The Russian sanctions imposed as a result of the ongoing conflict in Ukraine have had a significant impact on various industries, and yachting has certainly not been spared. Over the past year, we have witnessed various arrests of yachts, asset freezing and forced deletions from registries. The appetite to provide services to Russian individuals has drastically dwindled, primarily because of these legal restrictions and the potential reputational damage associated with doing so.
Compliance requirements have intensified, and these are even more prevalent in the yachting industry because Russian nationals make up a significant proportion of the world's superyacht owners. 'The Superyacht Agency' identified around 370 superyachts over 30m in length that are Russian-owned, equating to 8.8% of the superyacht fleet. Furthermore, Russian nationals own 29% of all superyachts over 90m in length. In light of this compelling data, one cannot dispute the Russian dynamic in this space and the reason that legislators are keenly looking at yachting to ensure that it's also playing its part in adhering to these restrictions.
The Richard Masters case was an eye-opener for the yachting industry as it shed a negative light on the modus operandi of service providers regarding their obligations as gatekeepers. The ripple effects caused by this matter resulted in further apprehension amongst service providers in their dealings with Russian nationals. Whilst it is the service provider's prerogative to determine who they are prepared to offer services to (as long as these are not in breach of laws), it is wrong to adopt a one-size-fits-all approach – particularly when off-boarding existing customers.
Service providers have an obligation to adhere to sanctions and laws, yet they should also take time to understand them and apply them intelligently. Whilst it is good to err on the side of caution in this respect, it is just as wise to make an effort to comprehend who you can and cannot service.
Originally published by The Islander Magazine (April 2023).
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