Courtesy of em_framing at PixaBay

OFAC today issued an alert to warn US individuals, firms, and financial institutions about possible violations of the price cap on Russian crude oil imposed last year, especially through the Eastern Siberia Pacific Ocean (ESPO) pipeline and ports on Russia’s eastern coast.

OFAC notes that Russian oil may be trading above the price cap and may be using covered services related to maritime oil transport provided by unwitting US providers. Non-US persons involved in the exports may be providing incomplete or false documentation to conceal the illegal trade.

  • The agency warns ship owners about automatic identification system (AIS) manipulation—a common sanctions evasion technique in which ships spoof their locations—as a method of disguising Russian port calls and selling Russian oil above the price cap.
  • Failure to itemize shipping, freight, customs, and insurance costs, which are not included in the price cap—is also a red flag that may indicate efforts to ship oil at a price above the cap.
  • A refusal by a counterparty to provide documentation showing that Russian oil or petroleum products were purchased at or below the price cap should also be considered a red flag for possible efforts to evade the restriction.

OFAC notes that US actors involved in commodities trades can mitigate their risk of penalties by showing good-faith efforts to comply with the price cap, such as retaining invoices, contracts, and receipts/proof of payment. Failure to properly vet counterparties and retain relevant documents can result in OFAC enforcement actions. OFAC expects that US service providers involved in commodities trading will continue to implement and perform the standard due diligence.

Engaging with experts to help navigate the complexities and challenges of Russian sanctions evasion can help US firms and financial institutions moderate the risks of regulatory penalties and reputational damage. FiveBy analysts stand ready to help you perform needed due diligence research and help identify red flags that will demonstrate good-faith efforts to obey US laws. Click below for a free consultation with certified FiveBy compliance experts who possess jurisdictional and linguistic knowledge to help mitigate your risks.

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