UK Government issues guidance on second-hand vessel sales to prevent Russia sanctions evasion
On 21 May 2024, the UK Government released new guidance on the sale and brokering of second-hand vessels, specifically addressing the sale of oil tankers to third countries under the current Russia sanctions regime.
This guidance includes financial, trade, aircraft, shipping, and immigration restrictions, aimed at preventing sanctions evasion by clarifying prohibitions on brokering and related services for vessel sales to Russia and raising industry awareness of risks and deceptive practices.
Sellers of vessels and brokers are reminded that regulations 25 and 29 of the Russia (Sanctions) (EU Exit) Regulations 2019 (the Regulations) concern respectively the making available or acquiring of and brokering services relating to “restricted goods”. This includes certain vessels listed in Part 7 of Schedule 2A of the Regulations, known as “critical-industry”.
Russia has however, sought to procure restricted goods and services via indirect routes and complex supply chains, which raises circumvention risks. The primary objective of this guidance is to prevent Russia from circumventing sanctions and to stop the acquisition of essential goods, technologies, services, and revenue through indirect routes and complex supply chains; by equipping those involved in the sale and brokering of second-hand vessels to third countries with information to help possible circumvention. Businesses are advised to conduct thorough due diligence to ensure compliance with the Regulations, including identifying the ultimate beneficial owners (the true owner) and true end-users of vessels.
The guidance also lists key risk indicators for sanctions evasion, such as older vessels sold at high premiums, buyers with opaque ties to Russia and transactions involving suspicious jurisdictions. Strict adherence to due diligence and sanctions compliance policies is essential, with non-compliance leading to significant penalties or criminal prosecution.
This initiative is part of the UK government's effort to ensure the maritime sector effectively upholds international sanctions against Russia.
The guidance is directly relevant to the interpretation of the Regulations in the UK Overseas Territories, including the British Virgin Islands, the Cayman Islands, and Bermuda.
The guidance can be found here.
