The global maritime supply chain connects all individuals, companies, and organisations associated with international trade and shipping. While the breadth of players involved is far-reaching, many of the risks they face during a trade transaction are similar. By exploring how a ship can be monitored from various perspectives, it is possible to identify the types of risks each player faces, alongside how they can ultimately mitigate them using Pole Star’s Maritime Domain Awareness (MDA) solution.
Since the emergence of the COVID-19 pandemic, it has become increasingly clear that ensuring the smooth-running of the maritime supply chain is critical to businesses and livelihoods worldwide. Therefore, all stakeholders, from ship owners and operators, to governments, flag administrations, port authorities, banks, and financial services, share the common goal of upholding a safe, secure, and compliant operating environment to maintain business continuity.
Over the past couple of years the maritime world has changed significantly, in parallel with the regulatory landscape. With international sanctions being inherently guided by the state of global affairs, increased concerns regarding countries such as Iran, North Korea, Venezuela, and Syria have determined a crackdown on illicit activities. As such, global regulators have now placed the entire maritime supply chain under the spotlight to monitor sanctions violations and evasion techniques.
Consequently, no company is exempt from the criminal, reputational, or commercial damage that would occur as a result of noncompliance. This has highlighted the need for companies and individuals to ascertain exactly who and what they are in business with, to ensure they have no connection with money laundering or terrorist financing. As such, monitoring a trade transaction, by screening and tracking a vessel and its associated management and ownership, is now essential due diligence.
For a flag administration, the investigation of a vessel begins during the registration confirmation process, with continuous tracking and regular screening performed from there onwards.
MDA can facilitate the safeguarding of maritime domains and ensure the success of coastal surveillance operations. Authorised users are able to track domestic LRIT vessels and non-SOLAS vessels everywhere, and any foreign asset operating only within their territorial waters, to maintain a clear overview of their registered fleet and full maritime domain.
Monitoring vessels in this way for deceptive shipping practices shines a light on red flags for illicit behaviour, terror-related incidents, and threats to homeland security. Risk indicators, such as flag hopping, AIS disablement, vessel disguise, complex ship ownership, falsification of documentation, and STS transfers are essential for identifying suspicious vessels and, therefore, for minimising threatening activity and ensuring homeland security.
Before a ship is accepted for registration by a flag, the vessel and its associations are thoroughly vetted to check for sanctions violations. Such due diligence ensures that the flag’s fleet is compliant with current regulations, including LRIT conformance, and mitigates the risk of flag hopping. Comprehensive due diligence allows flags to identify these vessels and apply proper penalties, including the removal of their registration, which would hinder the vessel’s ability to operate within the supply chain.
Once a vessel has been successfully registered, it will be continuously monitored by the flag administration for anything that could highlight sanctions violations or links to countries like North Korea, where the illicit import and export of goods is depended on to sustain the country’s ballistic missile and nuclear programmes.
Specifically, there is a focus on activities in high risk zones or suspicious behaviour that could indicate deceptive shipping practices, such as:
For ship owners, operators, and managers, MDA can provide valuable insight for pre-journey planning and ongoing journey checks, for crew and cargo safety, business continuity, and competitive advantage.
Before and during a ship’s journey, these users can identify and choose routes that avoid high risk ports and other sanctions zones, such as the Crimea Peninsula. Users can set up alerts based on individual risk parameters to prevent the risk of breaching sanctions or exposing oneself to levels of risk deemed too high. Similarly, environmental regulatory zones can be identified to mitigate the risk of violating IMO and EU regulations.
When planning and monitoring shipping routes, MDA’s weather forecasting function shows the historical and predicted weather conditions, including wave height, wind direction, visibility, water and air temperature, precipitation, and currents, as well as swell and wind waves. The piracy sea state risk also utilises wave height and weather data to indicate the likelihood of a piracy attack in a certain area, which can be used to reroute in the case of potential danger.
As the vessel’s voyage continues, progress checks are continuously updated on the ship’s time, speed, and estimated time of arrival (ETA), alongside triggered alerts if a vessel has deviated from the planned shipping corridor.
In addition to operational uses, ship owners, managers, and operators can utilise MDA’s compliance tools to ensure that they too remain on the right side of regulators.
When a trade transaction is set in motion, banks are required to facilitate the financing of the trade before the goods involved are transported. As a result, financing banks take on the risk involved, including the potential to become linked to illicit behaviour or sanctioned entities.
Regulatory risk can be associated with all aspects of a trade transaction: the goods being traded, the origin of the goods, the buyers and sellers, the cities and ports along the shipping route, and the shipping vessels themselves. To mitigate such risk, those financing maritime trade must ensure they have comprehensive due diligence procedures in place. For this, Pole Star provides a sanctions screening and vessel tracking solution, PurpleTRAC, which links out to MDA when in-depth analysis of vessel behaviour is required.
PurpleTRAC itself enables users to configure their own unique risk parameters to screen vessels and their associated ownership and management against global, country, and company sanctions watchlists, as well as port state control history and environmental impact. When used in conjunction with MDA, financing banks are able to identify suspicious vessels and behaviour, and take their investigations further by analysing non-reporting AIS gaps.
In cases where a ship does go dark, MDA users can identify the overarching risk potential by examining if the vessel was in a high-risk zone when it last transmitted its position and how long it was dark for. Pole Star’s persistent tracking technology, combining AIS and Inmarsat data, allows for seamless real-time vessel tracking and the elimination of a significant number of dark ship false positives.
Accordingly, financing banks have the ability to meticulously monitor vessels for AIS disablement, STS transfers, and high-risk port calls. To do this, the bank can also utilise the draught change function within MDA, which indicates whether cargo has been loaded onto or offloaded from a vessel by calculating changes in the vertical distance between the surface of the water and the lowest point of the vessel. If this occurs during a period of non-reporting, it is likely to indicate an illicit STS transfer and pose a substantial risk to the bank.
While port state control authorities were one of the target groups focussed on by the 2020 OFAC advisory, the widespread use of sanctions screening and security measures in and around ports is still limited. As a result, many of the efforts made by other members of the supply chain, such as governments and flag administrations, are diminished, creating gaps in homeland protection, customs enforcement, and port authority inspections.
In the same way that airports and train stations pose a significant security risk, ports, as another point of entry, are vulnerable to infiltration, illicit imports, and terrorist activity. Examples of this include the prohibited transportation of oil to sanctioned countries like North Korea, or the delivery of illegal weapons for terrorist purposes. As such, the responsibility of ports includes actively withholding services from designated entities, the supply or transfer of goods subject to sanctions, and bunkering services from vessels carrying sanctioned cargo.
In order to achieve this, ports should be screening all vessels to identify their origin and whether they have travelled from, to, or via high risk areas or countries. Yet as it stands, vessels are often not screened before they arrive in port, because there is no compensation for ports if they have to arrest a ship once it is in berth. Consequently, with berthing being costly, ports would lose out on payments while the arrested ship is dealt with. As a result, many ports do not attempt to screen a vessel, to prevent lost costs, ultimately meaning that suspicious vessels avoid facing the appropriate penalties.
Moreover, the screening and monitoring of vessels provides additional information that can be used for logistics. With MDA, port authorities can gain valuable insight into vessel location and ETAs, which in turn help to organise traffic and alleviate port congestion. Reducing the time that vessels spend waiting to berth in this way creates more “just in time” ports and, subsequently, decreases pollution, with less ships queuing around coastal areas.