On April 16, 2025, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) re-issued and updated its Advisory for Shipping and Maritime Stakeholders on Detecting and Mitigating Iranian Oil Sanctions Evasion (“the Advisory”), originally issued in September 2019. The updated Advisory is part of OFAC’s implementation of the February 4, 2025 National Security Presidential Memorandum (NSPM-2), which directs the Treasury Department to enact “maximum pressure” on Iran.
The Advisory expands on the red flags and risk mitigation measures introduced in the original 2019 version, accounting for additional sanctions implemented since 2019 and going into further depth on notable sanctions evasion patterns identified by OFAC. In the accompanying press release, OFAC also announced the designation of seven entities and five vessels located in or flagged under Panama, China, Hong Kong, Malaysia, Cameroon, and the Marshall Islands.
The full list of red flags and mitigation strategies are set out in the Advisory. In particular, the Advisory introduces or expands on the following red flags and risk mitigation strategies:
New or Expanded Red Flags
- Complex vessel ownership and management structures:
- Iranian-linked networks use multiple shell companies and special-purpose vehicles in high-risk, low-transparency, and low-regulation jurisdictions, which are often owned by individuals with no public profile, no source of wealth information, and potentially falsified or citizenship-by-investment passports.
- Intermediary ship brokers in low-compliance oversight jurisdictions may also facilitate vessel transfers to shell companies in other jurisdictions with local firms acting as agents.
- Obscure oil brokering networks, largely in China:
- OFAC warns of oil broker networks located outside of Iran, and largely in China, functioning as critical intermediaries in finding buyers for Iranian oil, often distributing falsified documentation regarding origin of cargo.
New or Expanded Risk Mitigation Strategies
- Verify insurance and flag registration, not just cargo origin:
- OFAC recommends ensuring that vessels have adequate and legitimate insurance coverage and are not relying on sanctioned insurers or new insurers without an apparent business reason.
- When vessels are registered by high-risk jurisdictions or have flown multiple flags in a short period of time, OFAC recommends that maritime stakeholders request additional documentation on the vessel’s ownership, voyage history, and flag history (e.g., by utilizing the IMO’s Global Integrated Shipping Information database).
- Know your vessel (“KYV”), not just your customer (“KYC”):
- OFAC recommends parties conduct KYV diligence, not just KYC, which extends to diligence regarding the vessel, vessel owners, ultimate beneficial or group ultimate owners, and operators involved in any contracts, shipments, or related maritime commercial transactions.
- Contractual controls:
- OFAC emphasizes the importance of receiving contractually contingent assurances or warranties that parties are not engaging in activity that would violate, or cause a US person to violate, US sanctions. Such assurances should include sanctions compliance-based rights of exit or termination. Ideally such assurances also account for termination on the basis of deceptive practices (e.g., multiple instances of vessel location manipulation).
- Refusing service or port entry to sanctioned vessels/entities:
- OFAC recommends that port agents, operators, and terminals refuse service and port entry to sanctioned vessels.
If you have questions regarding this regulatory development, please contact our Outbound Trade team for more information.
