How Does Vessel Screening Reduce Maritime Compliance Risks?

On April 28, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned three vessels: Zaas Shipping & Trading Co (Tulip BZ), Bagsak Shipping Inc (Maisan), and Great Success Shipping Co (White Whale), and their owners.

These vessels were sanctioned for continuing to deliver refined petroleum products to Ansarallah (the Houthis), an Iran-backed, sanctioned terrorist group, even after the expiration of General License 25A on April 4, 2025.

International trade through the Red Sea has been severely disrupted by attacks from the terrorist group, prompting international military responses.

The Office of Foreign Assets Control (OFAC) has been attempting to apply economic pressure on the Houthis by imposing sanctions, disrupting their operations and finances, and halting their destabilizing activities by blocking assets and preventing business transactions with these entities.

OFAC introduces and enforces economic sanctions against countries, entities, and individuals following U.S foreign policy to maintain national security.

All U.S. residents and foreign entities operating in the U.S. must comply with OFAC sanctions following a risk-based approach to achieve sanctions compliance.

Individuals and entities connected to the maritime industry, including insurers, brokers, port owners, and regulatory authorities, may be involved, intentionally or unintentionally, in financial crimes and sanctions violations by facilitating or exploiting vessels to conceal illicit activities such as money laundering, terrorist financing, and smuggling.

For example, many vessels linked to Russian sanctions have been sanctioned, showing the growing scrutiny in the maritime sector.

Due to a high volume of vessel activity, there is a risk that your shipments could unintentionally be associated with sanctioned vessels. It highlights the critical importance of maintaining compliance with the latest maritime sanctions.

Importantly, individuals involved in maritime illegal activities may use strategies to manipulate vessel documents by submitting false vessel location data, altering the original documents, such as hiding the true vessel ownership, to evade sanctions and expand illicit operations.

These sophisticated tactics complicate the due diligence process, making it challenging for compliance teams to verify the authenticity of vessel information.

Stakeholders in the maritime sector should implement best AML practices like enhanced due diligence, including vessel sanctions screening, to identify potential risks and improve  AML compliance.

What is Vessel Screening?

Vessel screening is the process of evaluating the ships by examining different factors such as history of vessels, their flags state, true ownership, details of cargo, and crew to asses potential regulation and ensure compliance with global and local regulations.

An essential element in this process is the International Maritime Organization (IMO) number, a unique, permanent identifier that helps accurately track vessels regardless of changes in name, flag, or ownership, enhancing the effectiveness of sanctions screening.

Due diligence on sanctioned vessels is carried out by diverse stakeholders across the maritime, financial, and marine finance sectors to identify and mitigate risks for sanctions compliance.

They combat potential risks by thoroughly screening vessels against sanctions lists and monitoring their activities.

Entities that typically perform due diligence on sanctioned vessels include:

• Shipping Companies & Vessel Operators ensure they do not engage with sanctioned vessels to avoid legal and reputational risks.
• Freight Forwarders & Logistics Providers verify the legitimacy of vessels carrying goods and ensure sanctions compliance.
• Port Authorities & Terminal Operators monitor and control vessel access, especially for sanctioned or banned ships.
• Insurance Companies assess risks and avoid underwriting or insuring sanctioned vessels.
• Financial Institutions & Banks screen vessels tied to financing, loans, or payment processing in shipping transactions.
• Commodity Traders & Exporters/Importers prevent trade violations by avoiding goods transported on sanctioned vessels.
• Regulatory & Compliance Firms provide third-party due diligence services to clients for sanctions and maritime compliance.
• Maritime Intelligence & Security Providers track vessel ownership, flag status, and activities linked to sanctioned entities.
• Shipping Agents & Brokers conduct due diligence in chartering or brokering vessel deals.
• Governments & Sanctions Enforcement Agencies monitor and enforce adherence to sanctions regimes.

Conducting thorough due diligence also helps protect shippers from reputational damage by preventing engagement with vessels involved in illicit activities, thereby promoting a compliant and secure shipping process.

What are the Factors to check During Vessel Screening?

The following factors will be included in Vaseel screening:

• Evaluate the vessel’s history by monitoring the previous investigation, detention records, details of past accidents, maintenance, and repair reports.
• Verify the vessel’s registration is associated with which country and its reputation regarding the following AML regulations.
• Conduct background checks to detect their past activities linked with financial crimes and their commitment to achieving AML compliance.
• Verify the type and nature of cargo being transported across the borders and analyze the complete voyage information, including analysis of route and destination.
• Consider the ports, areas, and regions where the ship stayed along its journey.
• Ensure the vessels comply with global and domestic maritime laws and environmental and safety-related regulations.
• Check vessels against international and national sanctions lists and AML watchlists.

Challenges Faced by the Maritime Industry

Compliance officers are under constant pressure to make sure organizations comply with evolving AML sanctions regulations to combat illicit trade.

In legacy AML software lacking automation and real-time updates, maintaining accurate records of sanctioned vessels, entities, individuals, and countries is time-consuming and challenging.

Manual screening increases the risk of legal, regulatory, and financial exposure, potentially leading to reputational damage and significant penalties for organizations.

Identifying accurate risks associated with vessels is a constant struggle for risk management due to different factors, such as cargo details, vessel ownership, and route.

Maritime brokers manage complicated shipments across borders and face challenges due to limited visibility, and the possibility of getting involved in illicit activities may be enhanced.

One of the challenges AML software faces is the absence of real-time adverse media and regulatory enforcement updates, such as official press releases from authorities like OFAC, which can delay identifying newly imposed sanctions that have yet to be incorporated into sanction lists.

The risk of sanction violation increases due to a lack of visibility of vessel ownership, and it puts vessel owners and operators in a complex situation, such as legal and reputational harm due to unintentional involvement in illicit trade.

Clearly understanding the portal risk and differentiation between primary and secondary sanctions is mandatory to avoid penalties, and this concept is not properly understood by freight forwarders, which leads to unintentional violations.

Insurance managers are usually unable to stay ahead of frequently updated sanctions, fail to screen properly, and may get caught in huge claims.

Very often, sanctioned vessels have a flag state that has no link to the country in which a vessel is associated.

For example, a vessel associated with Iran could be registered in the Cayman Islands or any other island nation, and it may carry the flag of this nation.

Therefore, concerned businesses can’t skip due diligence for flags that are not high-risk and have to go for IMO screening.

Advanced AML Vessel Tracking for Maritime Compliance

Manual vessel screening is unable to meet the modern compliance challenges in rapidly evolving maritime trade.

Criminal networks use sophisticated strategies such as creating false documents, manipulating route details, and hiding details of true ownership to bypass due diligence.

To stay ahead of regulatory challenges in the maritime industry, real-time monitoring AML screening solutions are utilized to detect updates in sanctions and generate alerts to ensure robust vessel tracking, enabling businesses to identify and block sanctioned vessels promptly.

Thus, it maintains compliance with evolving regulations and mitigates risks related to illicit trade and reputational damage.

Financial institutions and shipping firms utilize the robust AML vessel tracking system to identify sanctioned vessels by screening against sanctions lists and AML watchlists to prevent dealings with a sanctioned entity or vessels.

AML shipping tracking allows the maritime industry to monitor suspicious activities across the shipping route by acquiring the details of the vessel, monitoring them in real time, and analyzing their movements to improve compliance frameworks in maritime.

Advanced methodologies enable the detection of abnormalities easily, which traditional methods lack, such as ships turning off their tracking system to hide their location, changing routes near sanctioned areas, or changing goods from one vessel to another to obscure information and the financial destination of the cargo.

Vessel sanctions compliance is not limited to merely checking a vessel name against an AML watchlist; it mandates organizations to evaluate ownership of vessels, details about cargo, associated entities, and flag jurisdictions.

It prevents association with vessels involved in illegal activities such as terrorist financing, smuggling, and money laundering.

Vessel registration can be linked with the flags of higher-risk countries, but this does not necessarily mean the vessel itself is sanctioned. Unlike the flag, the vessel’s IMO number is a unique and reliable identifier, which can be easily changed or manipulated.

Using IMO numbers in vessel screening enables accurate identification of vessels linked to sanctions lists.

It helps prevent trade-based money laundering by ensuring businesses do not engage with sanctioned ships and remain compliant with AML regulations.

Robosut Vessel Screening through AML Watcher

AML Watcher empowers maritime industry professionals, financial institutions, and compliance teams with a vessel screening feature that screens the vessel against sanctions lists in real time and ensures compliance with international regulations.

It elevates your compliance strategy and ensures secure global trade operations by pairing vessel screening with a secondary sanctions feature. Vessel Screening solution of AML Watcher offers due diligence against the IMO of sanctioned vessels.

Secure Cross-Border Shipments

AML watcher allows shipping companies and the financial industry to perform vessel screening to identify vessels and entities linked with sanctioned individuals and jurisdictions.

It reduces the risk of noncompliance with sanctions by flagging vessels engaged in sanctioned activities.

It offers accurate vessel risk identification, customizes alert options per the risk appetite, and provides detailed analysis of country, category, and criminal records.

Primary and Secondary Sanctions Ensure Sanctions Compliance

AML Watchr goes beyond the regular IMO checks; its secondary sanctions features identify potential risk, such as vessel owners and freight forwarders linked to the SDNs list. They could be exposed to secondary sanctions due to their connections.

It provides detailed analysis of vessel ownerships, linked entities for UBOs, and real-time monitoring of vessel sanctions to ensure sanctions compliance with the latest sanctions lists.

Minimize Risks With Detailed Insight

Robust data models allow tracking vessel ownership, flagging high-risk maritime operations, and reducing the risk of involvement with sanctioned entities. Quick audit trails and custom risk analysis ensure compliance.

Real-Time Updates On The Sanctions Status Of Vessels

Real-time Risk Updates and notification alerts don’t let financial institutions and the maritime industry miss the critical updates.

AML watcher prevents reputational harm and financial loss by offering timely and accurate data to identify and block engagement with vessels under sanctions, keeping business compliance with primary and secondary sanctions, and empowering global trade and maritime operations.