Captains blacklisted as US and UK governments crack down on trade sanctions

US President Donald Trump signs a document reinstating sanctions against Iran. Credit: SAUL LOEB/AFP via Getty Images

Captains are at risk of being blacklisted as the US and UK governments take a harder stance on trade sanctions violations at sea. Both governments are stressing to the maritime sector that all those involved in evading sanctions, from the ship owners to the individuals onboard, will be penalised.

In a signal of a stricter approach with captains of vessels found to have flouted trade sanctions, the US Department of Treasury and Foreign Assets Control recently added the captains of five Iranian flagged tankers to the Specifically Designated National and Blocked Persons List (SDN List) on 24 June for delivering oil to Venezuela.

A person placed on the SDN list will have any US assets or bank accounts frozen, and the individual will not be able to trade or do business with US companies or citizens. Seafarers added to this list will then not be able to work on US flagged vessels or call at US ports.

Meanwhile, the UK Treasury issued tougher sanctions guidance for the maritime sector on 28 July, placing the onus on captains to be aware of international sanctions and report any breaches to the relevant authorities.

“The Treasury Department will target anyone who supports Iranian attempts to evade US sanctions and who further enables their destabilising behaviour around the world,” said Steven T. Mnuchin, US treasury secretary, in a press statement.

However, experts believe that being added to the SDN List will have little impact on the Iranian captains and that this act is to deter other vessels from breaking trade sanctions. “The individuals [Iranian captains] are unlikely to have funds in the US [which will be frozen] and [are] unlikely to be sailing to US ports and trading with US companies,” explained Daniel Martin, partner and shipping specialist at law firm HFW. Martin stated to SAS that it may even enhance the captains’ careers as Iranian masters on Iranian vessels as they have been publicly identified by the US as loyal employees; the masters followed company orders and publicly violated international sanctions.

“This is more a signal to masters on other vessels that the US has the power to blacklist them and sets the precedent,” said Martin.

The latest sanction regulations are holding captains responsible for the actions of the management companies or owners; a move that could be seen as the further criminalisation of captains in the shipping industry “Going forward individuals in the maritime sector who find themselves caught up in a trade – part, or all, of which contravenes sanctions will find it increasingly difficult to defend themselves if they cannot demonstrate that they took active steps to enhance their due diligence,” commented Dr Ian MacNeill, analyst at security consultancy Dryad Global.

What complicates matters further is that vessels routinely turn off their AIS in high risk areas, due to piracy and other risks, and can be mistakenly flagged for deeper investigation for sanction violation. According to data from Israeli maritime security firm Windward, 70% of active very large crude carriers (VLCCs) were “lost” at least once in June 2020 (meaning a period of eight plus hours they were not detected). Another 11% went “dark” at least once in the same month (where speed, distance, and coverage quality, indicates a ship could have conducted an illicit activity during a “lost” period). “Two out of three VLCCs can be mistakenly flagged for deeper investigation,” Omer Eilat, business development director, Windward told SAS. “Even with algorithms that can filter out ‘dark’ vessels, an expert analyst would need to review 10 ‘false positives’ for every actual high-risk vessel”.

According to Eilat, the main issue facing captains is not about whether the vessel is transmitting a signal but what it could have been doing while it wasn’t transmitting. To avoid being falsely accused, he advises that captains try to avoid making detours, stops or slow down while not transmitting, therefore minimising the time a vessel is “unaccounted for”.

For captains conducting ship-to-ship transfers in known areas for sanction violations, Dr MacNeill advises that they verify the vessel name, flag, and IMO number and ensure they are legitimate before engaging in the transfer. “Dryad Global advises against vessels switching off AIS as a mitigation measure and, instead, should focus on implementation of hardening and intelligent routing,” said Dr MacNeill.

The US government has an anonymous Rewards for Justice (RFJ) programme that offers an award of up to USD15 million, for any information leading to the disruption of the financial mechanisms of Iran’s Islamic Revolutionary Guard Corps. This includes sanctions violations.

According to Martin, the RFJ is the proverbial carrot for captains while the stick remains being added to the SDN list. “The US authorities encourage masters to provide information on sanctions violations through the RFJ programme, in order to avoid the risk of personal sanctions exposure,” said Martin. The anonymity of the RFJ programme gives captains vital protection against any retaliation from their shipping company.