Countering Shadow Fleet Activity through Flag State Reform

Executive Summary

The practice of reflagging vessels (with ‘flags of convenience’) is not new. In the 1920s, US-owned vessels registered in Panama continued to serve their passengers alcohol during prohibition. Before the US entered the Second World War, US vessels flew the Panamanian flag to circumvent the US Neutrality Act (which prohibited the use of US-flagged ships in the war zone) while supplying European allies. 

The more recent emergence and entrenchment of shadow fleet operations have seen a range of states challenging international sanctions enforcement and global maritime governance.  Shadow fleets have been used over the past 15 to 20 years by North Korea and Iran to circumvent UN sanctions, but these fleets have expanded dramatically since Russia’s full-scale invasion of Ukraine, with ageing, opaquely owned tankers deployed to illicitly sustain the export of oil by Russia. Despite mounting sanctions, these vessels continue to operate with impunity by exploiting weak flag state oversight, frequently switching registries or ‘flag hopping’ to avoid scrutiny. Building on the findings of RUSI’s Maritime Sanctions Taskforce, this paper calls for a structural shift: the embedding of flag registry oversight into the evaluation framework of the Financial Action Task Force (FATF), the international watchdog for anti-money laundering and other forms of financial crime, including proliferation financing (PF, the financing of WMDs).

At the centre of the challenge posed by the shadow fleet is the fragmented and permissive global system of ship registration. Numerous flag states allow registration with minimal due diligence, failing to verify beneficial ownership or assess the risk of sanctions. This lack of regulation has created a structural loophole: a vessel removed for sanctions violations – or other failings – can simply re-register under another state, often within days. Private registration services, operating with little oversight and often outside the territory of the flag state they represent, further exacerbate the system’s vulnerability.

Diplomatic pressure, enhanced surveillance and national enforcement have yielded results, but such measures remain reactive and uncoordinated. Efforts to disrupt the shadow fleet are outpaced by its adaptability. Current governance tools under the International Maritime Organization lack enforcement power and do not address the underlying regulatory failures that enable the shadow fleets’ continued operation.

Flag registry abuse has become prevalent in the field of PF. The FATF’s standards require effective implementation of UN sanctions related to PF, and it uses its mutual evaluation and country risk assessment processes to identify shortcomings in implementation efforts. Vulnerabilities and failings are publicly exposed, incentivising countries to reform and upgrade to avoid prolonged reputational damage. Ensuring flag registries are actively assessed as part of this process would help drive reform, close systemic gaps and rebalance the burden of enforcement. Considering rising geopolitical tensions and the increasing militarisation of maritime sanctions enforcement, leveraging the existing multilateral FATF framework offers the most credible, scalable and preventative approach to countering the shadow fleet threat now and in the future.

Introduction

‘Shadow fleets’ – the networks of vessels that operate outside conventional maritime oversight – have long been used as tools to evade international sanctions. North Korea has relied on such vessels for many years to import oil and export coal in violation of UN sanctions, while Iran has used similar tactics to continue exporting oil, despite restrictions on its energy sector. These fleets typically obscure vessel ownership structures, disable or manipulate tracking systems, and exploit permissive jurisdictions to avoid enforcement, including ship re-registration from one flag state to another.

Although the term ‘shadow fleet’ has gained prominence in recent years due to Russia’s use of old, poorly maintained and opaquely owned tankers to sustain its oil exports in the face of sanctions, the underlying tactics used by these fleets are well established. In fact, a lack of transparency along with complex ownership structures are widespread features of the shipping industry. Many of these practices are based on long-established customary international law, allowing states to bestow their flags on ships without undue restrictions, in an exercise in sovereignty. And, as noted above, the commercial benefits of these ‘flags of convenience’ are also well established: they provide shipping companies with the ability to evade onerous, often Western-imposed labour costs and to continue to ply their trade when national restrictions might otherwise impact operations. What has changed is the scale of abuse and, therefore, the extent of the resulting risks. As geopolitical tensions rise and sanctions regimes become more complex, efforts to counter the continued operation of these fleets have revealed serious shortcomings in global maritime governance. More specifically, the lack of integrity in registration services provided by flag states to all shadow fleets is increasingly clear.

The global shipping industry is under rising pressure as international efforts to disrupt maritime sanctions evasion intensify. The EU’s 17th and 18th sanctions packages and recent UK sanctions maintain the focus on targeting Russia’s shadow fleet, which continues to transport large volumes of oil in defiance of the G7 price cap to finance the war in Ukraine. At the same time, Iran’s evasion of maritime sanctions remains a priority target of the current Trump administration and its renewed ‘maximum pressure’ campaign, which aims to curtail Iran’s oil revenues by targeting its shadow fleet and the enabling infrastructure that supports its continued operations.

As the sanctions pressure mounts, Russia and Iran are increasingly relying on evasive practices such as concealing ship ownership, disabling Automatic Identification Systems (AIS), registering under permissive flag states, or flying false flags to avoid detection and enforcement. Flag-hopping has reached a peak in 2025 as vessels frequently switch flags to avoid scrutiny, exposing the lack of international coordination on state responsibility and registry integrity. The challenge of addressing shadow fleet activity has brought into question the effectiveness of international maritime law and its deficient governance under international organisations, which lack enforcement powers.

This paper examines the role of flag registries as a point of vulnerability and a potential lever for sanctions enforcement. Its central premise is how states and international organisations can improve the oversight of flag registries to reduce the ability of shadow fleets to evade sanctions. Under international maritime law, every vessel must be registered with a flag state that bears responsibility for ensuring compliance with international standards. In practice, however, many states offer flags of convenience, allowing registration with minimal due diligence and failing to verify beneficial ownership and exercise meaningful jurisdiction over the vessels they flag. The absence of binding and enforceable international rules governing flag registration has thus led to a fragmented and abused system in which shadow vessels operate with impunity by shifting from one jurisdiction to another as enforcement nears.

The following analysis principally draws on insights reached through the work of RUSI’s Maritime Sanctions Taskforce, which brings together international expertise from across the insurance, banking, legal and maritime data sectors to assess the effectiveness of maritime sanctions and counter the risks posed by shadow fleets. The findings are based on the Taskforce’s cross-sector discussions and its published reports, reflecting the operational challenges, regulatory gaps and emerging evasion tactics identified by practitioners across maritime sanctions.

As identified by the Taskforce, the integrity of flag registries also plays a broader role in meeting global anti-financial crime standards, particularly in relation to the implementation of UN-mandated targeted financial sanctions and to countering proliferation financing (CPF). Vessels may be used to store, transfer or transport proliferation-sensitive goods, while registration in permissive jurisdictions can obscure ownership and hinder enforcement. As a result, inadequate registry oversight can lead to breaches of UN sanctions, particularly those concerning North Korea’s nuclear programme, and thus fall within the scope of the FATF’s standards. These risks have implications not only for maritime safety and sanctions compliance, but also for international financial integrity and counterproliferation obligations.

The first section of this paper provides an overview of the role of flag states in sanctions enforcement and the subsequent expansion of the shadow fleet under deficient registry performance. The second offers a review of the international responses to the shadow fleet, and the third an evaluation of how leveraging the FATF’s standards and procedures can offer a turning point in countering maritime sanctions evasion, including for both UN and non-UN sanctions regimes.

Flag States and Sanctions (Un)Enforcement

The governance of flag registries lies at the centre of international maritime regulation and has become a critical focus in the enforcement of sanctions regimes. Under the United Nations Convention on the Law of the Sea (UNCLOS), every vessel must be registered with a flag of a state that assumes jurisdiction and responsibility over the ship in key domains, including safety, labour, pollution prevention and legal compliance. Article 91 restates the customary international law provision that grants states the right to bestow their flags on ships but also requires a ‘genuine link’ between the ship and the state. Article 94 further restates the traditional international law obligation on flag states to exercise effective control in ‘administrative, technical and social matters’, such as working conditions. These legal provisions form the backbone of the international maritime system, but their implementation varies widely and is often insufficient.

Many states operate ‘open’ registries that do not have nationality or residency requirements. These registries offer lower costs and administrative convenience, but they also frequently fall short on due diligence requirements and often do not verify beneficial ownership, assess vessel histories, validate insurance cover or screen for sanctions risks. The leading open registries – in Panama, Liberia and the Marshall Islands – collectively account for over 40% of global shipping capacity (by deadweight tonnage), and while these states are more established and participate in Port State Control (PSC) frameworks, other states’ registries operate with little transparency or accountability. This contributes directly to the expansion of the global shadow fleet.

The fragmented registry system has created significant vulnerabilities in sanctions enforcement. Vessels removed from a registry for breaching sanctions can often secure a new flag in a matter of days. This was evident in the case of Russian state-owned Sovcomflot tankers, which were deregistered by Liberia and rapidly reflagged by Gabon, whose register is run by Intershipping Services LLC, a private company based in the UAE. This illustrates the absence of harmonised standards and coordinated enforcement mechanisms. There is also no binding requirement for registries to share information across jurisdictions. Initiatives such as the creation of the Registry Information Sharing Compact (RISC)1  database are commendable steps, but with a membership of just 13 flag registries, including Panama, Liberia and the Marshall Islands (and following the expulsion of Cook Islands in 2025), its reach is limited. 

This regulatory gap is exacerbated by the outsourcing of registry services to private companies, some of which operate outside the territory of the flag state and significantly undermine the integrity of global maritime operations. One such example is Intershipping Services LLC, which was sanctioned by both the UK and the EU in July 2025 for ‘carrying on business in a sector of strategic significance to the Government of Russia’ by facilitating Russian energy sales. While the flag state remains legally responsible under international law, the delegation of operational control to third parties introduces further complexity. In some jurisdictions, private registry operators lack the mandate or capacity to conduct compliance screening. This disconnect between legal responsibility and regulatory capacity has allowed sanctioned actors to exploit registry systems that are poorly resourced or politically disengaged.

One of several UN Panel of Experts reports has documented how registries have been exploited by sanctions evaders, particularly in North Korea. Vessels involved in these illicit transfers have used forged documentation, reported false destinations, manipulated Automatic Identification Systems (AIS), engaged in ship-to-ship transfers or sailed under false flags. Such practices are designed to conceal cargo origins, destinations and ownership, and are especially prevalent in the transport of sanctioned oil, coal or arms. Indicators such as AIS transmission gaps and inconsistencies in vessel identifiers are well known, yet without timely information sharing or due diligence from the flag state, they do not trigger sanctions enforcement.

The International Maritime Organization (IMO), the UN agency responsible for the safety and security of shipping, has established several tools aimed at improving flag state performance, but these remain limited in scope and legal force. Among them, the IMO Member State Audit Scheme was created as a voluntary scheme in 2006 to assess the extent to which IMO members implement applicable IMO instruments, including those relating to flag state obligations. Although participation became mandatory in 2016, the scheme does not impose binding corrective measures. These instruments also do not address the specific problem of registry shopping by sanctioned vessels and do not provide flag states with mechanisms to vet applications for registration based on enforcement history or beneficial ownership risk.

PSC regimes, particularly under the Paris Memorandum of Understanding (MoU) and the Tokyo MoU, provide additional oversight. Flag states’ rankings in white-, grey- and blacklists are based on inspection records and detentions in port, and poor performance can lead to increased inspections or bans. However, these regimes are reactive and jurisdictionally limited. They cannot prohibit a registry from issuing flags nor prevent a sanctioned or de-flagged vessel from seeking re-registration elsewhere. The International Chamber of Shipping also publishes a Flag State Performance Table, which, similarly to PSC regimes, provides reputational signals rather than direct enforcement.

The emergence of the shadow fleet is not an anomaly, therefore, but a natural outcome of the structural failures in flag state governance. The ease with which vessels can obtain flags without scrutiny, avoid ownership transparency and escape enforcement actions has created the conditions for an entire parallel shipping ecosystem. It operates in defiance of international sanctions and maritime norms and is sustained by systemic gaps in registry oversight rather than spontaneous abuses. If the phenomenon of the shadow fleet is not addressed urgently, it will continue to expand, drawing more vessels, cargoes and jurisdictions into a system that rewards opacity over compliance.

International Response to the Shadow Fleet and its Limitations

The entrenchment of the shadow fleet has been accelerated by recent geopolitical shifts. In the past year, approximately 700 vessels have been subjected to sanctions. This represents a relatively new approach and now accounts for a material portion of international shipping tonnage, particularly within the global tanker fleet. Most notably, US sanctions in July 2025 on Iran's shadow fleet and oil exporting networks under the return of the US’s ‘maximum pressure’ strategy, and the growing push for enforcement against Russian oil exports by the EU and the UK, have incentivised the expansion of informal logistics networks and the pursuit of permissive flagging. Targeted measures have been introduced to challenge the legal and financial enablers of illicit shipping activity, but these measures remain fragmented and reactive and have yet to turn the tide on the expansion of the shadow fleet. 

Certain national and multilateral initiatives have demonstrated potential. The Nordic-Baltic 8++ group (Denmark, Estonia, Finland, Germany, Iceland, Latvia, Lithuania, the Netherlands, Norway, Poland, Sweden and the UK) has advanced cooperative maritime domain awareness, sharing intelligence on insurance records and flagging history and vessel activity in high-risk zones. The group introduced a voluntary insurance reporting mechanism (VIRM), which has become a model for exerting increased port-based compliance. As of July 2025, the UK has reportedly challenged 343 vessels (equating to 40 per month) transiting the English Channel, focusing on ships suspected of carrying sanctioned Russian oil. While the VIRM is voluntary, it has proven effective in incentivising transparency from vessels that depend on access to European ports. The EU adopted further measures in April 2025 by amending the 2022 Vessel Monitoring Directive, introducing a mandatory ship reporting system.

Efforts to engage flag states diplomatically are obtaining significant results but are ultimately hindered by the ease of flag-hopping. Some registries, including of Panama and Liberia, have responded to diplomatic pressure and support for capacity-building aimed at improving oversight. Panama has de-registered more than 650 vessels since 2019 following diplomatic engagement and has also recently announced that it will no longer accept the registration of tankers and bulk carriers more than 15 years old. States such as Barbados are also reacting positively to such engagement. Yet these gains are undermined as smaller registries, such as Cameroon, Comoros, Gambia, Honduras, Mongolia, São Tomé and Príncipe, Sierra Leone and Tanzania, emerge and provide flagging services to the shadow fleet. As a result, vessels expelled from one registry are easily and quickly absorbed by another.

Military-backed monitoring has provided further insight into the weakness of registry enforcement. Operation Nordic Warden, launched by the Joint Expeditionary Force, and NATO’s Operation Baltic Sentry, have increased scrutiny of shadow fleet routes, particularly those linked to Russian crude oil exports and the damage to critical undersea infrastructure. These initiatives offer real-time data that can support interdictions and reinforce port entry restrictions. However, this hard security approach has met with escalation from Russia with the deployment of a fighter jet to escort the Jaguar tanker and a missile-armed corvette to escort the Sierra and Naxos tankers. Moreover, these operations do not address the structural conditions that allow sanctioned vessels to remain mobile in the first place. Surveillance may locate and track a ship, but flag registry loopholes will allow it to re-enter the system under a new name, flag or ownership structure.

Meanwhile, the shadow fleet has continued to adapt. One identified emerging trend is the growing use of ‘false flags’, whereby vessels falsely claim registration with a flag state or present forged documentation without being legitimately listed in a state’s flag registry. A recent study by maritime data provider Windward found that nearly 40% of Iranian-linked tankers are using false flags, including 33 vessels sanctioned for servicing Russian oil exports, illustrating the growing overlap of evasion tactics. This tactic allows ships to appear compliant with regulatory requirements while avoiding actual scrutiny. Investigations have uncovered multiple examples of vessels purporting to be flagged under states that had no record of their registration. For example, in Estonian waters in April 2025, Estonian authorities detained the Kiwala, a tanker flying the Djibouti flag, where authorities claimed it was not registered. As a result, the vessel was treated as stateless and thus not entitled to freedom of navigation under international law.  More recently, in August 2025, the Blue (a tanker sanctioned by the UK and the EU, carrying Russian crude bound for India) was identified under the false flag of Benin off the coast of Ireland (assumed to be avoiding the UK VIRM checks in the English channel).

Intercepting vessels carries significant geopolitical risks, particularly the potential for escalation if military assets or politically sensitive cargoes are involved. Along with the examples above of such escalation, another example is Russia’s reciprocal detention of the Greek-owned Green Admire tanker when leaving an Estonian Baltic Sea port.

A parallel trend is the establishment of fraudulent maritime service providers, including fake insurers issuing false documentation that is required to demonstrate valid liability coverage for oil tankers. The recent case of Norway-based sham insurer Ro Marine highlighted the risks posed by ‘shell’ insurers claiming to provide cover to oil tankers without any underlying financial backing or regulatory approval, rendering the cover invalid, should it be called on. In such cases, the failure of flag registries to verify the legitimacy of insurers could lead to uncovered costs that will have to be met by the affected port state or coastal state should an accident or oil spill occur.

Enforcement actions, even when effective in removing a sanctioned vessel from service, of course do not remove the remaining shadow fleet vessels pending designation and those that are yet to join the fleet. As long as the underlying incentives remain intact and the enforcement ecosystem continues to be lacklustre, the shadow fleet will not only persist, but grow. It will adapt to each new compliance measure as a technical hurdle, not as a systemic constraint.

Addressing the expansion of the shadow fleet requires a fundamental shift in the international approach to flag registration, from lacklustre and reactive enforcement to systemic prevention. This will include coordinating efforts to raise standards in flag state performance, empowering the IMO to promote transparency in flag registration and developing live registry information-sharing tools (such as verified insurance coverage), which are accessible to flag states, port states and service providers. Without such reforms, current responses will remain one step behind the shadow fleet, which has already moved from being a sanctions workaround to a parallel and entrenched infrastructure for illicit maritime trade.

The Case for FATF Leadership

As the shadow fleet continues to evolve and regulatory responses struggle to keep pace, a systemic and materially effective approach is urgently needed. The FATF is uniquely positioned to drive that response as the global standard-setter on anti-money laundering, countering the financing of terrorism and counter proliferation financing (AML/CFT/CPF). Under the FATF’s standards, over 200 participating jurisdictions are required to implement targeted financial sanctions related to proliferation financing in line with UN Security Council Resolutions (UNSCRs), including the freezing of assets and preventing the provision of services to designated persons or entities. 

Closing a Major CPF Loophole

The FATF’s evaluations of effective national compliance with AML/CFT/CPF standards often overlook the assessment of flag registry integrity. Vessels can be considered ‘economic resources’ under these standards and should therefore be subject to targeted financial sanctions enforcement. Jurisdictions are required to freeze assets and block services to sanctioned actors ‘without delay’, and this includes denying registration to or de-registering vessels associated with UN sanctioned activity. However, the FATF’s compliance framework has yet to consistently consider the maritime sector, despite the direct relevance of the shadow fleet to its CPF mission. As a result, many states continue operating without basic mechanisms in place to identify whether a registered vessel is linked to a UN-designated actor. This constitutes a significant gap, as the integrity of flag registries’ standards could make a material contribution to the global implementation of the UNSCRs covered by the FATF’s standards. 

A shift in approach is imperative considering the ongoing expansion of the shadow fleet and the increasingly sophisticated nature of its supporting networks and evasion tactics, which include shell companies, fake insurers, fraudulent documentation and opaque registry operators. The FATF should play a more prominent role in bringing flag registry governance within the scope of its mutual evaluations and country risk assessments. This would place clear expectations on states to regulate registry operations in line with the FATF standards. Such regulation would include screening for links to designated individuals and conducting fit and proper checks on key personnel at the vessel registration stage.

The Asia/Pacific Group on Money Laundering (APG, a FATF-style regional body) has recognised – with the support of the UNODC – that flag registries are potential facilitators of PF and sanctions evasion, particularly in the case of North Korea. This provides a basis for action. Early signs of this increased focus can be seen in recent APG country evaluation reports. For example, the 2024 evaluation of the Marshall Islands (a founding member of RISC) scrutinised the operations and governance of its shipping registry with regard to its role in PF sanctions evasion and to any wider issues related to money laundering and terrorist financing. It recognised it as ‘well regulated’. In contrast, the APG’s evaluation of Nauru, also published in 2024, was less positive, concluding that: ‘There is insufficient oversight to ensure targeted financial sanctions are implemented in relation to the vessels registered under Nauru’s shipping registry’. It called for an urgent review of the registry to ensure sanctions screening for Nauru-flagged vessels. 

The importance of integrity in this field is further underlined by the red flags in the UN North Korea Panel of Experts reports, cited earlier, which include false flagging, AIS manipulation and opaque ownership structures. Strengthening the FATF’s standards or enforcement expectations to address these behaviours in the case of North Korea would have a broader impact, considering many of the same evasion tactics are now used by the Russian and Iranian shadow fleets. While FATF obligations apply only to the implementation of UN sanctions, the regulatory reforms they promote, such as improved due diligence, beneficial ownership checks and registry screening, are equally relevant to countering non-UN sanctions evasions and would significantly reduce systemic vulnerabilities across all sanctions regimes.

Leveraging the FATF’s Effectiveness

The FATF has a proven track record of driving tangible regulatory reforms at the national level, setting it apart from other international bodies, such as the IMO. While the IMO develops important technical standards and encourages best practices, its tools – including voluntary audits and non-binding guidance – lack the enforcement power needed to compel meaningful change. By contrast, the FATF’s mutual evaluation process and the use of grey or blacklists exert significant political and economic pressure on jurisdictions to align with the FATF’s standards. Countries found to be non- or insufficiently compliant face major consequences, such as increased scrutiny from financial markets, heightened risk ratings and reputational exposure. When the FATF identifies systemic deficiencies, whether in beneficial ownership transparency or sanctions implementation or supervision, it has consistently been a catalyst for legislative and institutional change. Bringing flag registry oversight explicitly into the FATF’s remit can therefore transform what is currently a fragmented and permissive landscape into one subject to real regulatory consequence.

Addressing Evolving Risks

Including flag registry oversight explicitly within the FATF’s evaluations would help address two major trends in sanctions evasion. 

The first is the persistent use of privately managed registries based in third countries, often outside the direct jurisdiction or oversight of the original flag state. These outsourced operations can undermine state control and create weak points in compliance and enforcement. 

The second preoccupying trend is the rise in fraudulent vessel registrations, whereby ships are falsely registered under a flag state without authorisation or valid documentation. As it continues its fifth round of country evaluations, which began in 2024, the FATF should evaluate a state’s ability to oversee its own registry – even when management is delegated to private operators in other states – as part of its evaluation of a country’s ability to effectively implement targeted financial sanctions related to PF. The FATF should also assess how jurisdictions regulate foreign registries or maritime service providers operating from within their territory. Evaluating states on the comprehensiveness of their maritime oversight would further encourage states to take enforcement action against networks facilitating fraudulent or high-risk registrations, helping to close off key enablers of maritime sanctions evasion.

Enhancing Enforcement Efforts

Incorporating registries into the FATF’s evaluations may also help rebalance the current enforcement model. At present, the burden of responsibility falls disproportionately on port states, insurers, financial institutions and naval patrols. Permissive registries, which are often the root enablers, continue to escape scrutiny. A FATF-led process would shift accountability upstream, targeting governments that allow their commercial flagging operations to function as gateways for sanctioned shipping and those that are home to private sector operators managing registries for other states. It would also support technical assistance and peer pressure, reinforcing the political momentum needed to raise registry standards and close off systemic avenues for evasion.

In light of recent geopolitical developments, and in particular the war in Ukraine, it is increasingly urgent to expand the regulatory track. Reports of Russian jets and naval vessels escorting tankers suspected of shadow fleet activity underscore the growing risk that maritime sanctions enforcement could become militarised. While legitimate efforts to uphold international law must continue, there is a risk that confrontational approaches could provoke escalation at sea. A FATF-centred strategy would help anchor the international response in a recognised legal and regulatory framework. It would focus enforcement efforts on financial facilitators and jurisdictional enablers rather than relying on military force.

Conclusion

The shadow fleet is no longer in the shadows. It has become a systemic and entrenched threat to the integrity of global trade, the enforcement of sanctions and the rule of international maritime law. These vessels operate with impunity, exploiting weak flag oversight and permissive jurisdictions to move sanctioned goods and to fund illicit activities. They enable sanctions evasion at scale while posing serious risks to maritime safety and environmental protection when, for example, failing to consistently verify vessel insurance. Despite mounting international concern, current enforcement remains fragmented and reactive, unable to match the speed and adaptability of the complex sanctions evasion networks supporting the efforts of numerous hostile jurisdictions.

Tackling this challenge requires more than isolated actions. It demands structural reform rooted in credible international oversight, and a move from reactive enforcement (at best) to structural prevention. The role of flag registries as central vulnerabilities in sanctions evasion activity must be addressed; the unique position of the FATF to hold them accountable must therefore be acted on. Ensuring that registry governance is evaluated as part of the FATF’s mutual evaluation and country national risk assessment processes would close a major loophole both in counterproliferation and sanctions enforcement efforts, as well as strengthening the rule of law and safety in the maritime domain. Without such action, the shadow fleet will continue to entrench itself as a parallel system that threatens financial security, undermines legal norms, poses immeasurable environmental risk and raises the threat of geopolitical escalation.

Recommendations

• Explicitly integrate flag registry oversight into the FATF’s mutual evaluation process, including country national risk assessments.
• Require flag registries to conduct due diligence, including beneficial ownership checks, sanctions screening and insurance verification.
• Encourage states to adopt ‘fit and proper’ requirements for private operators managing registry functions. Hold states that are home to privately managed registries accountable for ensuring operational integrity.
• Leverage the FATF’s evaluation and grey-listing processes to apply pressure on jurisdictions enabling shadow fleet operations that breach UNSCRs on PF.
• Promote information-sharing frameworks between registries, port states and maritime service providers.
• Support registry authorities with capacity-building to help implement compliance and verification systems.