Issues of sanctions and banking roadblocks, magic pipes and record-keeping

The talk by two lawyers from Blank Rome’s Washington, DC office stood out because it was based on “questions that we get every day from clients” rather than dry recitations of highly complicated regulations.

Matt Thomas, and Greg Linsin, talked about their work with sanctions, and environmental compliance, respectively. Both lawyers have hands-on Federal government experience in their subjects; Thomas had worked for the Federal Maritime Commission, while Linsen spent many years in the Environmental Crimes Division of the US Department of Justice.

Thomas noted that shifting political tides in Washington, DC keep him busy, and he urged audience members to “pay attention to Syria, Sudan and Russia-related sanctions” in addition to the marquee geographies of Cuba and Iran. Regarding Iran, after alluding to problems with export rules when US made equipment is aboard ships calling at Iran, he said that: “The biggest roadblocks we’ve seen with Iran have to do with banking and financial services.” He noted that “voyage charter hire for a ship going in and out of Iran cannot be cleared through a US bank,” and that even indirect costs, such as long term charter hire, or bunkers, related to vessels cannot go through US banks.

During his remarks, Linsin, presented a view on steps that companies could take to mitigate, though not entirely eliminate,) certain Marpol-related enforcement risks. On the subject of whistle-blowers, who might report a violation to the Coast Guard, he discussed reduction in size of financial rewards where the crew member might take time to build up a dossier before making a report to the US Coast Guard, contravening company policies stating that observed violations should be reported to the company in a very timely manner. In particular, he suggested that shipping companies should take a “pro-active” stance, and periodically require employees to reaffirm their understanding of the relevant Marpol rules, after receiving training.

Taking “pro-activity” even further, Linsin talked about companies striving to maintain robust internal systems for quickly gathering reports of Marpol violations from crew members- including the suggestion that engineering superintendents gather intelligence from engine room crew and officers, when they visit their company’s vessels.

Where there is the hint of Marpol violations, he stressed the importance of having a corrected oil record book, with corrective entries done in close coordination with the vessel’s Flag State. According to Mr. Linsin, many Marpol – related criminal enforcement actions in the States are based on action that occurred outside US territorial waters with inaccurate entries in the oil record book providing the basis for criminal prosecution in the US. The speaker’s war stories included discussions of thorough internal investigations that saved “months of possible delays” that could have resulted from expensive criminal enforcement actions by the US Government.

One question from the audience concerned pending Ballast Water Treatment enforcement regimes. Looking ahead to violations of BWT rules (once the convention comes into force), as well as Marpol 6 enforcement on subjects such as fuel compliance within ECAs. Linsin said that the US Government might well use the same types of enforcement issues that have been effective with oily water discharges (Marpol Annex 1) with great emphasis on record keeping requirements.