"The use of flags of convenience and non-compliance expands the capacity for fishing organizations to operate undetected, leaving maritime authorities scrambling to find new ways to identify, sanction, and regulate these types of vessels."
In our previous blogs, we looked at some of the more well-known deceptive shipping practices, including dark shipping and AIS manipulation, which help vessel operators circumvent monitoring and detection for things like IUU fishing, sanctions avoidance, and human trafficking. While these deceptive shipping tactics are challenging to tackle, maritime authorities have been developing strategies to manage their impacts for years.
The fact is, AIS manipulation is almost all technology-based, so fighting technology with technology can be a valid and effective solution. But not all deceptive fishing practices rely solely on technology. Instead, some deceptive shipping strategies use networking to make an impact - particularly flag hopping.
Flag hopping, flags of convenience, and flags of non-compliance are all relatively similar terms that describe how a vessel uses its flag to disguise operations or execute illicit activity without being recognized or challenged by authorities.
Below, we take a closer look at flag hopping and consider what strategies can be used to help maritime authorities keep the lid closed on the growing problem.
What is Flag Hopping?
Flag hopping is a term used to describe a vessel that rapidly or repeatedly changes its flag to circumvent things like conservation efforts, fisheries management, and sanctions compliance at local, national, or international levels.
Most often, flag hopping is used by vessels with a role in some sort of nefarious maritime activity. Flag hopping is often used because a ship has already been suspected of something illegal, but it can also be used to prevent maritime authorities from catching on to unlawful activity in the first place.
What is a Flag of Convenience?
While flag hopping describes regularly or rapidly switching flag states, the term “flag of convenience” describes a vessel registered in a country other than the vessel's owner. So, a flag-hopping vessel could be registered with multiple “flags of convenience” over any prolonged period.
Flag states that allow vessels to fly a flag of convenience often offer financial benefits like reduced taxes as an incentive to gain revenue for the purchase of the flag.
How Does Flag Hopping Work?
Flag states are countries where an entity registers its commercial or merchant vessels. Every country has the right to let ships fly under its flag, and every ship must register with a specific flag state and operate under that nation's flag. For example, if a vessel was registered with Thailand, that vessel would operate under the flag of Thailand.
When a vessel registers with a flag state, the flag state becomes responsible for ensuring that the ship operates under international law - regardless of where they are located. Since each ship is governed by its flag state, every vessel can only fly under one flag at a time.
The idea is that there must be a “genuine link” between the flag state and the vessel, but this is not always the case. In fact, many nations use “open registers,” which allow any ship to register with them, regardless of its initial nationality.
Flags sold to vessels with no genuine link to the flag state or without the flag state checking the vessel’s history, sanctions status, or seaworthiness are also called “flags of non-compliance.”
Why do countries offer flags of non-compliance? Simple. For the revenue.
Who Are the Usual Culprits of Flag Hopping?
While flag hopping is used by all sorts of organizations and vessels to operate outside of regulations, there are two primary types of vessels using the tactic to circumvent authorities.
IUU Fishing Vessels
IUU fishing organizations are always trying to operate without national and international maritime authorities taking notice, usually so that they can work and fish in protected or regulated waters without being noticed. Since IUU fishing is such a profitable business, flag hopping becomes an obvious tactic to employ.
Cargo Vessels Carrying Sanctioned Materials
Another subclass of vessels seen to be using flag-hopping tactics most often is those carrying and trading sanctioned goods like oil, coal, and sand.
Why these materials specifically?
These materials are known as high-profit income streams for countries like China and North Korea, and western nations have regularly placed sanctions on the trade of these materials in recent years. Since flag hopping is a tactic that can help vessels trade these materials without notice, those countries take full advantage of the opportunity.
Advantages of Flying a Flag of Convenience
Numerous advantages and benefits exist for a vessel to fly a flag of non-compliance - particularly fishing vessels.
Fast and simple registration from anywhere in the world.
Low registration costs.
No vessel checks, history checks, or background checks by flag states offering flags of non-compliance.
Owners avoid regulations from their home countries.
International regulation gaps make it legal to fish on the high seas, sometimes even in Regional Fisheries Management Organization (RFMO) areas - so a vessel may choose a flag state that is not subject to certain laws or participate in international fishing agreements.
RFMO inspectors are prohibited from boarding a vessel without permission from the flag state.
Labor legislation avoidance.
Low or non-existent taxes.
Owner identity may be hidden, and some registers even advertise anonymity as a selling point.
Ability to re-flag and change the vessel’s name multiple times during a fishing season to confuse authorities and avoid regulation or prosecution.
IUU Fishing and Flags of Non-Compliance
The world’s oceans are under severe threat from illegal, unreported, and unregulated (IUU) fishing. According to the United Nations’ Food and Agriculture Organization (FAO), around 34% of fish stocks are exploited and overfished at unsustainable levels, while another 60% of fisheries have already reached maximum fishing capacity.
A big part of the problem is that there is a significant lack of transparency in the global fishing sector, allowing illegal fishing organizations to operate with violations that span everything from overfishing to slave labor - and they do it using numerous pathways and tactics.
The use of flags of convenience and non-compliance expands the capacity for fishing organizations to operate undetected, leaving maritime authorities scrambling to find new ways to identify, sanction, and regulate these types of vessels.
On a global scale, there are no specific lists or regulations of flags of compliance to help authorities identify and regulate illegal fishing. Many countries operate under open registries, allowing vessels to register with them and fly their flag for a fee. Other countries are less transparent about open registration but still have laws that are not actively enforced, leaving the door open for vessels from other countries to register and operate under their flag.
It’s not the practice of registering a vessel under a foreign flag that’s the problem, though. In reality, it’s how flag states and flags of convenience allow fishing vessels and organizations to act and operate in secrecy to avoid regulations and detection. Many IUU fishing organizations set up shell companies to register for a flag of convenience, creating false registries and entities that can more easily avoid investigations, taxes, and sanctions.
So, what can maritime authorities do to identify and mitigate the challenges associated with IUU fishing organizations and flag hopping in general?
Thanks to advances in maritime technology, we now have several ways to identify and associate vessels with a high risk of flag hopping and flag manipulation for regulatory avoidance.
1. By monitoring fishing fleets via satellite and AIS, maritime authorities can gauge whether a fleet may be operating outside of maritime law. For example, if only a few vessels from a fishing fleet were operating and transmitting AIS data under a specific flag state, and the number of vessels registered from the flag state grew significantly in a short period, that could be an indicator of flag hopping within the organization.
2. Authorities and flag states can ensure that their processes for due diligence on background assessments for new vessel registrations are strict and thorough. Before accepting a vessel registration for the flag state, the regulatory body should ensure a vessel is compliant with current regulations and equipped with adequate technology, including Long Range Identification and Tracking (LRIT) systems and Automatic Identification System (AIS). If a vessel is registered and compliant with the appropriate tracking technology, authorities can better monitor the vessels within a fishing organization and record any risk of non-compliance and potential IUU fishing threats.
3. Flag states and maritime authorities should have processes to regularly and systematically monitor vessels so that all vessel actions may be applied to risk assessments. Monitoring should look for numerous identifiers, including flag registry anomalies, AIS outages, AIS irregularities, undocumented ship-to-ship transfers, and irregular calls to ports. Authorities should follow up on any suspicions with additional investigations, which could employ the use of satellite imaging, SAR imagery, RF emissions, and information sharing within maritime networks.