A merican Club Circular No . 0 4 /22 1 FEBRUARY 1, 2022 CIRCULAR NO. 04/22 TO MEMBERS OF THE ASSOCIATION Dear Member: SANCTIONS – RECENT DECEPTIVE PRACTICES Since 2010, considerable sanctions activity has been directed at shipping and its supporting industries reflecting the fact that 90% of world trade involves the carriage of goods by sea. The purpose of this Circular is to draw Members’ attention to some of the recent deceptive practices employed by parties that are engaged in activities that offend the sanctions regimes operated by national governments and/or supranational bodies such as the United Nations (UN). Current deceptive practices observed by the International Group (IG) and its commercial partners While trade sanctions are applied widely by governments to promote individual foreign policy objectives, the following jurisdictions are particularly relevant in the context of controlled activities in maritime trade: • Iran • Syria • Venezuela • Democratic People’s Republic of Korea (DPRK) • Crimea • Cuba • Belorussia Cargoes traded in breach of international and national trade sanctions appear to be on the increase. Iranian oil exports, initially heavily restricted by sanctions programs, are now thought to have risen from an estimated 340,000 barrels per day in following the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA) to an estimated 1.3 million barrels per day in March 2021. 1 In recent weeks oil swap deals involving Iranian and Venezuelan oil cargoes destined for Asian markets have been widely reported in the press. 2 In September 2021 the UN Security Council Panel 1 Iran Sanctions. Congressional Research Service. https://crsreports.congress.gov RS20871 2 “Under US sanctions, Iran, Venezuela strike oil export deal”. Reuters 25 September 2021 A merican Club Circular No. 04/22 2 of Experts on the DPRK published an interim report detailing widespread infringements of UN sanctions involving shipping and the DPRK. The report can be accessed by clicking on this link: S_2021_777_E.pdf (securitycouncilreport.org) Some of the techniques used to break sanctions have been in use for several years, while others are newer and have become more prevalent in the last 18 months. All aim to minimize surveillance and detection through confusion or concealment of the identities of vessels, their cargo, geographical location, and navigational activities. Such concealment poses risks for shipowners and their commercial partners who may inadvertently be employed to transport a sanctioned cargo. These techniques include: • Manipulating a vessel’s Automatic Identification Signal (AIS) to disguise the vessel’s location and/or to alter a vessel’s digital identity. • Changing a vessel’s physical appearance. • Falsifying vessel and/or cargo documentation. • Multiple ship-to-ship cargo transfers to hide the fact that the cargo originated in a country to which a sanctions regime applies. All these practices present risks for ship owners who, without a properly implemented compliance framework, may find that their vessel is being used to transport sanctioned cargoes. AIS manipulation Considerable emphasis is placed by UN reports and the US and UK maritime advisories 3 on the need to monitor the AIS transmissions of vessels as part of a properly implemented compliance framework. However, AIS technology and its associated hardware and software were not designed for this purpose; the purpose of AIS was to identify ships in coastal areas a