Combatting illicit cargo

The global maritime and transportation industries are pivotal in facilitating the movement of goods and people worldwide. However, these sectors are increasingly targeted by bad actors seeking to exploit vulnerabilities for illicit purposes, such as smuggling contraband, circumventing sanctions, and money laundering. In a recent announcement, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued a warning call, urging port executives and industry stakeholders to bolster defences against the rising tide of illicit cargo shipments. Critical in the fight against these negative aspects are the compliance measures highlighted by OFAC as well as leveraging maritime intelligence to fortify the port industry against these challenges.

DECEPTIVE SHIPPING PRACTICES
Deceptive shipping practices pose significant risks to port operations and, at the same time, undermine the integrity and security of global supply chains. Illicit actors manipulate location or identification data by tampering with vessel tracking systems such as AIS, falsifying vessel documentation, or assuming false identities to obscure the identity or location of cargo. These practices not only facilitate the clandestine movement of illicit goods but erode transparency and trust within port and terminal operations.

Furthermore, the falsification of cargo and vessel documents is prevalent, involving counterfeiting shipping documents, altering goods descriptions, or forging certificates of origin to disguise the true nature of cargo. These fraudulent activities represent significant safety and security risks within port facilities, and also compromise the reliability of essential documentation required to ensure efficient port and terminal operations.

Ship-to-ship transfers at sea is another tactic employed by illicit actors to obscure the origin and destination of cargo, presenting formidable challenges to port authorities in monitoring and regulating maritime traffic, thereby increasing the risk of illicit activities within port premises.

Moreover, these bad actors often utilise complex ownership or management structures to obscure vessel or company ownership, complicating efforts to identify the true beneficiaries of illicit shipments. This obfuscation has the joint effect of facilitating illicit activities within ports jurisdictions, while at the same time hampering efforts to hold accountable those responsible for illegal operations.

OFAC’s FIVE KEY MEASURES
To mitigate these risks, OFAC emphasises the importance of implementing the following compliance measures:

• Establishing effective sanctions and export control compliance programmes: Companies should develop comprehensive policies and procedures to identify and mitigate potential sanctions violations. This includes screening transactions against government lists, conducting due diligence on counterparties, and training personnel on compliance requirements.
• Implementing location monitoring best practices: Organisations should monitor the location history of vessels, vehicles, and aircraft to identify prior manipulation or disabling of location or identification tracking data. This can be done through a variety of methods, such as Automatic Identification System (AIS) monitoring, satellite imagery, and physical inspections.
• Conducting thorough “Know Your Customer” (KYC) investigations: Companies should conduct rigorous background checks on counterparties to ensure their legitimacy and adherence to relevant regulations. This includes verifying their legal registration, financial standing, and business activities.
• Exercising supply chain due diligence: Entities should evaluate the potential risks associated with their supply chains and take steps to mitigate those risks. This includes verifying the authenticity of shipping documents, ensuring that cargo is not diverted to prohibited destinations, and conducting due diligence on all intermediaries involved in the supply chain.
• Sharing information with law enforcement: Companies should report any suspicious activities to relevant authorities promptly. Information sharing plays a crucial role in disrupting illicit trade networks and identifying the perpetrators of these crimes.

LEVERAGING INTELLIGENCE TECHNOLOGY
Maritime intelligence technology offers powerful tools to fortify port security and combat deceptive shipping practices.

Advanced platforms provide real-time tracking and monitoring of vessel movements, enabling port authorities and executives to detect anomalies and suspicious activities. Predictive analytics can assess the risk associated with incoming vessels and cargo, allowing for targeted inspections and enforcement measures to take place. This collaborative information sharing among port officials and communities, in conjunction with robust compliance functionalities, can help to streamline regulatory compliance processes.

BOLSTER YOUR DEFENCE
As the threat posed by illicit cargo shipments continues to escalate, port executives and industry stakeholders must remain vigilant and proactive in safeguarding port operations against deceptive shipping practices. By embracing maritime and intelligence technology and leveraging its capabilities to enhance visibility, risk assessment, information sharing and regulatory compliance, ports can bolster their defences and preserve the integrity of the global supply chain.