On July 19, 2012, the Office of Foreign Assets Control
("OFAC") issued an advisory stating that Iran Islamic
Republic of Iran Shipping Lines ("IRISL") is currently
operating unregistered vessels. OFAC advises all persons in the
maritime industry that any assistance provided to IRISL in
connection with the re-flagging of its vessels may constitute a
provision of services in violation of U.S. sanctions. Such a
violation may result in the assisting person being added to
OFAC's Specially Designated Nationals ("SDN") list
for having assisted another designated person or entity.
Background
On June 9, 2010, enhanced U.N. sanctions were adopted by the
U.N. Security Council, which froze the assets of various designated
persons, including certain entities deemed to be owned, controlled
by, or acting on behalf of IRISL. Due to these international
sanctions, many of IRISL's vessels have either had their flags
revoked or registration rejected by vessel registries. OFAC noted
that it is likely that persons will encounter such unregistered or
improperly flagged vessels more frequently as jurisdictions
continue to refuse to flag IRISL's vessels.
As expected, the sanctions are taking its toll both on Iran (the
intended target) and the international shipping community. Blocked
funds, rejected U.S. dollar transactions, contractual conundrums,
and uncertainty have made navigating an already complex regulatory
environment even more difficult. It goes without saying that those
who wish to continue pursuing lawful business opportunities with
Iran or Iranian entities must establish comprehensive compliance
programs that ensure an up-to-the minute understanding of the
various applicable regimes. However, even the best compliance
program provides little comfort to those caught mid-transaction by
new SDN and other blocked party designations with immediate effect.
In today's environment, a workable compliance program must
focus not only on the current state of applicable laws and
regulations, but equally on the risk of regulatory changes. As a
practical matter, this means that parties to shipping transactions
in particular must conduct thorough due diligence to determine
whether they are dealing with persons who are at risk of being
designated as off-limits during the pendency of the
transaction.
Conclusion and Advice
It is well-known that IRISL continues to try to shift the
official registered owners, flags and names of its vessels in an
attempt to conceal IRISL's connection to the vessels. All
maritime industry personnel should be aware of the fact that IRISL
vessels are on OFAC's SDN list, which is regularly updated as
OFAC learns of additional IRISL vessels or those having a
connection to IRISL.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Specific Questions relating to this article should be addressed directly to the author.
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