BIFAlink


Legal Eagle


www.bifa.org


International Maritime Bureau sets up NVOCC code of conduct


The new code is aimed at reducing fraud and cutting potential exposures to fraudulent activity throughout the supply chain


We previously reported that the International Chamber of Commerce (ICC) International Maritime Bureau (IMB) had established a register for Non-Vessel Owning Common Carriers (NVOCC). The purpose of the register is to improve anti-fraud measures and to encourage higher standards 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 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”.


Suspect bills of lading 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 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 bills of lading are being issued by NVOCCs with low standards posing a


8


fraud and money laundering risk to the banks. The objective of this initiative is to impose a


greater degree of accountability on NVOCCs. It is hoped to increase the essential role played by the bill of lading. 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. 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 NVOCC will be required to provide its full contact details, including physical business address and the full names of two directors (designated persons) who will assume responsibility for the NVOCC following its joining the register.


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 persons’ information.


Non-compliance penalties 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 its removal from the register, unless it can demonstrate that it has put procedures in place to ensure these errors are not repeated. Suggested corrective actions include sending staff on training courses and close monitoring of their work.


Any scheme aiming to improve standards is to be welcomed and membership of the scheme should be regarded as indicating an 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 reduce potential exposures to fraudulent activity throughout the supply chain.


October 2020


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24