Strait of Ormuz: USA warn shipowners of sanctions even without charge

The U.S. Office for Foreign Asset Control (OFAC) warned shipowners and shipping companies through the Ormuz Strait that a sanctioning risk may arise even before any payment to Iranian operators is made.

Communication published on 24 August is an update of the previous OFAC warning on Iranian requests for ships passing through Ormuz Strait. The U.S. office has identified three sanctioned entities: the Persian Gulf Strait Authority (PGSA), the Persian Gulf Marine Insurance Company (PGMIC), and the HormuzSafe Marine Services Authority.

PGSA was subject to US sanctions on May 27. According to the U.S. Treasury Department, this entity cooperates with the Islamic Revolutionary Guard Corps to organise ship crossing through the strait and toll collection. PGMIC and Hormuz Safe were placed on the sanctions list on 29 July in connection with activities in the Iranian financial sector.

Not only the transition fee

The most important part of the new communication concerns a situation where no money is transferred. OFAC warns that US and non-US individuals and companies may also be subject to sanctions by accepting insurance or other services from designated entities, as well as by responding to requests for information relating to obtaining a guarantee safe passage.

This does not mean that any exchange of information conducted during shipping by the Ormuz Strait will be treated as a violation of sanctions. The warning refers specifically to contacts with Iranian sanctioned entities and requests for information related to the service or guarantee of safe passage.

Nor does the communication itself impose a new ban. Ofac explains how existing US sanctions can be applied to actions taken by shipping companies. However, for the shipowner, this means that the risk assessment starts already at the first contact stage with the data demander before the issue of payment or conclusion of any contract arises.

Iran can demand more than money

OFAC also points out that the charge for crossing the Strait of Ormuz does not need to take the form of a traditional transfer. It may be collected in currencies, cryptocurrency and other digital assets, as well as through compensatory settlements, intergovernmental agreements, informal exchanges or other in-kind benefits. American office points also to contributions presented as charitable donations.

Payments presented as charitable donations may also be considered as a form of such payment. The U.S. office indicates Iranian Red Crescent Society, the Bonyad Mostazafan Foundation and the accounts of Iranian diplomatic institutions. According to OFAC, the penalty risk does not therefore depend solely on the way in which the payment will be made.

Shipowners are to check the passage through the Strait more closely

Ofac also recommended companies providing shipping services to better check ships using the Strait of Ormuz. The verification is to include, inter alia, information on with whom the shipowner or captain agreed to move, whether Iran had been or would have been transferred to a fee and whether the ship was using Iranian insurance or other services.

This also applies to companies outside the United States. OFAC indicates the possibility of applying secondary sanctions, including restrictions on foreign financial institutions' access to the US financial system. Risks may also arise if a specified payment or service leads to a breach of sanctions by an American insurer, reinsurer or bank.

Ofac consent does not guarantee a passage

In the final part of the communication, the U.S. office draws attention to another restriction. The possible sanctioning permit of the OFAC does not repeal decisions of other U.S. administrations, including measures introduced by the U.S. Central Command and the War Department.

In practice, this means that the solution to sanctions does not yet prejudge the possibility of passing the ship through this route. For shipowners, the situation becomes more complicated: not only what they pay and what they pay for, but also who they contact when organising a transition through one of the most important maritime corridors The world.