CRIMINAL CAPTALI$M

Confronting Fraudulent Practices Within the Maritime Sector

PUBLISHED NOV 21, 2023 12:03 PM BY OBERHEIDEN P.C.

 

 

Fraudulent activities are not just confined to financial institutions and corporate settings. They can affect a wide range of industries, including the maritime sector. According to recent reports, maritime fraud appears to be rising, causing significant disruptions to supply chains and resulting in unwanted costs.

There are many ways that fraudulent behavior can arise in the shipping world, including document fraud, smuggling, bunkering fraud, cargo fraud, and cyber fraud. While many incidents of maritime fraud involve external third parties who seek to profit from defrauding the maritime industry, in some cases the fraud may also be carried out, or assisted from, within. This article will take a closer look at maritime fraud and common techniques used to carry out illicit activities within this industry.

Cargo and Document Fraud

This type of fraud can manifest in various ways. These can include the following:

• The sale of non-existent cargo
• Using fraudulent cargo documents
• Cargo theft
• Illicitly attempting to make claims on Letters of Credit
• Misrepresenting the quantity, quality, or condition of the cargo

In many cases, cargo and document fraud will require some “inside help” as those carrying out the fraud will require certain information in order to create or alter documents to achieve the outcome they desire.

If you believe you have information that could warrant federal enforcement action and are considering filing a whistleblower claim, it is advisable to seek specialist legal help from whistleblower lawyers like Oberheiden who can advise you further.

Under-Invoicing

This is where the importer of certain goods asks that their value be reduced on the invoice. By declaring a lower amount than the true sale price the importer seeks to benefit from lower customs taxes and duties.

An exporter who issues a false invoice if requested in this way could find themselves in violation of the Foreign Corrupt Practices Act (FCPA) as well as the rules relating to Trade Based Money Laundering (TBML) which refers to the disguising of the proceeds of crime. TBML can take place in many ways with over and under-invoicing of goods and the misclassification of goods to avoid customs duties being common examples.

Bribery

On a daily basis, large numbers of ships and their cargoes arrive at ports and go through customs clearance. These activities involve many people across various levels of the supply chain as well as various jurisdictions. As a result, there are also many opportunities for corrupt practices to take place such as bribery.

One example of such behavior involves marine surveyors. These professionals are responsible for surveying, inspecting, and examining the condition of ships and their cargo to ensure they comply with certain safety regulations and remain seaworthy. The outcome of their reports can impact the decision of insurers, shipowners, and other stakeholders within the maritime industry.

In some cases, marine surveyors have been known to issue biased or false assessments in exchange for bribes. This practice enables the other party to obtain a favorable assessment, potentially putting vessels and cargo at risk.

These are just some of the unethical and illicit practices that taint the maritime sector. Being aware of them and bringing them to the attention of the relevant authorities can ensure the continued safety and integrity within the sector as a whole.

This article is sponsored by Oberheiden P.C. For additional information visit Oberheiden online.