This is part 4 of a five-part series with Tom Fox and the FCPA Compliance Report on navigating an increasingly complex sanctions landscape. The series will consider the current sanctions landscape, discuss how to build a sanctions compliance program, walk listeners through what happens when a sanctions breach or potential breach is discovered, consider new sanctions exposure, and conclude with a look in that veiled land of the future by considering issues on the horizon.
In recent months, the U.S. State Department, Department of the Treasury, and Coast Guard have come together to issue new guidance in the sanctions arena for the maritime industry, making for an interesting time for those operating in the sector. Perhaps the biggest change has been moving sanctions away from only impacting the financial services and banking sectors and into the commercial space.
While financial institutions have grown both anti-money laundering (AML) and sanctions compliance groups, such compliance disciplines are not as prevalent in maritime and shipping. Getting up to speed—and doing so quickly—will thus present challenges for those sectors, as the guidance issued significantly raises the level of due diligence expected from the industry. One tactic companies in the maritime industry, such as shipping companies, can use to get up to speed is to seek guidance from their partner financial institutions on expectations for what a compliance program might look like.
Shipping companies should approach this in a two-pronged manner: seeking to learn both what the financial institutions have done in the past to ensure that they are staying on the right side of sanctions, as well as what they would expect from a shipping company as a partner. Ensuring this open dialogue is important, particularly in light of the recent guidance.
As entities in the shipping and maritime space begin to wrap their arms around their own sanctions programs, it is critical to ensure that customers and counterparties—such as insurance companies that partner with the industry—also have robust sanctions compliance programs in place.
As sanctions continue to broaden beyond traditional financial services, insurance companies in turn need to ensure that their customers have sanctions compliance programs in place and that these compliance programs are fairly robust. Doing so will provide an almost built-in mechanism to assess an entity’s compliance program before conducting business with them. These assessments can not only be used to let customers know minimum expectations, but also, equally importantly, can help entities make sure that their sanctions compliance programs meet current standards. The bottom line is that this B2B business pressure will help drive compliance in the industry in new ways.
The maritime industry can also leverage discussion among peer companies in the shipping space to ensure sanctions compliance is meeting current standards. Having conversations with other shipping companies that are facing the same challenges can be productive. And in addition to peer company resources, entities can look to outside parties, such as law firms and consulting firms, that have experience working in this space.
To listen to the next podcast in the series, please click here.