---
title: OFAC Publishes Updated Russian Oil Price Cap Coalition Advisory
description: OFAC has published an update on the sanctions that place a price cap on Russian seaborne oil and oil products.
image: https://www.regtrail.com/hubfs/Canva%20images/Canva%20Design%20DAGVpeeVkPk.png
---
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# OFAC Publishes Updated Russian Oil Price Cap Coalition Advisory
RegTrail | 21 October, 2024
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This week OFAC, the financial intelligence and enforcement agency of the US Treasury, published (click [here](https://ofac.treasury.gov/recent-actions/20241021)) an update to the *Price Cap Coalition Advisory for the Maritime Oil Industry and Related Sectors*. The advisory relates to the restriction imposed by the Price Cap Coalition (click [here](https://ofac.treasury.gov/media/932571/download?inline)) – and arrangement that places an oil price cap on Russian seaborne oil and oil products. The update contains specific recommendations regarding best practices. The seven-page advisor may be found [here](https://ofac.treasury.gov/media/933506/download?inline). The recommendations are summarised briefly as follows:
**Recommendation 1: Require Appropriately Capitalized P&I Insurance**
- Stakeholders should mandate that vessels engaged in maritime trade possess continuous and appropriate Protection and Indemnity (P&I) insurance;
- If engaging with a vessel lacking legitimate insurance, industry participants must conduct thorough due diligence on the insurer’s financial health, track record, and regulatory compliance.
**Recommendation 2: Receive Classification from an IACS Member Society**
- To assess the seaworthiness of vessels, stakeholders should ensure that ships receive classification from an International Association of Classification Societies (IACS) member;
- The Coalition highlights the importance of using established classification societies, as some vessels involved in shadow trade have shifted to non-IACS societies.
**Recommendation 3: Best-Practice Use of Automatic Identification Systems (AIS)**
- In accordance with the International Convention for the Safety of Life at Sea (SOLAS), stakeholders should promote continuous AIS broadcasting throughout a vessel’s voyage;
- If AIS must be disabled due to safety concerns, the ship should document the reasons;
- Stakeholders should monitor AIS data for inconsistencies and patterns that may indicate criminal activity;
- Complement AIS Tracking with Long-Range Identification and Tracking (LRIT) - combining AIS and LRIT is recommended to enhance risk mitigation.
**Recommendation 4: Monitor High-Risk Ship-to-Ship Transfers**
- Stakeholders must ensure that all ship-to-ship (STS) operations comply with MARPOL regulations and relevant national laws;
- While STS transfers can serve legitimate purposes, they may also mask illicit cargo origins;
- Stakeholders should conduct enhanced due diligence for STS transfers, especially in high-risk areas, and verify that oil record logs accurately reflect cargo movements.
**Recommendation 5: Request Associated Shipping and Ancillary Costs**
- To prevent the concealment of transactions involving Russian oil above the price cap, stakeholders should require a detailed breakdown of all shipping and ancillary costs at the outset of any trade transaction;
- Inflated or bundled costs may indicate price cap evasion;
- As of early 2024, coalition service providers must request this information under certain circumstances, including regulatory inquiries.
**Recommendation 6: Undertake Appropriate Due Diligence**
- Stakeholders should conduct thorough due diligence, especially for vessels with complicated histories (e.g. frequent re-flagging or ownership changes);
- Enhanced diligence is particularly important for intermediary companies that may conceal their ownership or engage in opaque practices;
- Due diligence should align with specific business risks, especially when market assessments indicate potential price cap breaches.
**Recommendation 7: Report Ships That Trigger Concerns**
- Industry participants should report any knowledge of potentially illicit or unsafe oil trading practices to relevant authorities;
- This may include reporting breaches of the oil price cap, as outlined in the Coalition’s Compliance and Enforcement Alert.
**Recommendation 8: Ensure Vessels Meet International Maritime Safety and Environmental Obligations**
- Flag States should prevent vessels from conducting illegal operations and uphold SOLAS, MARPOL, and other relevant standards;
- Port State Controls (PSC) should verify that foreign-flagged vessels meet these requirements and act against non-compliance, such as detention or denial of port entry.
**Recommendation 9: Monitor Tanker Sales**
- Stakeholders involved in tanker sales and brokerage should remain vigilant regarding potentially evasive purchase structures, particularly for ageing tankers;
- Enhanced due diligence should include verifying the ultimate beneficial ownership and ensuring buyers have no links to illicit activities;
- Stakeholders must maintain accurate and verified records of buyers’ identities and fund sources.
**Recommendation 10: Avoid Interactions with Sanctioned Parties**
- Stakeholders must continuously monitor their exposure to ensure they do not engage with sanctioned entities unless authorized by relevant authorities;
- This includes proactive investigations to identify any links between unsanctioned counterparties and sanctioned parties;
- Stakeholders should deny entry or transactions involving sanctioned vessels and report any such attempts to the authorities.
**Recommendation 11: Raise Awareness and Enhance Market Transparency**
- Stakeholders should implement targeted training programmes for employees and partners on the risks associated with shadow fleet activities and deceptive practices;
- These programmes should cover identifying red flags, understanding the implications of deceptive practices, reporting protocols, sanctions risks, and the importance of transparency;
- Additionally, open communication and collaboration with industry partners are vital for combatting deceptive practices and sharing pertinent information.
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