- Maintaining business velocity and customer satisfaction while meeting regulator due diligence expectations is a growing challenge
- Know Your Vessel – KYV, screening processes lacking cargo information are exposing companies to sanctions compliance risks
- Independent sources of cargo information have become indispensable to see through deceptive shipping practices such as false shipping documents and AIS manipulation
The growing hidden trade in sanctioned oil threatens legitimate companies involved in global oil flows. Until now, companies have been relying on documents, interpreting draft changes, and client questionnaires to fill in the gaps in their cargo risk assessment. With Windward’s Cargo Insights, they will gain immediate and independent visibility into wet cargo they are purchasing or transporting. These insights will enable them to easily spot anomalies, speed up investigations of high-risk activities, verify the accuracy of shipping documents, and continue confidently trading across the world.
Due diligence gap
Companies in maritime trade like ship owners, banks, and traders rely on accurate and timely information on products shipped to screen for risk and keep business flowing. But bad actors often use dark port calls, ship-to-ship transfers, obscured ownership, and misleading documentation to hide their illicit trade. OFACs May 2020 advisory singled out oil and oil products for enhanced due diligence.
“Authorities have found that sanctions evaders have falsified shipping documentation pertaining to petrochemicals, petroleum, petroleum products … in order to disguise their origin…persons conducting transportation or trade involving the maritime sector are encouraged to conduct due diligence, as necessary, on documents that indicate or suggest that cargo is from an area they determine to be high-risk for sanctions evasion, notwithstanding any purported low-risk place of origin.” OFAC May 2020 Shipping advisory
However, cargo information is often not readily available or even reliable. This lack of visibility is exposing companies to unknown risks and slowing down operations. It also has an effect on counterparty and client relationships, as it means continuous requests for more information.
Streamlining cargo screening
Windward’s Predictive Intelligence solution now layers oil flow data on top of our leading vessel behavioral intelligence to give clients insights into wet cargo they are dealing with. These insights include product details, its quantity, origin, destination, and sanction-related risk. Cargo insights provide compliance and risk management teams an out of the box solution to OFACs and OFSI petroleum due diligence recommendations. It includes tools to detect anomalies in product details, documentation, and routes to flag suspicious activity. Additionally, automated risk assessments, alerts, and a full audit trail will ensure businesses stay on track.
This unprecedented level of insight into cargo risk is enabled by a partnership with Vortexa, an energy analytics company using AI and deep industry expertise to provide the most complete real-time view of crude oil, refined products, LPG and LNG flows globally. The information is sourced from a global network of port agents independent from draft changes reported via AIS transmissions.
Digitalization of maritime trade
Shipping was and is still a paper-driven business. A typical trade finance deal might involve dozens of documents and bad actors will find ways to hide their activities between mounds of paper. Falsifying shipping documents has been named by multiple countries as one of the primary deceptive shipping practices used to conceal trading activity.
This leaves companies involved in maritime trade like ship owners, banks, and traders in a bind. On the one hand, these documents are a primary source of data for managing cargo risk. On the other hand, it’s difficult to verify their accuracy and investigate anomalies while keeping up with the pace of business. Cargo Insights is another way Windward is helping accelerate the digitalization of maritime trade to reduce risk and unlock efficiencies.
“The OFAC advisories published recently are a game-changer for the maritime and trade ecosystems regarding compliance requirements. Solutions that can increase both quality and efficiency in our sanctions compliance operations are essential across all related business transactions.” bp shipping
Screening cargo risk
Cargo Insights enables Windward clients to:
- Drill into cargo details to investigate and clear high-risk port calls and ship-to-ship transfers without bothering their clients with more paperwork or interpreting AIS draft change transmissions
- Immediately cross-reference product details from an independent source to spot anomalies and flag risk
- Receive real-time notifications when a vessel is flagged for carrying sanctionable cargo, even if the original port calls or ship to ship transfer was concealed
Revealing hidden trade
An analysis of Venezuelan oil trade highlights the challenge facing companies that rely solely on paper-based documents, list matching, and vessel tracking to understand their exposure. The analysis reveals there may be 3X as many tankers involved in the Venezuelan oil trade than visible through standard screening.
In total, almost 10% of the global tanker fleet may have been exposed to Venezuelan oil trade in the past year. – Joint Windward Vortexa analysis
As Reuters points out, Venezuela is actively learning from Iran and North Korea how to conceal their trade. Indeed, North Korea and Iran pioneered many deceptive shipping practices such as AIS manipulation, chained ship to ship transfers, shell companies, and falsified documents to conceal the origins and end destination of cargo. These tactics have now spread across the wider industry.
Managing risk with technology
To keep up with the growing sophistication, compliance teams are moving to solutions that incorporate multiple data sources, AI and domain expertise. Windward’s Cargo Insights sits alongside the other tools in the Predictive Intelligence solution, giving companies a dynamic 360 view of maritime risk exposure. These insights will be further enhanced in the near future by additional types of cargoes, such as containers.
To get early access to Cargo Insights or to learn more about it contact us below.