Reed Smith Client Alerts

On June 24, 2020, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned five Iranian ship captains for delivering approximately 1.5 million barrels of Iranian gasoline to Venezuela. This follows the threats made by the United States in May to sanction Liberian-flagged, Greek-owned vessels sailing toward Venezuela with Iranian refined products, which ultimately led to suspension of those deliveries.

Authors: Leigh T. Hansson Alexander Brandt Noah Jaffe

These sanctions demonstrate the Trump administration’s continued focus on Venezuela’s oil-related trade with other countries subject to U.S. sanctions, such as Iran and Russia. It also shows just how far the administration is willing to go to target those involved in sanctioned trade. These recent designations have caused some concern within the maritime industry about just how far their due diligence obligations now extend.

The five captains, who are employed by the Islamic Republic of Iran Shipping Lines and National Iranian Tanker Co., two major Iranian shipping companies that are subject to U.S. sanctions, were added to the list of Specially Designated Nationals and Blocked Persons (the SDN List). As a result of these sanctions, all of the captains’ property and interests in property under U.S. jurisdiction are blocked and cannot be transferred and U.S. persons are prohibited from transacting with these individuals. Further, non-U.S. persons will be exposed to a risk of sanctions if they provide material assistance or support to these captains.

When the U.S. government sanctions individuals, they have traditionally targeted owners or managers of entities involved in proscribed activities and foreign government officials leading government agencies. The imposition of sanctions on civilians with minimal authority reflects the administration’s policy of increased pressure on both Iran and Venezuela, as well as its focus on smaller actors within the maritime sector, as discussed in our May 20th client alert. Measures like this may lead to increased due diligence on captain and crew lists in order to avoid potential exposure to U.S. sanctions. An inevitable consequence of this is the heightened administrative burden, and the increased time and costs associated with screening crew lists – and new processes established to reduce the delay in fixing tonnage.