The UK is set to leave the EU at 11.00 pm on 31 December 2020. The UK Office of Financial Sanctions Implementation has issued new guidance on sanctions rules for the maritime sector
The UK Office of Financial Sanctions Implementation (OFSI) has issued an update on enforcing sanctions ahead of the Brexit deadline. The guidance is to ensure all participants understand the nature of financial sanctions in the shipping industry and how these sanctions might be breached.
The OFSI has the power to impose fines of up to 50% of the value of the breach or £1.0M (US$1.2M), whichever is higher, and refer the case to the criminal courts where punishment could result in seven years in jail.
The OFSI states that, “Any person carrying out, or partaking in, business involving maritime shipping, should be aware of the risks posed and the consequences for failure to ensure compliance.” It lists the following illicit and suspicious shipping practices and tactics that are deployed to confuse or conceal the identities of vessels, cargo, routes and ports.
Shipping intelligence provider Windward advises that shipping companies need to understand the guidance and seek remedies to show they have undertaken steps to conform. In mid-June 2020, BP Shipping teamed up with Windward to assess the global energy company’s exposure to sanction-busting tankers and counterparties.
Windward advises that maritime stakeholders who were previously indecisive regarding implementing measures to comply with the advisory may need to reconsider their commitment and timing in light of the possible implications, with OFSI putting further emphasis on risk-based screening and dynamic data analysis.
Winward states that legacy list-based screening systems are less effective and costly, either expanding the risk to the business or shrinking the business opportunities. Using legacy list-based solutions have proven to be extremely time-consuming in attempting to address the latest OFAC advisory – up to 2.5 days to clear a ship versus five minutes with predictive intelligence.
Windward further states that legacy list-based solutions have proven to create up to 12.6% false positives which ultimately restricts companies’ ability to conduct business.
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