U.S. agencies issue ‘know your cargo’ transport compliance note

The Department of Justice (DOJ), Commerce Department’s Bureau of Industry and Security, Department of Homeland Security’s Homeland Security Investigations, State Department’s Directorate of Defense Trade Controls, and Treasury Department’s Office of Foreign Assets Control (OFAC) released a joint compliance note Monday to highlight tactics commonly deployed by bad actors regarding the transportation sector. The note includes signs of sanctions evasion efforts and examples of relevant agency enforcement actions.

On the enforcement front, the DOJ announced in September a landmark criminal resolution involving a Greek-based shipping company’s transport of nearly 1 million barrels of contraband crude oil from Iran. Empire Navigation pleaded guilty to violating the International Emergency Economic Powers Act and was fined $2.5 million in addition to receiving three years of corporate probation as part of a deferred prosecution agreement.

Also cited was OFAC’s $6.1 million enforcement action against international freight forwarding and logistics company Toll Holdings in April 2022. Toll allegedly caused U.S. persons to violate sanctions through payments related to sea, air, and rail shipments involving blocked individuals in North Korea, Iran, and Syria.

To thwart bad actors seeking to exploit global supply chains, the agencies recommended transportation entities:

• Develop, implement, and adhere to written, risk-based operational compliance policies, procedures, standards of conduct, and safeguards;
• Conduct risk-based due diligence on the location history of vessels, vehicles, and aircraft to identify prior manipulation or disabling of location or identification tracking data;
• Conduct due diligence on counterparties;
• Conduct due diligence to ensure transaction recipients are not sending or receiving commodities in violation of U.S. sanctions or export control laws; and
• Share information across industries and supply chains, as appropriate.

“Companies operating in the maritime and other transportation industries should be vigilant in their compliance efforts and be on the lookout for efforts to disguise the nature, origin, or destination of cargo being transported,” the note concluded. “These entities are strongly advised to assess their sanctions and export risks; implement rigorous compliance controls to address those risks; and, ultimately, verify the true nature, origin, and destination of the cargo they are involved in transporting.”