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IMB launches NVOCC code of conduct


The aim of the IMB register is to impose a greater degree of accountability upon NVOCCs. It is also hoped that this will increase the essential role played by the bill of lading


The ICC International Maritime Bureau (IMB) has established a register for Non-Vessel Owning Common Carriers (NVOCCs). The purpose of the register is to improve anti-fraud standards and to encourage more accurate documentation completion by providing a mechanism to recognise participating NVOCCs who adhere to a minimum standard of anti-fraud measures in their operations.


For the purposes of the scheme, an NVOCC is


defined as: “A company which issues a bill of lading and assumes the role of the carrier of the cargo.” Joining the IMB scheme does not relieve an NVOCC of its obligation to register its company or activities with the competent local authorities, for instance the Federal Maritime Commission (FMC). It is relevant to point out to the reader that the ICC and IMB definition of NVOCC is specifically “Non-Vessel Owning Common Carrier”, whereas other organisations such as the FMC, World Shipping Council and TT Club define NVOCC as “Non-Vessel Operating Common Carrier”. According to the IMB, NVOCCs are issuers of over 90% of all suspect bills of lading identified in its database. Suspect bills of lading are those that have false content, including the incorrect vessel, dates, description of cargoes, container numbers or parties. They are presented to banks


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in order to commit fraud, money laundering, illegal capital flight and to by-pass sanctions. Whilst it is acknowledged that there are many


NVOCCs who operate to high standards, the simple fact cannot be ignored that there are some that do not. The industry sector is unregulated in many countries and the standards of trade knowledge are very variable. The result has been that inaccurate bills of lading are being issued by NVOCCs and financed by banks, posing a fraud and money laundering risk to the banks.


Objective


The objective of this initiative is to impose a greater degree of accountability upon NVOCCs. It is hoped to increase the essential role played by the bill of lading. At BIFA, from the communications we regularly


receive, it is clear that many do not understand the key threefold role of a bill of lading and, in particular, the potential for it to be a ‘negotiable’ document giving the holder title to the goods. A point that we have emphasised for many years, and this initiative highlights, is that information declared on the bill of lading has to be accurate and mirror the relevant information from the master bill of lading issued by the physical carrier. As stated in the opening line of this article, the IMB will open a register of NVOCCs around the


world. The scheme is voluntary, but it does intend to differentiate between those traders who wish to demonstrate their competence and those who do not. The NVOCCs will be required to provide their full contact details, including physical business address and the full names of two directors (designated persons) who will assume responsibility for the NVOCC. The ICC and IMB have written a code of conduct detailing acceptable business practices to be followed by the NVOCC in the issuing and processing of bills of lading. The NVOCC seeking registration with the IMB will be required to sign the code of conduct valid for one year. In addition, the NVOCC will be required to pay an administration fee for registration. The identity of all registered NVOCCs will be published on a website administered by the IMB. It should be noted that the website will not include the designated person’s information. The IMB NVOCC Register is backed by an online course designed by the IMB and run by the ICC Academy, which specialises in trade- related online training (https://icc.academy/).


Obligations Within the agreement will be a requirement for the NVOCC to promptly answer any questions from the IMB regarding the bill of lading issued. If the NVOCC is unable to satisfactorily explain a query regarding a bill of lading issued by it, or there is evidence that the document contained false information, it will be recorded as a ‘strike’ in the database. Two such strikes within a year will result in their removal from the register, unless it can demonstrate that it has put procedures in place to ensure these errors will not be repeated. Suggested corrective actions include sending staff on training courses and close monitoring of their work. When considering this proposal, the very


broad definition of an NVOCC has to be considered; in effect, any forwarder issuing a house bill of lading is likely to fall within the scope of this registration scheme and could therefore join it.


Like many such voluntary schemes, the


registration requirements are relatively low and currently there does not appear to be a substantive mechanism for ensuring compliance. However, any scheme aiming to improve


standards is to be welcomed and membership of the scheme should be regarded as indicating a NVOCC’s commitment to meet minimum acceptable standards relative to issuing essential trade documentation. It is hoped that this will be beneficial to the shipping and freight industry, and will surely reduce potential exposure to fraudulent activity throughout the supply chain.


July 2019


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