Case gives clarity on the incorporation of standard terms. Credit: 3D Animation Production Company, Pixabay

As geopolitical tensions and sanctions continue to evolve, maritime companies face increasing pressure to effectively manage risk and ensure compliance with Know Your Customer (KYC) regulations. In a recent webinar hosted by Baltic Exchange, industry experts gathered to discuss the critical role of KYC practices in the maritime sector and understand how Baltic Exchange’s new KYC platform is helping to streamline due diligence processes.

The webinar featured key figures from the maritime and compliance sectors, including Nadia Mirza, Head of New Business at Baltic Exchange, Alexander Brandt, sanctions law specialist at Reed Smith; Fulvio Carlini, president of FONASBA; and Jos Standerwick, Chief Executive of Maritime London. The discussion centred on the shifting sanctions landscape, the growing importance of a compliance-driven culture, and how the maritime industry can adapt to these changes while safeguarding business interests.

You can rewatch the webinar here.

Alexander emphasised that the sanctions landscape is undergoing a "significant geopolitical shift," with implications for the maritime industry. He pointed to the potential return of more stringent sanctions enforcement, especially under the upcoming Trump administration, with a focus on countries like Iran and Venezuela. He also acknowledged the uncertainty surrounding sanctions on Russia. Fulvio echoed Alexander’s concerns and explained how the evolving sanctions regime is impacting shipowners’ decisions. He noted that such decisions are having significant commercial implications, with more shipowners choosing to avoid high-risk regions altogether.

The panel also addressed the growing number of disputes arising from sanctions-related issues in 2024. Disputes often arise when commercial parties have differing interpretations of sanctions restrictions, particularly concerning vessel management, ownership, and cargo transactions. "There are disputes around whether a vessel is properly deemed to be sanctioned, or whether the ownership can control the management of vessels," Alexander explained. "And then there are issues like rejecting counterparty orders or questions over the adequacy of KYC documentation."

Fulvio highlighted the growing importance of compliance-driven brokers and agents in mitigating these risks. He explained that more shipping clients are now requesting brokers to verify compliance and KYC information before moving forward with any transactions. "When [customers] give us a cargo, they ask us to run a compliance check before we present an offer with a ship,” he said.

He also acknowledged that although ensuring compliance is more time-consuming and costly, it provides a significant competitive advantage for companies that are proactive in managing risk. "It’s a big advantage for the company," Fulvio added, "even though it’s a complex process that requires resources, it’s essential to avoid problems later on."

Given the increasing complexity of the compliance environment, the panelists agreed that companies are increasingly turning to technology to streamline their due diligence processes. Baltic Exchange’s KYC platform is one such tool designed to simplify and enhance the process. The platform integrates trusted data sources like Moody’s to verify company details, ownership structures, and financial standing. 

"For our customers, the platform offers peace of mind that they are not inadvertently doing business with high-risk individuals or organisations involved in corruption or money laundering," said Nadia.

A standout feature of Baltic Exchange’s KYC platform is its ability to provide real-time monitoring. Once a due diligence scan is completed, users can opt to monitor the entity for up to 12 months. This feature sends instant alerts if there are any changes to the entity’s status, such as new sanctions or other red flags. "This ensures you're always acting upon the most recent information, keeping you one step ahead of potential compliance risks," Nadia explained.

The platform also features an intuitive interface, designed to make it accessible to professionals at all levels. Whether conducting a single check or scanning multiple entities in bulk, the platform helps streamline the process, making it faster and more cost-effective. "You don’t need to be a compliance expert to navigate the platform," Nadia noted. "It’s designed for efficiency, helping businesses get results in seconds."

Additionally, Baltic Exchange KYC platform operates on a flexible, pay-as-you-go credit system, so companies can purchase credits as needed, without being locked into expensive long-term contracts. This makes it a cost-effective solution for businesses of all sizes looking to ensure compliance while managing risk exposure.

Despite the growing complexity of the regulatory environment, the panelists were optimistic about the future of the maritime industry’s compliance efforts. Fulvio, noting the dynamic nature of shipping, said, "Shipping is a very dynamic industry, and we have to find a way to carry on. The tools we have nowadays are a huge help to all of us."

Alexander added that although challenges remain, significant progress has been made in improving compliance processes. "It’s very rare that the punch-ups that we were having in early 2022 about trying to get pause on documentation and corporate structure charts happen now," he said.

Looking ahead, the experts agreed that the industry’s focus should now be on working closely with regulators to address ambiguous regulations and ensure new laws are properly operationalised. "The focus on the industry now is to work with the regulators to continue that conversation about clarifying ambiguous regulations and making sure that the laws that are passed are ones that are properly thought through," Alexander concluded.

By adopting robust compliance measures, proactive due diligence, and leveraging innovative tools like Baltic Exchange’s KYC platform, the industry appears well-equipped to manage evolving compliance risks and ensure long-term sustainability. 

Find out more about the Baltic Exchange KYC platform here.