Enterprise

How companies are using AI to monitor sanctions risks on the Black Sea and beyond

Amid the Ukraine conflict, AI-based data analytics are helping navigate the choppy waters created by sanctions against vessels, businesses and people associated with Russia.

The Marshall Islands-flagged Turkish-owned Yasa Jupiter ship, which was hit by a missile off the coast of Ukraine's port city Odessa, sails on the Bosphorus in Istanbul, Turkey.

Quantexa, Windward and Skytek use AI-based data analytics to monitor exposure to risks posed by sanctioned entities — whether it be to guard against financial fraud or maritime risks such as illegal cargo or flag-hopping.

Photo: Yasin Akgul/AFP via Getty Images

Yasa Jupiter and Namura Queen were stranded.

When the bulk carrier ships were hit by missiles while anchored at ports off the coast of Ukraine in late February, their crew weren’t the only ones at risk. So too were the ship owners, cargo underwriters, banks, energy companies and others involved in the complex web of businesses expecting the vessels to make their coal and wheat shipments.

But it isn’t just the threat of Russian missiles that has disrupted the supply chain flow in the Black Sea region. It’s the choppy waters created by sanctions against vessels, businesses and people associated with Russia. The conflict in Ukraine is putting a searchlight on technologies from companies including Quantexa, Windward and Skytek, which use AI-based data analytics to monitor exposure to risks posed by sanctioned entities — whether it be to guard against financial fraud such as money laundering or maritime risks such as illegal cargo or flag-hopping.

Damage to the two cargo ships — each of them valued at close to $30 million, according to sanctions compliance assessment software vendor Skytek — was minor, though one crew member on the Namura Queen sustained non-life-threatening injuries. When they were struck, the ships were among 120 cargo vessels moored at Ukrainian ports, just before Ukraine's military suspended commercial shipping at its ports following the initial invasion by Russian forces into that country.

The data is just a sampling of the sort of information available through software from Skytek, which uses machine learning and data analytics to evaluate current and historical voyage patterns and alert customers when suspicious activities such as evasion tactics occur in sanctioned maritime zones.

When President Joe Biden announced a new round of sanctions targeting 400 people and entities affiliated with the Russian government during a Thursday press conference, a reporter asked if he believed the actions would have an impact on making Russia change course in Ukraine. A frustrated Biden responded, “You’re playing a game with me.” Just before, he remarked, “I did not say that, in fact, the sanctions would deter [Russian President Vladimir Putin]. Sanctions never deter.”

Whether or not they are directly deterring Putin from continuing Russia’s attacks on Ukraine, data from Windward — another company providing AI-based analytics software to assess maritime risk — showed that regulatory or “moral” sanctions appear to be having some effect.

“The Western market has been shutting off completely any work with anybody related to Russia,” said Ami Daniel, co-founder and CEO of Windward. That means that when it comes to companies or ships that are connected in some way to Russia, “A lot of the people won't even touch you with a stick right now.”

Right now, Windward’s customers are conducting queries in its software platform to help inform how they address sanctions against Russian entities. “We have a German customer which is super risk averse and doesn't want to do any business with anybody who's ever been near one of these places in the last 24 months,” Daniel said.

Lloyd’s List Intelligence also offers data and AI-based analytics tools to monitor maritime risk. But unlike startup competitors, the company launched in 1734 as a printed broadsheet posting ship arrivals and departures in a London coffee house. It still maintains its media arm, which reported early this month that “Cargo underwriters are taking the decision not to cover consignments heading to Russia or Ukraine, and even nearby countries, citing reputational risks and the potential difficulties of paying out on insured claims.”

Russian ships go home for fuel

Windward’s software provides custom views of exposure to vessels connected to countries customers have particular concern about, such as Russia, Venezuela, Iran or Myanmar, over a selected time period. The company feeds satellite image and radio frequency data, weather data, ship ownership and cargo data, port data and vessel schedule data into deep-learning models tailored to a customer’s risk tolerance, then scores their level of risk associated with sanctions or other laws and regulations. As an example, the system pulls in imagery data from hundreds of satellites measuring a particular offshore area via an API every day.

Windward has published reports in recent weeks with updates related specifically to Ukraine and the Black Sea region, where intensifying attacks from Russia have led to a drastic decline in port activity around Ukraine.

But not all cargo ship activity is at a standstill. In fact, based on its analysis of its ship-tracking in the region, Windward reported on March 22 that general cargo and oil tankers calling port in Russia actually increased operations by 44% over the following week. The company pointed out an important piece of information teased out in its analysis: 60% of that increase in Russian port calls was associated with Russian-flagged vessels.

That, Daniel said, likely meant that those ships were returning home before they got stranded. “This is Russian vessels coming home, and we think it's also because nobody would sell them marine fuel,” he said, adding, “About 50% of the marine fuel providers of bunker fuel will not provide them fuel. So they're in a tough spot.”

Flag-hopping and oligarch shell games

Tracking sanctions-related risk on the high seas is just one area companies need to monitor, of course. Financial institutions are also using sophisticated analytics and machine-learning-based software to keep one step ahead of Russian nationals and oligarchs recently added to the U.S. Treasury Department’s sanctions list.

Entity resolution is a key component in the processes used to identify suspicious actors by companies including Windward and Quantexa, which uses network analytics to detect possible financial fraud such as money laundering. The Quantexa system automatically generates a contextual network, a graph indicating the links connecting target entities with other shell operations or shady individuals.

To isolate possible fraudsters, the financial fraud detection software ingests information from an array of sources, from SWIFT wire transfer messages and risk data from Bureau van Dijk’s Orbis and RDC Grid to less-obvious sources such as financial records data revealed through journalistic investigations of the leaked Pandora and Panama Papers.

“When you go in and look at the exposure, you see that person is not only a sanctioned individual, here's the company that our customers have been doing business with [and] he's 100% owner of that company,” said Clark Frogley, head of financial crime solutions at Quantexa. He continued, “But guess what? He's also the primary shareholder of these other three companies that they've been doing business with or these other two customers that we weren't even looking at.”

On the water, Windward must navigate the maritime version of oligarch shell games to resolve ship identity. According to Windward, vessels are usually associated with multiple nationalities because they are linked to several owners, each performing different functions on a single ship. Windward combines several sources of positional and vessel identifier data to detect flag-hopping, a manipulative tactic used to circumvent sanctions and fishing regulations by changing the nation where a ship is registered.

Shipping traders or legal teams at Windward’s customer companies are using its analysis to inform whether they should cancel booked shipments or other deals that might be subject to Russia-related sanctions. Contracts associated with trading plans over the next six months or more could be canceled if deemed too risky, Daniel said, adding, “Listen, force majeure. Tough luck.”

The headline on this story has been updated for clarity.

Fintech

Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

Keep Reading Show less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Keep Reading Show less
FTA
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.
Enterprise

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

Keep Reading Show less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

Keep Reading Show less
Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.

Enterprise

Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

Keep Reading Show less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories
Bulletins