Shadow fleets and shipping registry reform

Tuesday 23 December 2025

The modern maritime system rests on a bargain. Private commerce receives the privileges of safe passage and predictable rules, while states provide legal identity through registration, and enforce minimum standards through flag administration, classification and port state control. Shadow fleets expose how far that bargain has frayed. When an ageing tanker can change its flag overnight, disappear behind shell companies, obtain paper insurance of uncertain value and continue trading at scale, the registry ceases to be an instrument of public order and becomes a commodity for hire.

Recent enforcement has been energetic but reactive. The European Union has continued to designate large numbers of vessels associated with Russia’s shadow fleet, including an additional 41 ships in December 2025, and has tightened prohibitions on port access and maritime services for designated vessels. Yet the underlying machinery that grants ships their legal personality, the flag registry, remains structurally easy to exploit. The result is a market for “flags of convenience” that can be used as tools for which they never intended: not only to evade sanctions, but also to externalise environmental and safety risk, and to generate ambiguous, escalatory encounters at sea. 

What follows is a blueprint for restructuring the registry system so that sanctions evasion becomes harder, slower, more expensive and more legally perilous. It is not a single reform but a multi-layered redesign, because the shadow fleet succeeds by exploiting gaps between institutions.

Make a ship’s legal identity traceable, not merely nameable

The first weakness is the ease with which a vessel’s identity can be laundered through renaming, reflagging and paper ownership changes. A reform agenda should treat the ship’s International Maritime Organisation (IMO) number as the anchor, then require that the registry record around it is complete, standardised and verifiable.

A practical approach is a global minimum “registry transparency package”, agreed through the IMO framework and mirrored in domestic law by major maritime states. It would require each flag to publish, in machine readable form:

• the beneficial owner(s), not merely the registered owning entity, with ongoing update obligations

• the controlling commercial manager and technical manager

• the bareboat charterer (the party chartering the vessel)

• the classification society and statutory certificates

• the P&I insurer and evidence of cover, with verification status

• a sanctions screening statement and the date and method of screening

This is not novel in concept. Analysts have repeatedly identified opacity of ownership, flagging and insurance as the enabling triad of the shadow fleet. The change is to make the disclosure mandatory, standardised and auditable, rather than voluntary and fragmented.

Two design points matter.

First, beneficial ownership disclosure must be legally enforceable, with criminal penalties for deliberate misstatement and civil liability for harm caused by misrepresentation as a matter of the law of all nations. Without teeth, disclosure becomes theatre.

Secondly, the information must be interoperable. A port state inspector, a bank, an insurer and a charterer should be able to query the same core fields and obtain the same answers.

Turn flagging from a purchasable service into a regulated licence

The shadow fleet thrives because some registries operate as revenue seeking services with limited capacity or incentive to police quality. The reform is to treat a flag registry less like a tourist visa office and more like an aviation regulator.

There are two levers.

A tiered “flag performance” system tied to access

Port state control already differentiates by flag risk, but the incentives are weak and uneven. A more muscular regime would tie market access to flag performance through an agreed scale, for example:

• Tier 1 flags: full transparency compliance, robust inspection capacity, rapid cooperation with sanctions and safety investigations

• Tier 2 flags: partial compliance and corrective action plans

• Tier 3 flags: persistent non-compliance or facilitation of evasive practices

Then attach consequences that matter commercially: additional inspections, longer port clearance, higher pilotage or port fees, and restricted access to certain services for Tier 3 flags. This takes the EU’s service denial approach, currently aimed at designated vessels, and extends the logic to systematically poor flag administration. 

Financial responsibility for the flag state and registry operator

Some commentators argue that registries that profit from substandard tonnage should carry liability, particularly where uninsured ships create pollution risk. The point is not punitive symbolism. It is to internalise risk. If a flag knows that tolerating opaque ownership and questionable insurance can lead to material claims, its business model changes.

One could implement this through a mandatory “flag assurance bond” or pooled guarantee fund: a registry exceeding certain risk thresholds must post larger guarantees that can be called upon after casualties, unpaid wages, abandonment or oil spill response. This aligns with the increasingly prominent concern that shadow fleet insurance arrangements are uncertain, undercapitalised or difficult to validate. 

Rebuild the insurance and classification interface as an enforcement choke point

Registries do not operate alone. They outsource technical credibility to classification societies and rely upon insurance to manage catastrophic risk. Shadow fleet operators exploit precisely these interfaces, by shifting to less scrutinising service providers or presenting insurance documents that are difficult to verify.

A restructured registry system should require that:

• every P&I certificate is verifiable through a secure issuer registry, not a scanned PDF in a filing cabinet

• acceptable insurance must meet minimum capital and claims paying ability criteria, with independent ratings or equivalent safeguards

• classification societies issuing statutory certificates for flagged vessels must meet enhanced governance and audit standards, and must share relevant compliance data with flag administrations and designated port state authorities

Research focused on spill insurance and the shadow fleet has recommended using existing international insurance requirements as an enforcement tool, precisely because uninsured or underinsured trading is a central vulnerability. The registry is the natural place to apply that tool: a ship that cannot prove valid cover should not keep the flag.

This does not require inventing new law so much as enforcing what exists, with contemporary standards of verification.

Create a controlled, lawful pathway for “de-flagging” high risk ships

Sanctions evasion often depends upon speed. A vessel hops flags before scrutiny catches up. To slow the cycle, registries and major port states should adopt harmonised rules for rapid, procedural “holds” on flag transfer where defined red flags arise, such as:

• serious discrepancies in beneficial ownership documentation

• evidence of falsified registry documents

• inability to verify insurance

• repeated safety detentions or serious deficiencies

The goal is due process with velocity: short time limits, clear evidentiary thresholds and an appeal mechanism, but no endless limbo. This is not a geopolitical weapon. It is administrative hygiene.

A complementary measure is a global “do not register” list for vessels with unresolved identity, insurance or safety concerns. This would not be a sanctions list in the political sense, but an integrity list, akin to an airworthiness grounding, built on objective criteria.

Standardise digital ship documentation and make forgery difficult

A recurring theme in reporting on shadow fleets is the use of fraudulent flagging and fake registries. The reform is straightforward: the shipping world should stop relying on easily forged paper artefacts for legal identity.

Registries should issue core documents through cryptographically signed digital credentials, verifiable by any authorised party without contacting the issuing registry by email. Think of it as tamper resistant documentation rather than a new database for its own sake.

The effect is not perfect enforcement, but it raises the cost of fraud and lowers the cost of detection.

Align registry reform with service denial, not only ship designation

Designation of specific vessels is necessary, but shadow fleets are adaptive. The EU’s widening list demonstrates both intent and the sheer scale of the problem. Registry reform should therefore complement sanctions lists with system wide service rules, for example:

• ports and coastal states deny services to any vessel whose registry record fails the transparency package, regardless of whether it is formally designated

• insurers, brokers, classification societies and ship managers face penalties if they provide services to vessels that cannot satisfy identity and insurance verification standards

This approach targets the system that allows shadow ships to operate, not merely the hulls already identified.

Build an international investigative cell for maritime identity and sanctions integrity

Even with better registries, enforcement needs coordination. A small, standing analytical cell could link AIS (transponder) anomalies, ownership changes, inspection histories and insurance verification failures, then provide actionable alerts to flag states and port state control regimes.

This might be thought of as an international maritime integrity fusion centre. It should be technocratic, not political, and operate with clear safeguards, but it would prevent the current pattern in which each actor sees only a slice of the same deception.

European policy institutions have argued that countering the shadow fleet is a structural security issue for Europe, not merely a customs problem.  A dedicated investigative capability follows naturally from that diagnosis.

Use environmental and safety law as a parallel enforcement track

One reason shadow fleets persist is that sanctions enforcement can be legally complex at sea. Environmental and safety enforcement is often more straightforward. The fleet’s scale and ageing profile make it an objective hazard to crews and coastlines. 

Registry restructuring should therefore integrate environmental risk controls:

• mandatory, independently verifiable spill liability cover as a condition of registration

• enhanced inspection frequency for high risk tankers, regardless of cargo origin

• automatic escalation for repeated deficiencies, leading to loss of flag eligibility

This matters because it reduces the temptation to frame registry reform as geopolitics. It is also seamanship and public safety.

The political economy of reform

Registry restructuring will be resisted, because flags of convenience generate revenue and provide strategic ambiguity for some states. The response is to change incentives. If access to premium ports, finance and insurance depends on being a trusted flag, then trust becomes bankable. If tolerating opacity leads to inspections, delays, liability and service denial, the cheap flag becomes expensive.

The shadow fleet is not a mysterious parallel ocean. It is the same ocean, using the same rules to evade detection. The remedy is to rebuild the systsem of global shipping registries as a public regulatory function, supported by transparent identity, verifiable insurance, accountable flag administration and coordinated enforcement. Targeted sanctions lists will remain essential, but the long term solution is to make it difficult for any vessel, whatever her cargo, to hide who controls her, who insures her and which state has accepted responsibility for her conduct. This may ultimately require black lists of states that refuse to comply with a new international regulatory regime, but in the twenty-first century the technology is available to prevent abuse of flags of convenience.