Price Cap Coalition flags Russian oil evasion risks

LONDON, February 1, 2024 — The Price Cap Coalition has sharpened its focus on documentation, shipping costs and vessel behavior that may expose companies to Russian oil transactions above the coalition’s price limits.

The coalition, comprising the Group of Seven nations, the European Union and Australia, identified six broad evasion risks: falsified records, opaque ancillary costs, complex third-country structures, suspicious flagging, shadow-fleet activity and voyage irregularities.

False attestations and shipping documents can disguise the price, origin or destination of Russian oil and oil products. Inflated or bundled freight, customs and insurance charges can similarly obscure purchases above the cap, making itemized and commercially reasonable costs important to compliance assessments.

The alert also highlighted recently formed intermediaries, shell companies, concealed beneficial ownership and frequent changes in vessel or company management. Repeated reflagging, false flags and moves away from the Russian registry after the cap’s introduction may warrant closer scrutiny when combined with other warning signs.

Older, anonymously owned vessels in the shadow fleet present additional compliance, environmental and safety concerns. Such ships may use opaque corporate structures, unreliable insurance or nonstandard classification services while carrying Russian oil and oil products.

Voyage risks include unexplained route changes, prolonged gaps or manipulation in Automatic Identification System transmissions and ship-to-ship transfers conducted alongside other deceptive practices. The coalition cautioned that such behavior can have legitimate explanations and should not be assessed in isolation.

The guidance encourages risk-based due diligence on customers, counterparties, vessels and beneficial owners, along with document checks and retention of invoices, contracts and proof of payment. Where market information indicates Russian oil exceeds the cap, businesses using coalition services are advised not to provide the service and to notify the relevant authority.

The alert also reinforced previously announced compliance revisions under which relevant coalition service providers will receive attestations for each loading or lifting of Russian oil. Supply-chain participants with access to itemized ancillary costs will be expected to share them on request. The evidence does not specify a separate effective date for those changes; coalition members had said transition details would follow through domestic processes.