Five Federal trade enforcement agencies issued a " Know Your Cargo" announcement to industry Monday, describing best practices for shippers to comply with the current enforcement regime.
The Department of Justice, Commerce’s Bureau of Industry and Security (BIS), Department of Homeland Security’s Homeland Security Investigations, State’s Directorate of Defense Trade Controls (DDTC), and Treasury’s Office of Foreign Assets Control (OFAC) issued the joint compliance note, advising entities in maritime and transportation industries to implement compliance measures against illicit practices, particularly in high-risk areas and cargo types.
These illicit practices include:
The note goes on to describe steps that maritime and other transportation industries can take to enhance compliance controls, particularly in high-risk areas or when encountering anomalous behaviors indicative of deceptive shipping. Key compliance practices include:
Institutionalizing Sanctions and Export Control Compliance Programs: Develop and adhere to risk-based compliance policies and procedures. Encourage industry partners to have similar compliance policies. Utilize U.S. government resources for program development.
Establishing Location Monitoring Best Practices and Contractual Requirements: Conduct due diligence on the location history of vessels, vehicles, and aircraft. Encourage continuous broadcasting of tracking data and investigate any data manipulation. Include contractual language to prohibit dealings restricted under U.S. laws.
Knowing Your Customer: Perform risk-based due diligence on counterparties, including screening against government lists like the U.S. Government’s Consolidated Screening List.
Exercising Supply Chain Due Diligence: Ensure supply chain participants are compliant with U.S. sanctions and export control laws. This includes verifying shipping documentation and licenses, and ensuring cargo reaches its intended destination.
Industry Information Sharing: Foster industry-wide awareness by sharing relevant information within and across industries and supply chains.
Entities are advised to report any detected red flags to U.S. authorities, aiding in the protection of business interests, international commerce, and national security against illicit activities.
The note reviews enforcement actions in the maritime and freight forwarding space in recent years, concluding that companies should be vigilant in their compliance efforts and be on the lookout for efforts to disguise the nature, origin, or destination of cargo being transported.
Freight forwarders are advised to work together with exporters to ensure compliance to U.S. export controls and regulatory requirements. With respect to export controls specifically, freight forwarder roles and responsibilities are further delineated on the Department of Commerce, Bureau of Industry and Security (BIS) [website]
BIS anticipates updating this guidance in the near future.
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