The Maritime Sector: A "Front Line" of U.S. Sanctions

The maritime shipping sector has become a key target of sanctions policymakers and enforcement agencies in the U.S., European Union and United Kingdom as government authorities in these jurisdictions seek to advance national security objectives in part through countering deceptive and illicit maritime shipping practices. The strategic targeting of the maritime shipping sector for sanctions has continued to intensify in 2025, raising compliance risks for an increasingly broad range of maritime industry stakeholders. Given the costs that can arise from these issues through penalties and litigation, companies in this sector should 1) familiarize themselves with sanctions evasion "red flags" highlighted in guidance issued by enforcement authorities, 2) assess the risks most relevant to their cross-border activities, markets, clientele, investments and operations, and 3) devote appropriate resources to implementing risk-based compliance measures.

Maritime Sanctions Designations: What Are the Legal Authorities?

Statutes authorizing sanctions to be imposed on actors involved in undertaking certain shipping and other maritime-related dealings with Russia, Iran, designated terrorist organizations and North Korea have existed for more than a decade¹. Nonetheless, the targeting of vessels and other maritime-related companies allegedly associated with sanctions evasion "networks" ramped up significantly during the Biden Administration, following the G7's imposition of a "price cap" on Russian-origin oil in 2022. In addition, the U.S., EU and U.K. have continuously announced sanctions designations to counter efforts by vessels and related entities (referred to as the "Shadow Fleet" or "Dark Fleet") to evade U.S. sanctions and avoid compliance with the price cap or other sanctions prohibitions.

In 2025, the sanctioning of maritime entities and Shadow Fleet vessels has continued to intensify in the U.S., EU and U.K., although the focus of U.S. sanctions authorities has moved much more aggressively toward parties allegedly controlled by or working for or on behalf of sanctioned Iranian entities and other designated terrorist organizations (including Hezbollah and the Houthis). This shift in U.S. sanctions priorities aligns with the "max pressure" campaign on Iran and its proxies in the region announced in President Donald Trump's National Security Presidential Memorandum 2 (NSPM-2), which called for, among other things, a "robust and continual" campaign to "drive Iran's export of oil to zero, including exports of Iranian crude to the People's Republic of China."² Likewise, increased sanctions actions targeting vessels and shipping companies associated with the Houthis have followed the Trump Administration's redesignating the group as a Foreign Terrorist Organization (FTO) on March 4, 2025.³ The maritime industry has also been impacted by the Trump Administration's designation of cartels operating in the Western Hemisphere as FTOs as well.

Maritime Sector Targets of Sanctions Authorities

Maritime Sanctions Targets: By the Numbers

Recent statistics underscore how the maritime shipping industry has, along with the oil and gas energy sector, become a front line of sanctions policy for the U.S., EU and U.K. Well over 300 vessels, mostly tankers, have been individually added to the U.S. Department of the Treasury Office of Foreign Assets Control's (OFAC) Specially Designated Nationals and Blocked Persons (SDN) List⁴ in 2025 so far, which does not include vessels now subject to blocking sanctions as a result of their being 50 percent or more owned by SDNs⁵ or vessels sanctioned by U.K. or EU authorities, each of whom has designated hundreds of Shadow Fleet vessels and associated entities involved in transporting Russian oil and gas. As a result, since 2024, the total number of OFAC-sanctioned vessels registered with the International Maritime Organization increased by more than 46 percent to over 1,800 (including both individually designated vessels and vessels with sanctioned owners/operators). According to industry reports, well over 1,400 vessels are now individually identified on sanctions lists maintained by the UN Security Council, OFAC, European Commission, U.K. HM Treasury and Switzerland's State Secretariat for Economic Affairs (SECO), representing increases of more than 30 percent since 2024 and 130 percent since February 2022.⁶

Maritime Sanctions Targets: Who and Where?

OFAC has announced approximately over a dozen rounds of sanctions designations targeting vessels, entities and individuals engaging in illicit shipping practices or enabling or facilitating sanctions evasion in 2025. The vast majority of these entities are allegedly involved in the trade and transport of oil and gas from Iran or other embargoed jurisdictions or FTOs, although more recent sanctions designations have targeted bulk cargo shipping lines associated with Iran as well.⁷

Based on OFAC press releases announcing these designations, the scope of maritime shipping stakeholders affected or targeted by sanctions is broad. In addition to vessels, sanctions targets have included:

• shipping and logistics companies
• technical and commercial managers for vessels and other vessel service providers
• vessel brokers
• oil and gas traders
• financial institutions (including hedge funds)
• vessel insurers
• port operators and port service providers
• corporate directors and administrators
• corporate formation companies
• so-called "teapot" refineries (primarily in China)

Geographically, many of the designations targeted parties located in the United Arab Emirates (UAE), Hong Kong, Oman, Singapore, Malaysia, China and the Marshall Islands, as well as the EU and U.K. (jurisdictions not historically targeted by U.S. sanctions authorities).

Red Flags of Sanctions Evasion

OFAC and the Treasury Department's Financial Crimes Enforcement Network (FinCEN) have issued updated guidance on "red flags" for maritime sanctions evasion and noted the regulators' recommendations regarding the due diligence necessary to spot and address red flags.⁸ Red flags signifying potential sanctions evasion include:

• use of vessels that are uninsured or use of sanctioned, new or untested insurance providers for no apparent business reason
• use of vessels that have undergone frequent name changes or reflagging in different third-country jurisdictions or by registries not authorized to provide flagging services for a particular jurisdiction
• involvement of "exchange houses" registered in Hong Kong or the UAE or "trading companies" located in close proximity to Iran
• falsified cargo, vessel or transaction documents
• disabled or manipulated Automatic Identification System (AIS) data
• ship-to-ship (STS) transfers or irregular voyages
• blending or relabeling oil as originating in other jurisdictions

Sanctions Compliance and Downstream Legal Issues Abound

Compliance challenges are increasing for the maritime sector as it faces increased scrutiny from sanctions authorities in multiple jurisdictions and increased types of business, legal and reputational risks under sanctions regulations and other counter-terrorism laws implicated by any dealings with FTOs. This is happening as sanctions evaders continue to employ strategies to avoid detection or obfuscate the involvement of SDNs, presence of sanctioned cargo or a party's connections to embargoed jurisdictions.⁹ This increased sanctions risk can create downstream complications for maritime industry stakeholders, including disputes over contractual clauses in charter parties, insurance coverage, and how to dispose or address allegedly "blocked" cargo or vessels (particularly when the cargo or vessel becomes blocked mid-voyage). Companies are expected to engage in more thorough "Know Your Customer" or "Know Your Cargo" processes to ensure, for example, that vessel buyers are not straw purchasers or that charterers are not obfuscating their or their cargo's ties to sanctioned entities. For certain parties, reviewing vessel history, including automatic identification system (AIS) data, ownership and flag registration, is becoming a baseline compliance expectation.

This trend has meant greater resources being spent on complying and detecting risks associated with a growing body of sanctions prohibitions, which continue to evolve. In this environment, increasing institutional awareness of the risks and red flags, incorporating compliance obligations in contracts and implementing procedures to address relevant risks are essential steps to mitigate potentially costly and disruptive sanctions issues that may arise.

Notes

¹ See, e.g., Section 1244 of the 2012 National Defense Authorization Act, which prohibits transactions with Iran's shipping industry and mandates sanctions on financial institutions supporting Iranian maritime trade. See also the Iran Freedom and Counter-Proliferation Act (IFCA) of 2012, which targets Iran's ports, shipping and shipbuilding sectors by requiring secondary sanctions against foreign parties facilitating transactions for Iranian maritime entities. See also the Countering America's Adversaries Through Sanctions Act (CAATSA) of 2017, Pub. L. 115-44 (Aug. 2017); See, e.g., Executive Order 13846, "Reimposing Certain Sanctions with Respect to Iran," 83 Fed Reg. 38,939 (Aug. 6, 2018).

² White House: National Security Presidential Memorandum/NSPM-2 (Feb. 4, 2025). NSPM-2 also called on the U.S. Department of Justice to "pursue all available legal steps to impound illicit Iranian oil cargoes" and disrupt efforts by the Iranian government to evade U.S. sanctions and export controls.

³ U.S. Department of State Secretary Marco Rubio press statement: Designation of Ansarallah as a Foreign Terrorist Organization (March 4, 2025).

⁴ The SDN List, which is maintained by OFAC, identifies individuals, entities and vessels that are subject to blocking sanctions due to their connection to targeted countries, terrorism or narcotics trafficking. U.S. persons are, with very limited exception, prohibited from engaging in nearly any dealings with SDNs as well as their property.

⁵ OFAC: Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property Are Blocked (Aug. 13, 2014).

⁶ S&P Global: Maritime shadow fleet – Formation, operation and continuing risk for sanctions compliance teams in 2025; European Commission press release: EU adopts 18th package of sanctions against Russia (July 17, 2025).

⁷ OFAC: Treasury Takes Massive Action Against High-Profile Iranian Network (July 30, 2025).

⁸ OFAC: Guidance for Shipping and Maritime Stakeholders on Detecting and Mitigating Iranian Oil Sanctions Evasion (April 16, 2025); FinCEN: FinCEN Advisory on the Iranian Regime's Illicit Oil Smuggling Activities, Shadow Banking Networks, and Weapons Procurement Efforts (June 6, 2025).

⁹ Sanctions violations are strict liability offenses where even non-U.S. parties can be liable for "causing" a U.S. person (e.g., a financial institution) to violate U.S. sanctions.