Tehran's 'Toll Booth' System Is Now Controlling Hormuz Traffic
International Trade attorney Manny Levitt was quoted in Lloyd's List commenting on the compliance risks posed by a new transit corridor creating a vetting scheme for ships passing through the Strait of Hormuz. According to vessel owners, the Islamic Revolutionary Guard Corps (IRGC) has instituted a system requiring ships navigating the strait to sail exclusively through a controlled corridor and present documentation such as their International Maritime Organization (IMO) number and cargo manifest before undergoing screening and receiving a clearance code to continue, under the escort of IRGC-controlled boats. Some shipowners also report being required to pay a toll for passage, raising questions about whether doing so runs afoul of U.S. sanctions given the IRGC's designation as a Foreign Terrorist Organization. Although the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) recently issued an authorization for delivery and sale of certain Iranian-origin crude oil and petroleum products, Mr. Levitt cautioned shipping companies to tread carefully, noting it remains unclear whether this particular payment qualifies. He also mentioned making any payments to the Iranian government or even appearing to cooperate with the group, however indirectly, carries its own set of reputational risks.
"Until and unless OFAC provides additional clarification, I would expect financial institutions to be extremely skeptical as to whether the 'toll' fees would qualify as transactions 'ordinarily incident and necessary' to the sale, delivery or offloading of Iranian-origin oil or gas authorized under General License U," he said. "Specifically, the general license would not mitigate the risks that could arise under U.K. or EU sanctions, which still apply, nor would they prevent a company from potentially facing liability under separate U.S. anti-terrorism-related statutes targeting the provision of 'material support' to Foreign Terrorist Organizations, which include the IRGC."
READ: Tehran's 'Toll Booth' System Is Now Controlling Hormuz Traffic