The burden of international sanctions continues to rise, posing both a compliance and safety risk, as a growing number of vessels turn off transponders to avoid detection.
The use of trade sanctions continues to grow. A myriad of US, EU and national sanctions currently target government agencies, individuals and commercial operators in countries like Iran, Russia, Venezuela and China. Increasingly, sanctions are targeting the sectors that facilitate trade, including shipping companies, their financiers and insurers.
Sanctions are a growing issue for the shipping industry and for insurers, according to Justus Heinrich, Global Product Leader Marine Hull at AGCS. “They pose a significant compliance burden. As a result of sanctions, we need to ask more and more questions of our clients,” says Heinrich.
Sanctions regimes in Iran and Venezuela, for example, have expanded to include the energy and shipping industry. Earlier this year, the US blacklisted 14 largely European companies and six tankers over alleged involvement in the trade of Venezuelan crude oil. Last year, the US sanctioned a number 9 of shipping companies in Hong Kong for their dealings with Iran.
In a worrying development, some vessels have been switching off Automatic Identification Systems (AIS) as they seek to hide their location and defy US sanctions. In April, the US seized a Cameroon-flagged oil tanker10 for evading the country’s sanctions on trade with North Korea. The vessel is alleged to have engaged in a ship‑to‑ship transfer of more than $1.5m worth of oil to a North Korean ship, and to have stopped transmitting location information in a bid to avoid detection.
"The use of AIS for sanctions enforcement has an unintended result," says Kinsey. "It was introduced to make navigation of the seas safer, but now we see it is being used to track vessels. As a result, some ships have disabled AIS, which could obviously have a detrimental impact on maritime safety, given the potential for a serious incident to occur, such as a collision.”
Source: AGCS Safety Shipping Review -2021