Vessel Ownership Risk Whitepaper - 2023

This white paper coauthored by the Institute of International Banking Law & Practice (IIBLP), Global Financial Integrity, and S&P Global examines the connection between the availability of a vessel’s beneficial owner information, and the risk of criminal or sanction-violating behavior.


Financial institutions are increasingly expected to combat sanctions and financial crime compliance evasion by monitoring suspicious vessel behavior. These expectations are largely in response to the U.S. Department of the Treasury’s Office of Foreign Assets Control (U.S. OFAC) and the United Kingdom’s Office of Financial Sanctions Implementation (UK OFSI) advisories on shipping published in May and December 2020, respectively. These documents contained a number of recommendations for financial institutions to recognize and implement. While not previously expected of trade finance operations, a nuanced understanding of the maritime shipping industry has become a critical aspect of regulatory compliance, such as identifying commodities and trade corridors where transshipment and ship-to-ship (STS) transfers may occur. 

The complexity of the shipping industry, however, has caused some anxiety amongst financial institutions as it requires a level of expertise that may not be reasonable for, or even available to, small or medium sized banks, whether seeking to bring such expertise in-house, or rely on sophisticated service providers. 

Helpfully, recent guidance papers have been published to better assist the industry, but the authors considered that a global statistical review of vessel data could further benefit the community. This statistical review is intended to complement those guidance papers and further crystallize the compliance concerns arising from the shipping industry. 

This review shares our findings related to the availability of vessel Group Ownership in relation to each vessel's compliance behavior. Recommendations for financial institutions and insurance companies include adding at least one additional check during their risk-based approach. That check could be review of the ownership information of a particular vessel in light of its known compliance status, flag of country and ownership domicile. Put differently, banks should be able to, as a general matter, have a baseline calculation of risk for a given vessel so reasonable decisions may be made in light of the increased regulatory pressure regarding the maritime industry. Additionally, government regulators and port security officials should consider requiring Group Ownership information prior to port calls, and further down the line, establish a beneficial ownership registry to ensure additional transparency. 

Read full paper below, or click here to download.




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