This article provides general information, not legal, regulatory or financial advice. Requirements depend on the applicable contract, authority and jurisdiction.
What has to be screened
Sanctions compliance used to be a periodic legal review. It is now an operational process that runs on every fixture, every stem, every payment and every port call — and the consequences of failure include loss of insurance, loss of banking, vessel detention and enforcement action against individuals.
This article sets out a practical framework. It is not legal advice, and sanctions regimes change frequently; specialist counsel is essential for any specific question.
| Object | Screened against |
|---|---|
| Charterer and its ownership | Designated persons and entities; ownership thresholds |
| Cargo owner, shipper, receiver | Designated persons; end use |
| The cargo itself | Prohibited goods; origin restrictions; price caps where applicable |
| Bunker supplier and barge | Designated entities and vessels |
| Port agent | Designated entities |
| Ports of call | Sanctioned jurisdictions and ports |
| Other vessels in STS operations | Designated vessels |
| Banks in the payment chain | Designated financial institutions |
| Insurers and reinsurers | Where relevant to the trade |
Ownership screening is the part most often done inadequately. Designation frequently extends to entities owned or controlled above a threshold by a designated person, which means screening a name against a list is insufficient — beneficial ownership must be established.
The recognised red flags
Industry and regulator guidance consistently identifies a common set:
- AIS gaps or manipulation. Transponders switched off for extended periods, or position data that does not match physical reality.
- Ship-to-ship transfers at sea, particularly in known transfer areas, at night, or between vessels with no commercial logic.
- Documentary irregularities. Bills of lading, certificates of origin or cargo documents that do not reconcile.
- Opaque ownership. Newly formed entities, frequent changes of registered owner or manager, jurisdictions with limited transparency.
- Voyage deviations that are not commercially explicable.
- Unusual vessel profile. Older tonnage, frequent flag changes, unfamiliar insurers, unusual class arrangements.
- Payment routing through unrelated third parties or unusual jurisdictions.
None of these individually proves anything. In combination they require enhanced due diligence before proceeding.
Building the process
1. Written policy. Approved at board level, naming the regimes you comply with — commonly UN, EU, UK and US at minimum, plus any others relevant to your trade and banking.
2. Screening at defined trigger points. Pre-fixture, pre-stem, pre-payment, pre-port call, and on any change of counterparty. Screening once a year is not screening.
3. Ownership resolution. Establish beneficial ownership of counterparties to the relevant threshold, with evidence retained.
4. Contractual protection. Sanctions clauses in charterparties, supply contracts and management agreements, including the right to refuse or terminate.
5. AIS monitoring. Track your own vessels' AIS continuity and record any legitimate gaps with reasons — a safety-motivated transmission stoppage should be documented at the time.
6. Escalation path. A named compliance officer, a documented decision process, and a rule that operations cannot override a hold.
7. Record keeping. Screening evidence retained for the period your regulators and insurers expect.
8. Training. Chartering, operations, purchasing, crewing and finance staff all need to recognise the red flags.
On a hit
| Step | Action |
|---|---|
| 1 | Stop. Do not proceed with the transaction or the voyage step |
| 2 | Escalate to the compliance officer immediately |
| 3 | Verify — many hits are false positives on similar names |
| 4 | If confirmed or unresolved, take specialist legal advice |
| 5 | Notify insurers and, where required, report to the relevant authority |
| 6 | Record the decision and its basis in full |
The most dangerous response is the commercially pragmatic one: proceeding while "clarifying". Sanctions liability is generally strict, and intent is frequently irrelevant.
Why insurers care
P&I cover and hull cover typically contain sanctions clauses under which cover falls away where responding would expose the insurer to sanctions. A vessel that trades into a breach may find itself uninsured at the moment it most needs cover — which is also why financiers include sanctions covenants in loan documents.
sanctions regimes change frequently and vary by jurisdiction. This article is general information, not legal advice — obtain specialist counsel. Red flag chart is an indicative model based on published guidance themes. Reviewed by the Zeaclub Editorial Team, 24 August 2026.
Frequently asked questions
Who has to comply with sanctions?
Compliance obligations depend on nationality of the parties, currency of the transaction, jurisdiction of the banks involved and the nexus of the trade. Most international shipping companies are exposed to several regimes simultaneously.
Is switching off AIS illegal?
AIS may legitimately be switched off where its operation would compromise the safety or security of the ship, and this should be recorded in the log with reasons. Prolonged, unexplained gaps are a recognised red flag.
What is a dark fleet vessel?
A term used for vessels operating with opaque ownership, irregular AIS behaviour, unclear insurance and trading patterns associated with sanctions evasion. Dealing with such vessels — including in STS operations — carries significant risk.
Does a sanctions breach void insurance?
Policies commonly contain clauses under which cover does not respond where doing so would expose the insurer to sanctions. Check the specific wording with your broker and club.