Russian Vessels Getting Rid Of Their Flags To Steer Clear From Sanctions
An unusually high number of Russian vessels have ditched the Russian flags this March. They have re-registered to nations like the Marshall Islands and St. Kitts, per data provided by Windward AI, a maritime risk consultancy.
About 18 vessels have reportedly changed to a different nationality during March. That exceeds thrice the normal rate of 5.8, per data from Windward. Five vessels are linked to Russian ownership.
The technique — although legal — could permit businesses to hide their connections to Russia’s regime and “deceive authorities”, evading sanctions, Windward noted in the monthly report.
In the maritime industry, a ship’s flag highlights the nation it has been registered with, which has legal jurisdiction over the vessel. In most cases, a ship’s flag is a different nationality from the original business owning it. About three-quarters of vessels are registered in a country separate from where they are owned, per the BBC.
Eleven Russian ships that changed their flags in March registered instead to the Marshall Islands, a nation with an “open registry” that permits the registration of vessels, irrespective of their origin. Insider earlier reported on the popular cost-saving loophole, also known as the “flag of convenience.”
Several countries, including the UK and the US, have barred Russia’s oil and the country’s vessels from the ports following its invasion of Ukraine. The sanctions imposed against oligarchs of Russia have led to a flurry of highly scrutinized vessel movement as superyachts and their owners try to escape the seizures.
But not all flag changes indicate an attempt to evade sanctions. The trend could include honest businessmen trying to trade as usual without potential hurdles that a flag of Russia could bring to them, the report mentioned.
The high numbers of Russian flag switches are observed during other unusual and exceptional activities, such as Russia’s tankers switching off tracking systems. Both techniques are included in the US Treasury advisory from May 2020 and list seven types of deceptive practices.