Welcome to this special podcast series “In Conversation with K2 Intelligence FIN: Navigating an Increasingly Complex Sanctions Landscape”. This series is sponsored by K2 Intelligence, LLC. This week I have been visiting with Adam Frey, Managing Director, and Eric Lorber, Vice President at K2 Intelligence Financial Integrity Network (FIN).

Frey is a key member of the firm’s independent consultant team, at the direction of federal, state, and/or international regulators, he works to monitor and assess global financial institutions’ compliance with Anti-Money Laundering (AML) and Office of Foreign Assets Control (OFAC) enforcement actions and related consent orders. Frey helps lead K2 Intelligence FIN’s reviews of the institutions’ Bank Secrecy Act (BSA)/AML and sanctions compliance programs, policies, and procedures. Lorber advises global financial institutions on issues related to sanctions and AML /combating the financing of terrorism compliance. Prior to re-joining FIN, he was a senior advisor to the Under Secretary for Terrorism and Financial Intelligence at the United States Department of the Treasury, where he provided strategic guidance on US sanctions and AML/ Combating the Financing of Terrorism (CFT) policies. Earlier in his career, he was an attorney at Gibson, Dunn & Crutcher LLP, where he advised clients in the areas of international trade regulation, compliance, and anti-corruption. He is also the senior director of the Center of Economic and Financial Power at the Foundation for Defense of Democracies.

We have been reviewing the current sanctions landscape, discussing how to build a sanctions compliance program, walking listeners through what happens when you discover a sanctions breach or potential breach, considering new sanctions exposure and concluding with a look in that veiled land of the future by considering issues on the horizon. In this Episode 4, I am joined by Eric Lorber regarding new sanctions risk exposures for commercial corporations and the shipping space.

Over the past couple of months, we have seen the State Department, the Department of the Treasury and the Coast Guard come together to issue new guidance in the sanctions arena. Lorber said it has been an interesting time for those operating in the maritime sector. He went on to note that the scope of the guidance was very broad and, indeed, “a bit of a surprise to many in the sector”.

Yet perhaps the biggest change was moving sanctions away from only impacting the financial services and banking sectors, into the commercial space. Another sector heavily impacted is insurance. While financial institutions have grown both AML and sanctions compliance groups, such compliance disciplines are not as prevalent in maritime and shipping. This will present challenges for those sectors to get up to speed and do so quickly. Lorber said one suggestion is that if you are a shipping company, most probably you are already working with a financial institution; you can seek guidance from that financial institution on their expectations of what a compliance program might look like. What you are looking for is getting a sense from them as to what they have done in the past to ensure that they are staying on the right side of sanctions, as well as what do they expect from you as a company. Lorber believes this is “really important, particularly in light of this guidance, that you in the shipping and maritime space should ensure that your customers and your counterparties have robust sanctions compliance programs in place.”

Further, for an insurance company, this new guidance now portends that you make sure those to whom you are providing insurance have sanctions compliance programs and that these compliance programs are fairly robust, in place, implemented and ready to go. This provides almost a built-in mechanism where an insurance company or a financial institution with whom you are doing business, may well want to assess the strength of your compliance program. They are to let you know their expectations but, equally importantly, potentially even help you make sure that your sanctions compliance program meets with their standards. The bottom line is that this B2B business pressure will help drive compliance in an industry it may have been somehow lacking previously.

Lorber noted there were other mechanisms for the maritime industry to use in crafting individual compliance programs. He said, “I think the discussion for best practices among peer companies in the shipping space is another way to sort of go about doing this. Having conversations with other shipping companies who are facing the same challenges can be productive.” Lorber concluded by advising you review the three potential sources available to you for information, for example, peer institutions; outside parties, such as law firms and consulting firms who have experience working in this space; and those within the maritime ecosystem who are providing services to you in particular, i.e. financial institutions and insurance companies.

Join us tomorrow for our concluding Episode 5 with Adam Frey as we peer down the road and consider some issues on the horizon for sanctions compliance.


For more information on K2 Intelligence FIN’s Sanctions Risk Advisory Services, click here.

For more information on Navigating the Sanctions Minefield: What Every Global Business Should Know, click here.