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Publication
Keeping your dawn raid guidance current
Unannounced inspections or ‘dawn raids’ are used by antitrust authorities to obtain evidence when there are suspicions that individuals or businesses have infringed the antitrust rules.
Authors:
United States | Publication | October 2023
On October 12, 2023, the US Department of the Treasury's Office of Foreign Assets Control (OFAC) imposed sanctions on two entities and two vessels for transporting oil sold above the Coalition Price Cap on Russian oil (the Price Cap). This enforcement action, prompted by OFAC's April 17, 2023 alert regarding possible evasion of the Price Cap via the Port of Kozmino, Russia, is the first of its kind since the US imposed the Price Cap. The action was echoed by a commitment from other Group of 7 (G7) states, the European Union and Australia (the Coalition) to strengthen enforcement of existing economic sanctions on Russia, including the Price Cap.
The Price Cap, as discussed in our previous briefing, prohibits US persons from providing "covered services" related to the maritime transportation of Russian crude oil and petroleum products if sold over the designated price, currently fixed at:
Services covered by the Price Cap include trading and commodities brokering; financing; shipping; insurance, reinsurance and protection and indemnity (P&I); flagging; and customs brokering. The US is now actively enforcing the Price Cap alongside similar policies imposed by its Coalition partners.
This action comes after months of rhetoric, as recently discussed by our UK team, hinting at heightened monitoring and impending enforcement in the face of increasing concerns that the Price Cap would be difficult to enforce due to prevalent and dangerous evasion and circumvention tactics.
In tandem with OFAC's enforcement action, the Coalition issued an advisory, warning companies operating in the maritime oil industry of "shadow trade" practices being employed to decrease transparency in the shipping industry and evade and circumvent the Price Cap. The Coalition flagged a number of "shadow trade" tactics that carry significant maritime safety and marine environmental risks that companies operating in the sector need to heed. These include the use of:
With these risks in mind, the Coalition advises adoption of the following industry best practices to decrease risk:
This action and advisory signal the intent of the US and its Coalition partners to toughen their approach to enforcement and, specifically, attempts to evade or undermine the Price Cap and other existing sanctions.
Companies operating in the maritime oil industry should therefore be cognizant of increased monitoring and enforcement and should look to implement these best practices in order to ensure that stakeholders' and counterparties' behaviors do not raise red flags or pose significant safety risks. It would be prudent for companies to assess their diligence and recordkeeping practices, as needed, and ensure adequate information is maintained to support Price Cap safe-harbor protocols, as discussed in our initial briefing on the Price Cap.
Our team will continue to monitor enforcement and guidance in this space and will publish additional updates as appropriate.
Publication
Unannounced inspections or ‘dawn raids’ are used by antitrust authorities to obtain evidence when there are suspicions that individuals or businesses have infringed the antitrust rules.
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