A merican Club Circular No . 21 / 24 1 NOVEMBER 13, 2024 CIRCULAR NO. 21/24 TO MEMBERS OF THE ASSOCIATION Dear Member: PRICE CAP COALITION ISSUES AN UPDATED ADVISORY FOR THE MARITIME INDUSTRY AND OFAC ISSUES A COMPLIANCE COMMUNIQUÉ WITH SANCTIONS COMPLIANCE GUIDANCE FOR THE MARITIME INDUSTRY I. UPDATED ADVISORY FOR THE MARITIME INDUSTRY On 21 October 2024, the Price Cap Coalition (“Coalition”) issued an Updated Advisory for the Maritime Industry which sets out best practice recommendations for those involved in the trade of Russian origin crude oil and petroleum products. An Initial Advisory was published on 12 October 2023. The updated version provides new recommendations (Nos. 8-11) on meeting international maritime safety and environmental obligations, enhancing due diligence around tanker sales, avoiding interactions with sanctioned counterparties, and raising internal awareness. The Coalition confirms in the updated Advisory its commitment to facilitating the safe flow of oil/petroleum products while at the same time highlighting the increased safety, environmental, financial and legal risks arising from maritime oil trade performed outside the agreed price cap framework. Recognizing increased trade involving the ‘shadow’ fleet the Coalition highlights the following main risks associated with it (which are unchanged from the previous Advisory): • Maritime Safety and Marine Environment - the vessels engaged in this trade are typically older ships; with substandard or falsified certifications; inadequate safety and maintenance standards performed by substandard flags or unrecognized organizations; and inexperienced crew. • Insurance and Economic – recognizing the tremendous environmental damage and high cost of dealing with oil spills, the Coalition underlines the danger of not having proper P&I insurance: with insufficient capital, reinsurance arrangements and lack of the necessary technical expertise to handle marine casualties. • Reputational, Logistical, and Financial - highlighting that actors involved in the shadow trade often have complex and/or concealed corporate structures and engage in disabling or manipulating Automatic Identification Systems (AIS). As a result, such deceptive practices may cause stakeholders to unknowingly engage in transactions that are inconsistent with their compliance policies which negatively affects their reputations and causes de-risking behavior from counterparties. A merican Club Circular No. 21 / 24 2 • Legal and Sanctions – reminding the maritime industry that multiple sanctions and economic measures have been adopted in response to Russia’s war against Ukraine, including the oil price cap. Use of deceptive practices/shadow trade may lead to the violation of such sanctions and measures. As a new measure the updated Advisory reminds the maritime industry that Coalition members have taken action by directly sanctioning specific vessels and counterparties involved in the Russian oil trade which underscores the risk of deceptive behavior. Considering the risks identified above, the Coalition continues to recommend the following measures and best practices: 1. Require appropriately capitalized P&I insurance With sufficient coverage for 1992 Civil Liability Convention and Oil Pollution Act 1990 liabilities and conducting appropriate due diligence of the insurer, including financial soundness, track record, regulatory record, and/or ownership structure. 2. Receive classification from an International