New technology helps financial institutions manage their maritime risk

With 90 per cent of all world trade by volume and 70 per cent by value transported by sea, the maritime sector is the backbone of international trade and a critical global industry.

Yet the increase in international regulations and sanction policy, the emergence of new conflict zones and the rise of piracy and terrorism around the world means that financial organisations are increasingly exposed in this sector. Trade finance drives an estimated $14 trillion in annual global commerce, and the exposures of global banks in relation to shipping and related cargoes is high on the agenda. The consequences of sanctions breaches are serious, with many of the world’s largest banks having already been fined, and one of the world’s largest banks receiving an $8.9 billion fine this year.

Pole Star, the global leader in maritime tracking, monitoring and security software, has developed a new service, PurpleTRAC, to address the challenges financial institutions face. PurpleTRAC enables banks, commodity trading companies, marine financers and insurers to manage their exposure and mitigate the possibility of involvement with a vessel at risk of sanctions non-compliance, money laundering or terrorist financing.

PurpleTRAC is an advanced risk management and sanctions compliance technology, which automatically checks against global sanctions lists to screen vessels for compliance. These checks quickly reveal a ship and its associates’ current and past exposure to risk, enabling financial institutions to make prompt and informed investment decisions, saving both time and money and avoiding the likely criminal, commercial and reputational damage as a result of sanctions non-compliance.

By screening, tracking compliance during the voyage and reporting on the voyage, PurpleTRAC also provides an auditable and verifiable statement of an organisation’s risk management and sanctions compliance activity.

Data insight from PurpleTRAC reveals that of over 2,300 ships screened for compliance in Q3 2014, some 60 per cent returned warning alerts warranting closer investigation, while 21 ships and their associated companies were found to be either on a sanctions list or based in a comprehensively sanctioned country. Of all ships tracked via PurpleTRAC during the quarter, 21% made incursions into sanctions zones.

Following trials of PurpleTRAC, several major global financial clients are already rolling out this technology to streamline their risk management and sanctions compliance activity.

Andrew Peters, Chief Executive Officer of Pole Star comments: “The insight into a vessel’s exposure to risk that PurpleTRAC provides is crucial since sanctions and international regulatory policy grows by the day. No other industry has been impacted more than shipping. Financial organisations need to know and prove with whom and where they are trading. PurpleTRAC provides this certainty while simplifying and streamlining compliance procedures.”

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