By: Becki LaPorte, Principal – AML Strategy & Innovation at FinScan

The crisis in the Strait of Hormuz has become a stress test for the global financial systems that facilitate trade. As trade, finance, and enforcement fragment in real time, heads of trade, corporate treasurers, and chief risk and compliance officers must confront an environment where traditional risk indicators are failing.

This shift has happened rather quickly as the escalation of geopolitical tensions, characterised by vessel seizures like Iran’s capture of the MSC Aries and the US seizure of the Touska just this week, has fundamentally altered the compliance landscape. Risk now hinges on a number of interconnected factors, including port exposure, vessel history, beneficial ownership, routing behaviour, and opaque intermediary networks.

For compliance teams, the fundamental question at hand has stopped being, “Can this ship transit safely?” and has become, “Should this transaction, vessel, or counterparty be trusted at all?”

Shipping data is becoming harder to trust

For shipping and logistics firms, the immediate impact may come down more on the operations side, but the deeper challenge is compliance. As vessels reroute around the Cape of Good Hope to avoid chokepoints, the resulting 10 to 14-day delays disrupt the predictable data patterns that banks have traditionally relied on to flag suspicious activity.

This chaos that this brings is the perfect cover for a number of so-called “dark fleet” tactics, which the very techniques used for sanctions evasion, such as “spoofing” Automation Identification System (AIS) signals to hide port calls in Iran.

Practices such as indirect routing, transhipment through intermediary ports, and the use of brokers or shell entities are now occurring at such high volume that traditional red flags are being triggered across legitimate trade, creating a dangerous grey area for investigators. Clarity around risk signals is eroding at the very moment vigilance must increase.

Insurance coverage now depends on deeper due diligence

Marine insurers have effectively become the new frontline regulators of global trade, and some insurers have even suspended or repriced their policies as a result of this newfound responsibility. Those that are providing war-risk coverage now require near-real-time data on cargo origin and beneficial ownership before they can provide binding coverage.

One of the main differences is that, with the stakes this high, insurers must now answer a number of complex questions before binding coverage. Does the vessel have any exposure to Iranian ports? Has ownership changed recently? Are the premiums being paid by third-party intermediaries linked to sanctioned entities?

Providing coverage to a sanctioned vessel is a regulatory violation that can lead to massive fines. However, as Western insurers tighten controls, higher-risk actors are migrating to “shadow” insurance markets, which are often backed by non-aligned states, resulting in further breakdown of the degree of transparency that compliance teams have come to rely on.

Trade finance facing greater complexity

If shipping is where disruption is visible, then trade finance is where it becomes embedded, and, therefore, often hidden.

Trade finance depends on aligning the movement of goods, documentation, and payments, and the current crisis in the Hormuz Strait is disrupting all three at the same time. Global merchandise trade, for example, is expected to slow sharply, from about 4.7% growth in 2025 to 1.5-2.5% in 2026.

But the disruption extends far beyond that and has further implications within trade finance. Consider a situation where the shipper is forced to change the port of discharge mid-transaction due to a security threat. In such a situation, unless it is rectified quickly, it is very likely that the bill of lading will no longer match the original letter of credit. Discrepancies like these create fertile ground for trade-based money laundering (TBML) to grow.

Increased “force majeure” claims and disputes are other areas that may lead to delayed payments and frozen transactions. In a volatile environment like the one we’re in now, where global commodity prices, particularly oil and LNG, are already volatile due to the conflict, it is much more difficult to detect certain fraud techniques like over- and under-invoicing.

Financial institutions, therefore, are faced with an uncomfortable reality in which trade that is fully compliant at origination can become high-risk as routes and documentation evolve over the course of transit.

Reopening will create new compliance pressure

There is also this assumption that as soon as the Strait reopens, all of these risks will subside and we will be back to normal. If only it were so simple. In reality, the surge of delayed shipments will likely trigger a “second wave” of compliance failures because the rush to clear backlogs will create immense pressure to move quickly, tempting firms to overlook some of their documentation gaps to restore supply chains.

Regulators, however, are unlikely to be sympathetic to “operational urgency” as an excuse for missing sanction screening. To help with this, compliance teams will need to “unwind” weeks of opaque activity by reviewing transactions and reassessing those counterparties that may have been engaged during the height of the disruption.

Trust can no longer be assumed

The fallout from the current crisis in the Strait of Hormuz is proving that our existing compliance framework is too rigid for a fragmented world. The erosion of consistent enforcement and the blurring of legitimate and illicit activity are clear signs of a system under strain.

To prepare for the world to come, heads of trade and risk and compliance officers will need to move beyond “check-the-box” screening and embrace the type of dynamic, real-time visibility that can connect the dots between a vessel’s location, its shell company owners, and the ultimate destination of the funds.

Because in this environment, the risk is no longer just in the Strait itself; it is embedded across the entire lifecycle of global trade.