The Price Cap Coalition has updated its advisory with new best practices for companies and governments involved in the maritime trade of crude oil and petroleum products. These updates focus on preventing sanctions evasion and enforcing price caps on Russian-origin oil established by the G7, EU, Australia, and New Zealand. In response to recent developments in the maritime oil trade, four new recommendations have been introduced.
These recommendations are summarised below. One key highlight from the U.S. Department of the Treasury’s Office of Foreign Assets Control’s (OFAC) latest advisory is the importance of using persistent tracking technology alongside AIS to enhance vessel monitoring. Pole Star Global is the only compliance platform that offers this capability, making it an indispensable tool for protecting your fleet from bad actors.
As the risk landscape grows more complex, deploying the right software solutions is more critical than ever. With this in mind, read on to learn more about OFAC’s latest advisory and how Pole Star Global has been designed to help you maintain compliance at all times.
OFAC’s Recommendations
The Coalition encourages stakeholders to follow these best practices, depending on their role, risk exposure, and the types of transactions they handle.
Recommendation #1: Ensure that Protection and Indemnity (P&I) Insurance is Adequately Capitalised
Stakeholders should ensure vessels have continuous, valid insurance from reputable providers that cover environmental and liability risks. Due diligence on insurers, including their financial health and regulatory status, is essential.
How Can Pole Star Global Help?
Pole Star Global’s PurpleTRAC software solution identifies risky and unknown Protection and Indemnity (P&I) clubs, enhancing your due diligence efforts in this critical area.
Recommendation #2: Ensure Classification from an International Association of Classification Societies (IACS) Member Society
Ships should be classified by societies that are part of the International Association of Classification Societies (IACS). This classification ensures vessels meet industry safety standards.
How Can Pole Star Global Help?
Pole Star Global’s PurpleTRAC details the classification society associated with each screened vessel, making it easy for you to check whether that society is an IACS member.
Recommendation #3: Best Practice Use of Automatic Identification Systems (AIS)
Ships should continuously broadcast their location via AIS during voyages, as required by the International Convention for the Safety of Life at Sea (SOLAS).
If a ship needs to disable AIS for safety reasons, it should document why. Stakeholders should also watch for irregular AIS data that may signal hidden activities. Long-Range Identification and Tracking (LRIT) can be used as a backup in these circumstances, to track ship locations.
How Can Pole Star Global Help?
Pole Star Global is the only compliance solution that provides persistent tracking, helping you detect bad actors who may spoof AIS signals or disable a ship’s AIS transponders. With continuous monitoring throughout a voyage, you can ensure that no illicit activities are taking place. For more information on Pole Star Global’s persistent tracking capabilities, read: Fleet Analytics: Opportunities, Challenges, And How to Find the Right Solution (6-Step Plan).
Recommendation #4: Monitor High-Risk Ship-to-Ship Transfers
Stakeholders must ensure all ship-to-ship (STS) activities comply with MARPOL convention rules and national regulations, as outlined in the IMO’s December 2023 Resolution on STS activities and the shadow fleet. STS transfers can hide the origin of cargo. Extra diligence should be applied in areas known for illicit activities when logging cargo movements and verifying oil transfer records.
How Can Pole Star Global Help?
Pole Star’s MDA technology provides full visibility into STS transfers and their locations. It offers 30 days of historical and 5 days of forecasted weather data on an interactive map, allowing you to assess whether STS transfers occurred in challenging conditions (which is often used to hide illegal transfers). Plus, with PurpleTRAC, you can also identify AIS gaps, stationary periods, and potential STS cargo transfers through instant draught-change notifications.
Recommendation #5: Request Transparent Shipping Costs
Hidden or inflated shipping costs could indicate that Russian oil is being sold above the price cap. Stakeholders should ask for detailed, itemised breakdowns of all shipping and related costs at the start of any trade transaction to avoid price cap evasion. Contracts and invoices should clearly show the oil price up to the port of loading and separate costs for transportation and other services.
Recommendation #6: Perform Thorough Due Diligence
Enhanced due diligence should be conducted on ships with frequent changes (e.g., new ownership or registration) or those with higher risk profiles due to age, accident, and inspection histories. Extra care is needed when working with companies that conceal ownership or have opaque practices, as they may be involved in deceptive activities.
How Can Pole Star Global Help?
Pole Star Global’s PurpleTRAC will automatically notify you of suspicious changes in vessel ownership, management, and registration, as well as instances of flag hopping. This automation streamlines the due diligence process, ensuring near-real-time alerts with high accuracy.
Recommendation #7: Report Suspicious Ships to Authorities
If stakeholders suspect illegal or unsafe maritime oil trade, including potential breaches of the oil price cap, they should report it to authorities. Reporting helps protect the industry from harmful activities. Stakeholders should refer to the Coalition’s February 2024 Compliance and Enforcement Alert, which includes important reporting details.
How Can Pole Star Global Help?
With Pole Star Global’s PurpleTRAC solution, you can screen each vessel and generate a PDF report that can be saved for your records. This provides a comprehensive evidence trail.
Recommendation #8: Ensure Ships Meet Safety and Environmental Standards
Ships must follow international safety and environmental regulations (like SOLAS, MARPOL, STCW, and CLC). Flag states, port states, and coastal states enforce these standards. Stakeholders should engage with these authorities if they suspect a ship is involved in illegal activities or is not following safety rules.
How Can Pole Star Global Help?
Pole Star Global acts as a single source of truth on the compliance status of vessels for all stakeholders across the industry. The platform offers real-time access to critical vessel data, including safety certifications, inspection records, and compliance status. By consolidating this information, stakeholders can make informed decisions and take action when necessary.
Recommendation #9 – Monitor Tanker Sales:
Be cautious of the sale or brokering of tankers, particularly ageing vessels, which may be involved in illicit activities. Conduct enhanced due diligence on buyers, including verifying ownership and financial details, to prevent the vessels from being used for illegal purposes. The Coalition suggests checking this information using third-party databases, media, and market intelligence. This should be reviewed regularly, following local regulations and Recommendation 6.
How Can Pole Star Global Help?
Pole Star Global’s PurpleTRAC can detect recent or historic ownership changes, allowing you to investigate further if required.
Recommendation #10 – Avoid Dealing with Sanctioned Parties:
Stakeholders should regularly check their counterparties and ships against sanctions lists. If possible, avoid dealing with sanctioned vessels, parties, or companies that have previously interacted with sanctioned entities. Report any attempts by these vessels to access ports or conduct business.
How Can Pole Star Global Help?
Stakeholders can use PurpleTRAC to quickly and automatically screen vessels. This tool checks a vessel’s sanction status, movement history, and port state control history, and compares it against company, country, ship, and flag watchlists.
Recommendation #11 – Raise Awareness and Increase Transparency:
Stakeholders should provide training to employees and partners on the risks of deceptive practices in the maritime industry. This training should cover identifying red flags, understanding the impact of these practices, and the importance of transparency and compliance. Collaboration and information sharing with other industry partners is also encouraged.
How Can Pole Star Global Help?
Pole Star Global’s software solutions serve as your in-house compliance expert. With a user-friendly interface and clear outputs, Pole Star’s system simplifies compliance training for your teams and partners.