THE ubiquity of fake ship registers and illusory insurance is such that it is now difficult for governments to tell the difference between the endemic lack of regulatory oversight from the worst ship registers, and entirely fictional flags.

Baltic states are routinely asking shadow fleet tankers for proof of insurance. But what exactly is one supposed to do with a blatantly forged Civil Liability Convention certificate issued by Comoros, for a Russian insurance group with no history of payouts or evidence of funds, for a ship flying a false Aruba flag with a digital identity claiming to be registered in Palau?

We could offer you dozens of other real examples, but the result is the same every time; these are vessels operating with impunity, exploiting weak flag oversight and a system that is fundamentally flawed.

This is no longer about the enforcement of politically divisive sanctions. After all, threatening to sanction that which is already sanctioned produces diminishing returns.

It’s not even about how we end the multiverse of fake flag registers.

This is about why we need structural reform rooted in credible international oversight to regulate global shipping in a meaningful way.

This is about the disintegrating rule of international maritime law and the evolution of a parallel fleet into an increasingly entrenched parallel system that threatens financial security, undermines legal norms and poses immeasurable environmental risk.

Sanctions evasion didn’t create lax standards in flag state regulation, but it did expose the cracks in the system and supercharge the black market that now risks undermining international regulation in shipping. 

Shipping’s responsible operators understand that they need to conduct robust due diligence, including beneficial ownership checks, sanctions screening and insurance verification. Why should it not be a requirement for all flag registers to do the same?

The latest analysis today from RUSI doesn’t tell Lloyd’s List subscribers much they did not already know. But RUSI’s recommendation that oversight should be pushed into the arena of another multi-lateral agency, this time a global money laundering and terrorist financing watchdog, bears examination.

The International Maritime Organization has been trying unsuccessfully for years to get a grip on this problem, but asking nicely is not the same as enforcement.

The current system is failing and it requires a multilateral effort to get it back on track.

Whether that is the collective will of the member states behind the IMO or the Financial Action Task Force is going to be a difficult political discussion, but it is one that needs to be had swiftly.

Richard Meade, 
Editor-in-chief, Lloyd’s List

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