1. Purpose
This policy has been prepared to ensure that Kuzey Star Shipyard Denizcilik San. ve Tic. A.Ş. (“Kuzey Star Shipyard”) operates in compliance with the economic and export control obligations enforced by the U.S. Department of Treasury's Office of Foreign Assets Control (“OFAC”), the United Nations (“UN”), the European Union (“EU”), and other jurisdictions. The policy aims to guarantee legal compliance in shipyard operations, protect the company’s reputation, manage counterparty risks, and facilitate quick intervention in case of non-compliance.
2. Scope
This policy covers all activities, departments, projects, suppliers, customers, and business partners within Kuzey Star Shipyard. The following areas are included:
- Shipbuilding and ship maintenance/repair projects,
- Supply chain and material procurement,
- Sales, marketing, and customer management,
- Financial transactions and payment processes,
- Employee training and awareness programs on sanctions regulations.
All stages of Kuzey Star Shipyard operations must be conducted in compliance with the determined sanctions and trade restrictions.
3. General Principles
Acting responsibly in alignment with our core values (loyalty, reliability, fairness, and customer orientation) is an integral and fundamental part of Kuzey Star’s corporate culture. Our standards of conduct are based on applicable laws, internal company guidelines, and core ethical principles.
The sanctions and export control compliance policy is "preventive" in nature. Its purpose is to detect compliance risks and violations early and respond appropriately. To achieve this, Kuzey Star Shipyard:
- Knows its customers and business partners,
- Adheres to applicable regulations, Kuzey Star Ethical Principles, and related policies,
- Ensures the accuracy of financial and commercial records,
- Maintains secure and appropriate records of all activities,
- Conducts third-party due diligence in accordance with regulations.
4. Policy
Kuzey Star Shipyard management and all employees are committed to:
Compliance in Operations: Complying with the “SDN List” (Specially Designated Nationals List) issued by OFAC, as well as UN and EU sanctions, and other economic sanctions and export control obligations enforced by other jurisdictions.
Adhering to all international sanctions in regions where the shipyard operates.
Reputation Protection: Treating legal compliance as a priority to strengthen the company’s reputation and increase reliability in international trade by avoiding collaboration with suspicious parties and minimizing reputational risks.
Counterparty Risk Management:Screening all customers, suppliers, and business partners in accordance with compliance procedures and creating risk profiles,
Avoiding any commercial relations with high-risk countries or entities under sanctions.
Training and Awareness: Regularly training employees on OFAC regulations and policy practices to enhance awareness,
Organizing comprehensive training on sanctions regulations, company policies, and procedures to foster a culture of compliance within the organization.
Audit and Continuous Improvement: Regularly auditing operational processes and swiftly integrating changes in OFAC regulations into shipyard procedures,
Conducting thorough investigations when violations of sanction laws and regulations are suspected,
Taking corrective actions and disciplinary measures when necessary.
Emergency Control and Measures: Activating pre-prepared emergency plans in case of a suspicious transaction or violation.
4.1. Non-Compliance with the Policy
Violation of this policy may lead to the following
- Employees facing imprisonment (for certain sanction violations),
- Significant financial penalties for both Kuzey Star Shipyard and its employees,
- Loss of reputation,
- Loss of business opportunities,
- Termination of contracts,
- Difficulties in accessing international financing,
- Recall of loans,
- Asset seizures
4.2. Prohibited Transactions
Kuzey Star Shipyard is fully committed to complying with OFAC regulations. These regulations prohibit transactions related to:
- Sanctioned Individuals and Entities: No business or financial transactions will be conducted with individuals, companies, or organizations listed on OFAC’s SDN List or other sanctions lists maintained by OFAC.
- Sanctioned Countries: No shipbuilding, repair, or maritime services will be provided to individuals or companies affiliated with sanctioned countries. Additionally, business dealings with assets controlled directly or indirectly by such governments or entities will be avoided.
5. Customer and Supplier Due Diligence Process:
To ensure compliance with OFAC regulations, Kuzey Star Shipyard implements the following measures:
- List Screening and Monitoring: Customers, suppliers, contractors, and business partners are screened against OFAC’s SDN List and other relevant sanctions lists before initiating any contracts, shipbuilding projects, or maritime services. These screenings are conducted continuously to prevent collaboration with sanctioned parties.
- Know Your Customer (KYC): For high-value projects or international transactions, identity verification information, ownership, and control details will be requested from customers and business partners.
- Transaction and Contract Monitoring: All transactions, shipbuilding agreements, and service contracts will be monitored for suspicious activities or situations that may conflict with OFAC regulations. Any suspicious transaction or contract will be promptly investigated.
6. Roles and Responsibilities
6.1. Responsibilities of Senior Management:
- Formulating policies and allocating necessary resources.
- Conducting risk assessments and making final decisions.
- Overseeing the effective operation of compliance processes within the shipyard.
- Ensuring thorough due diligence is performed on customers, partners, suppliers, and other relevant entities before engaging in any business transactions, and updating/reporting to the Board of Directors periodically
6.2. Responsibilities of the OFAC Compliance Officer and Team:
A “Compliance Officer” has been appointed on behalf of Kuzey Star Shipyard to oversee and monitor OFAC compliance processes. The Compliance Officer is responsible for:
- Policy Implementation: Supervising the implementation of this policy and ensuring continuous compliance.
- Training and Awareness: Providing training and raising awareness among employees about OFAC compliance.
- Reporting Suspicious Activities: Facilitating the reporting of suspicious transactions or violations and cooperating with authorities when necessary.
- External Communications: Serving as the point of contact for external inquiries regarding the compliance program, communicating with regulatory authorities when required, and notifying stakeholders about changes in sanctions regulations.
- Risk Assessment and Mitigation: Conducting regular risk assessments to identify potential areas of exposure to sanctions violations and managing risk activities.
- Legal Controls: Ensuring compliance with all applicable laws and regulations, staying updated on changes in sanction laws, and communicating updates to relevant stakeholders.
- Monitoring and Reporting: Monitoring operations to ensure compliance with procedures, reporting irregularities, and making recommendations for corrective actions.
COMPLIANCE OFFICER : Atty. Fikri Eren HEPŞEN
E-mail & Phone : compliance@kuzeystar.com – 0 216 392 6210
6.3. Internal Auditor:
- Conducting audits with the Compliance Officer on operations, transactions, and contracts, and submitting regular compliance reports.
- Implementing corrective measures, including disciplinary actions, in cases of non-compliance.
6.4. Responsibilities of the Shipbuilding and Maintenance Department:
- Conducting material and technology inspections to prevent the use of sanctioned products.
- Reporting risky projects and customers to the compliance team.
6.5. Responsibilities of the Sales and Marketing Department:
- Verifying the sanctions compliance of new customers and regions.
- Including compliance clauses in contracts.
- Reporting suspicious payments and transactions to the compliance team.
6.6. Responsibilities of the Finance and Accounting Department:
- Auditing financial transactions for OFAC compliance.
- Identifying blocked funds and notifying the relevant units.
7. Reputation Management
To protect and strengthen its reputation in international trade, Kuzey Star Shipyard:
- Refuses to work with high-risk customers and projects.
- Conducts regular audits to prevent compliance violations.
- Positions itself as a business partner aligned with international standards.
8. Counterparty Risk Management
- Regular automated screenings of customers and suppliers are conducted.
- Business relationships with high-risk regions and parties are avoided.
- Risk analysis results are reported to management to guide workflows.
- Regular risk assessments are conducted to identify potential areas of exposure to sanctions violations.
- Collaboration with professional law firms is ensured.
9. Emergency Control and Measures
- Emergency Response Plan:
When suspicious transactions are identified, all departments notify the Compliance Officer, and the transaction is immediately halted. The project or transaction is evaluated, and decisions are made based on the results.
- Reporting:
Violations are swiftly reported to OFAC by the Compliance Officer.
- Corrective Actions:
Processes are analyzed in case of non-compliance, and necessary precautions are taken to prevent similar issues in the future.
- Training:
Employees are adequately trained to understand their responsibilities, and updates on regulatory changes and the importance of compliance are provided.
This policy serves as a fundamental guide to ensure Kuzey Star Shipyard's compliance with international laws, minimize potential risks, protect the company’s reputation, and establish a sustainable business model.
KUZEY STAR SHIPYARD DENİZCİLİK SAN VE TİC. A.Ş.
BOARD OF DIRECTORS
