The shipping industry is facing an unprecedented challenge in navigating sanctions compliance. While banks have spent years building robust compliance frameworks, shipping companies are far behind. The rapid, sweeping sanctions against Russia have exposed major gaps in the sector’s ability to manage risk. With compliance teams often non-existent and overstretched general counsel taking on the load, many businesses struggle with conflicting regulations across jurisdictions. The result? A compliance minefield where even small mistakes can lead to costly penalties.
This issue is worsened by the complexity of enforcing sanctions. Unlike previous measures against countries like Iran, Russian sanctions involve a coalition of nations with overlapping and inconsistent rules. Exemptions, caveats, and jurisdictional differences create confusion, and rapidly issued general licences demand constant vigilance. However, the industry’s limited resources leave it unprepared. Even marine insurers, with more advanced compliance systems, are struggling to keep up. This highlights the urgent need for investment in technology, expertise, and collaboration to strengthen compliance systems.
Tackling these challenges isn’t just about avoiding penalties—it’s essential for long-term success. Tools like AI and machine learning offer potential solutions to track and manage sanctions risks, but human oversight is still essential to interpret grey areas. To meet growing enforcement expectations, shipping companies must act now to implement stronger compliance measures. Failure to adapt could bring severe consequences as regulators increase their focus on enforcement.
