Every ship needs to fly a flag to trade internationally. Some countries such as Panama and Liberia allow shipowners with no ties to their country to register their ships under their flag, whilst others insist on tangible connections such as crew nationality or ownership. The open and closed registry arrangement is a well-established mechanism for the regulation of global shipping. Thanks to MarineTraffic it is easy to ascertain the flag flown by any ship over 300 gross tonnes. The vessel’s flag, alongside name and call sign is one of the basic details which the ship is required to broadcast via its AIS signal.
However, the Tokyo based current affairs magazine The Diplomat recently highlighted the problem of fraudulently flagged ships, particularly in relation to sanction-busting North Korean vessels. According to the report, there are three ways in which the fraud is being perpetrated.
The first method is for the vessel to continue to claim a country’s flag, despite having been struck from the register. The Diplomat says that this happened with the Cambodian flag which despite a decision by the Cambodian government to shut down its registry, was continued to be claimed by North Korean vessels.
The second method involves simply falsifying the details entered into the AIS transponder. The Diplomat cites the case of the O Ka San, a vessel listed by the International Maritime Organization (IMO) as being previously flagged to North Korea, but now having an “unknown” country of registration. The ship’s most recent AIS transmission on July 6, 2017, captured by MarineTraffic, identified the vessel as the Sarisa, a container ship flagged to Tanzania. However, The Diplomat says: “According to the official IMO database, the vessel was never known by that name, nor was it ever registered in Tanzania. In fact, no ship named Sarisa exists in the IMO database. The vessel likely altered its AIS transmissions to avoid restrictions on North Korea and its vessels.”
The third method is for a false ship registry to be set up, allowing companies to claim that they represent the country. This is possibly what happened in the case of the Maldivian-flagged tanker Xin Yuan 18 which was reported by Japan to the UN Security Council as having conducted an oil-transfer operation to a North Korean tanker in violation of international sanctions in February this year. At the time the Maldivian government denied the vessel was from the Maldives and condemned “the use of our national flag in a manner so as to tarnish the good standing and reputation of our nation and that of our people.”
But it is not just the Maldives whose flag has been fraudulently used. The Democratic Republic of Congo (DRC), Fiji, Micronesia, Nauru, and Samoa have all been caught up in cases where companies were created for the purpose of operating a fraudulent registry. Last year MarineTraffic media partner Splash247 reported on a complaint by the Federated States of Micronesia (FSM) to the IMO that a fake international registry was issuing seafarer documents and registering ships in its name, despite the fact that the “laws of the FSM do not provide or otherwise allow for an international ship registry.” 150 ships are thought to have been caught up in this affair. In 2017 Fiji reported 91 illegally registered ships under its flag in 2017 to the IMO, whilst the DRC has said that out of the 84 vessels shown under the DRC flag, 73 had been registered without its Maritime Administration’s knowledge or approval since 2015.
There are clearly gaps in the ship registration process which can be exploited by fraudsters and it is something which the IMO is beginning to address. Earlier this year the IMO’s Legal Committee added a new output to its agenda on “Measures to prevent unlawful practices associated with the fraudulent registration and fraudulent registries of ships”, with a target completion date of 2021. The Committee has requested the IMO Secretariat to conduct a study on the cases received and to provide information on the capabilities of IMO’s Global Integrated Shipping Information System to address the issue, to potentially include contact points, sample certificates and a listing of registries.