Companies Should Prioritize Maritime Sanctions Compliance, Experts Say

As commercial ships worldwide continue to try to evade sanctions, U.S. authorities are increasingly monitoring industry compliance with maritime sanctions regulations, compliance experts said. The U.S. underscored maritime sanctions compliance last year after it issued guidance on common evasion practices, setting high expectations for industry compliance, the experts said.

“It really kind of made everyone snap to attention,” said Bethany Milton, a sanctions compliance officer with Danske Bank, speaking during an April 1 webinar hosted by the Association of Certified Sanctions Specialists. “Everyone had been a little bit worried about maritime sanctions evasion before, but when this document came out, it was clear that this was something that the government was taking very seriously.”

The guidance, issued in May by the Treasury Department, the State Department and the Coast Guard, outlined common sanctions evasion practices that companies and banks should be monitoring, including the disabling of a ship’s automatic identification system (AIS), falsified cargo documents and flag hopping (see 2005140039). The U.S. agencies stressed that the document isn’t exhaustive and urged companies to keep their compliance programs up to date, advice Milton said companies should follow. She said compliance officials should be continually checking their programs for weaknesses and ensuring their screening software and other tools are running well. “Sanctions authorities want to see good strong compliance programs,” she said. “And a part of any good, strong” program is “testing the effectiveness of what you've created.”

Although companies can use either automated or manual controls to conduct due diligence, Andrew Fierman, head of sanctions at Barclays, recommends using both. “When it comes to implementing controls in this context, it can't really ever be fully manual or automated,” he said during the webinar. “It really requires this balanced multimodal approach.” Fierman said companies should first build a “complex knowledge of basic shipping tactics” before relying solely on automated software, including through compliance training.

“If people don’t know what they're looking for when you say the words AIS manipulation, the automation doesn't actually benefit anybody,” he said. “So once this framework is in place, and the stakeholders involved understand the risk, then you can begin implementing automation to make the process easier.” He said an automated system can “turn an investigation that would regularly require anywhere between 15, 20 minutes per vessel into just a few seconds.”

Yael Regev, a sales director for maritime risk management company Windward, said companies are increasingly turning to artificial intelligence-powered tools to monitor sanctions risks. “We're talking about 100,000 commercial ships that ship 400 million containers a year,” she said. “It's really challenging to get all of these data sources into one place.” She said AI can help compliance officers quickly monitor whether potential customers have manipulated their AIS signals or recently traveled to sanctioned regions. “In the end,” she said, “I think that only AI can help you find the true needle in the haystack in terms of risk.”