cargo. Four major methods are commonly utilised. Firstly, location or identification data manipulation involves tampering with vessel tracking systems, falsifying documentation, or adopting false identities to conceal cargo identity or location.
Another tactic is the falsification of cargo and vessel documents, where bad actors counterfeit shipping documents, alter goods descriptions, or forge certificates of origin to deliberately misrepresent cargo content.Ship-to-ship transfers present another challenge, as malign actors transfer cargo at sea, making it challenging to identify the true beneficiaries of illicit shipments. This problem is exacerbated by complex corporate structures that are purposefully complex, muddying the waters further.
The Key Measures Emphasised by OFAC
Recognising the significant risks posed by deceptive shipping practices to legitimate vessels and cargo, OFAC emphasises the implementation of robust compliance measures. The top five measures include:
- Establishing robust sanctions and export control compliance initiatives: Companies ought to formulate comprehensive policies and procedures designed to detect and alleviate potential violations of sanctions. This encompasses scrutinising transactions against government lists, conducting due diligence on counterparties, and providing personnel with training on compliance requirements.
- Implementing best practices for location monitoring: Organisations should actively monitor the historical location of vessels, vehicles, and aircraft to identify any prior manipulation or disabling of location or identification tracking data. This proactive surveillance can be achieved through diverse methods, such as Automatic Identification System (AIS) monitoring, satellite imagery analysis, and physical inspections.
- Conducting meticulous “Know Your Customer” (KYC) investigations: Companies should undertake thorough background checks on counterparties to verify their legitimacy and adherence to relevant regulations. This entails confirming legal registration, assessing financial standing, and scrutinising business activities.
- Exercising diligence in supply chain management: Entities should assess potential risks associated with their supply chains and take decisive measures to mitigate these risks. This involves authenticating shipping documents, ensuring that cargo is not diverted to prohibited destinations, and conducting due diligence on all intermediaries involved in the supply chain.
- Facilitating information exchange with law enforcement: Companies are urged to promptly report any suspicious activities to relevant authorities. The sharing of information plays a pivotal role in disrupting illicit trade networks and identifying the individuals responsible for such criminal activities.
Unlocking Solutions through Advanced Maritime Intelligence
Effectively tracking deceptive shipping practices and meeting OFAC’s prescribed measures necessitates access to cutting-edge maritime intelligence technology and risk intelligence. These technological solutions offer comprehensive insights into global supply chains, enabling the proactive identification of potential warning signs. Furthermore, these solutions provide robust compliance features, including consolidated screening and seamless integration within various databases for transaction and counterparty screening against authoritative lists.
Supply chain mapping and visualisation are becoming increasingly useful to organisations to analyse and visualise intricate supply chains. This allows for the identification of potential vulnerabilities and network connections that could be exploited for illicit purposes.
Conclusion
OFAC’s recent emphasis on the escalating threat posed by illicit cargo shipments underscores the imperative for increased vigilance within the maritime and transportation industries. Through the implementation of rigorous compliance measures and the strategic utilisation of maritime and risk intelligence technologies, these industries can effectively combat the challenges presented by illicit cargo shipments, thereby safeguarding their businesses from the associated risks.
