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Fake Flags: At-Sea Sanctions Enforcement and Ship Identity Falsification

 
 

On February 24, 2018, a patrol aircraft of the Japan Maritime Self-Defense Force found a North Korea-flagged vessel, the Chon Ma San, engaged in what appeared to be a ship-to-ship transfer with another vessel. Such transfers are prohibited under United Nations sanctions on North Korea. Japan’s Ministry of Foreign Affairs published a notice on its website identifying the other vessel as a Maldives-registered tanker, the Xin Yuan 18. There was just one issue: the vessel was never registered by the Maldives.

The identity falsification perpetrated by the Xin Yuan 18 is far from an isolated case. On the contrary, the problem is surprisingly widespread and vastly undertreated. It circumvents the process by which countries regulate the use of their flag for international trade. Some countries allow foreign-owned or controlled vessels to use their flag through an open registry. Others may choose to only register vessels with ties to the country through ownership or crewing. This is termed a closed registry. Still others just choose not to allow the use of their flag for international trade at all. All can be affected by vessel identity falsification.

This falsification can take different forms, from a vessel continuing to claim a country’s flag after being struck from its flag registry, to manipulating the information a ship transmits to broadcast incorrect information, to an unusual and highly concerning phenomenon: the creation of fraudulent national flag registries. Though a range of actors looking to mask illicit trade may exploit these approaches to hide their activity, North Korea is actively making use of all three.

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The first variant is simple for a vessel’s owners and managers to perpetrate. A vessel, after its registration with a country is either terminated or expired, simply continues to use the identification it was once legitimately issued. After Cambodian authorities decided to close their registry, which had been used by North Korean-controlled vessels looking to evade UN sanctions, some of those vessels continued — in violation of national law — to fly the Cambodian flag.

The second method, broadcasting a falsified identity, is also relatively straightforward. All vessels over 300 gross tons are required to have an Automatic Identification System (AIS) transmitting information about their course and identity, including name, flag, and call sign. Vessels engaged in illicit activity often alter these transmissions to reflect either entirely fictional identity information or that of another vessel. All a ship operator needs to do is manually input false information into the ship’s AIS transponder.

One example of this practice is 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 ship-tracking platform MarineTraffic, identified the vessel as the Sarisa, a container ship flagged to Tanzania. 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 type of identity falsification – the issuance of fraudulent registration documents to the IMO without the knowledge of the country in question – is significantly more complex and represents a major maritime governance challenge.

In the case of the Xin Yuan 18 described above, for instance, the Maldives Defense Intelligence Service alleges that a Maldives national communicated with the IMO using a Gmail account fraudulently created in the name of a former employee of the Maldives Transport Authority, the body responsible for registering vessels. Using this email, he provided the IMO with fraudulent registration documents for the ship, which appropriated the call sign of a legally registered Maldivian fishing vessel. These documents appear to have been accepted as proof of registration by the IMO, despite not resembling those normally used by the Maldives.

In other cases, companies have posed as national shipping registries, leading to hundreds of vessels claiming the country’s flag without its knowledge or authorization. The Democratic Republic of Congo, Fiji, Micronesia, Nauru, and Samoa have all fallen victim to this kind of fraud despite not authorizing the use of their flag for international trade. In all of these cases, at least one company was created for the sole purpose of operating a fraudulent registry, and the effort was facilitated by authentic-looking websites which at first — and even second — glance appeared to be perfectly legitimate.

Perhaps the most startling is the case of Micronesia. Over 300 vessels may have flown the country’s flag. This was made possible by the IMO erroneously recognizing the fraudulent registry as an official Micronesian entity. In addition, Fiji is investigating 91 reported cases of vessels claiming its flag without authorization, at least 20 of which were linked to North Korea.

It is unclear what proportion of vessel owners were aware of the fraudulent nature of the registrations, but it seems plausible that at least some were unsuspecting victims.

Vessel identity falsification, in whatever form it takes, represents a global maritime safety, security and governance challenge. Fraudulent registries of the kind set up for Micronesia deny that country the revenue associated with operating a registry, while affiliating potentially suspect vessels with the country without their knowledge. They can also serve as a method for vessels to engage in a form of “reputation laundering,” by allowing ships to mask a history of illicit activity before migrating to a legitimate or more reputable registry. Case in point, the Lian De was deregistered by Tanzania in July 2016 for its links to North Korea, then fraudulently registered under the Fijian flag, and subsequently registered to Panama – the world’s largest open registry – in March 2017.

Fraudulent registrations may also hinder the processes for dealing with a maritime emergency. For example, in January of last year the cargo vessel Tong Da ran aground in Japan while claiming the Fijian flag. In scenarios like this, the vessel’s flag state is generally responsible for rectifying the situation. In this case, however, Fijian authorities reported no record of the vessel when queried by the Japanese, and the vessel appears to have been salvaged without Fijian participation. Similar issues could arise in the case of interdictions of vessels in international waters, which normally require the consent of the vessel’s flag country. It is unclear how this consent would be acquired for a fraudulently registered vessel or, indeed, whether such consent is even needed to interdict a vessel without valid registration.

Vessel identity falsification is a complex issue with implications for the IMO and its members, whether they operate open registries or not. It is even an issue for non-members like Micronesia, that have found themselves the victims of astonishingly brazen acts of fraud. The IMO appears to have finally recognized this, and recently added the subject to the agenda of its Legal Committee. In the readout from that meeting, the IMO claims to have circulated information “[…] to ensure that port State control officers were also informed and would take appropriate action against ships fraudulently flying a flag.” Despite this, it does not appear that much progress has been made in curbing the practice of identify falsification; ships continue to be detained claiming Micronesian and Samoan registration.

While the IMO has begun taking a stand on the issue, this cannot be solved by the IMO alone. The IMO must first take steps to ensure they never again authorize fraudulent registries or accept forged documents, as highlighted in the cases above. But even more importantly, the IMO must coordinate the actions of the international maritime community and act as a leader in encouraging states to share information and act on instances of identity manipulation in their jurisdictions. Increased communication between governments, registrars, and the IMO will reduce gaps and uncertainties currently exploited by illicit actors in the maritime space. This problem will not be solved quickly, but increasing communication and due diligence in the maritime sphere will go a long way towards reducing opportunities for fraud.

Olivia Vassalotti is a researcher interested in nonproliferation, trade controls, and sanctions evasion and implementation. 

Cameron Trainer is a Research Associate with the James Martin Center for Nonproliferation Studies currently focusing on sanctions policy and implementation.

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