Red flags for charterers, brokers, port agents and insurers

How to use a list of red flags

Every indicator below appears in official guidance, principally the 2020 joint US advisory on illicit shipping and the Price Cap Coalition advisories, with parallel material from OFSI for UK firms. They are screening prompts, not evidence. Each has an innocent explanation that is common, and the compliance value lies in the combination, the timing and the answers you get when you ask.

The one exception is a connection to a designated person, which is not a risk signal but a legal problem.

Identity

Frequent changes of name. Ordinary after a sale. Suspicious when the name changes shortly after a designation of the owner or a sister vessel, or repeatedly within a short period.

Frequent changes of flag. Also ordinary after a sale. Worth attention when a hull moves between small registries in quick succession, or moves immediately after a port-state detention.

An IMO number that does not match the ship. Particulars that conflict with the number — wrong build year, wrong dimensions, wrong type — point at either bad data or a fraudulent claim of identity.

A flag the state does not recognise. Some registries issuing documents are not authorised by the state whose flag they use. OFAC’s data marks such claims explicitly. A vessel in this position may be without valid nationality altogether.

Behaviour

Prolonged AIS gaps. SOLAS expects transponders to be operated continuously, with a narrow safety exception. Gaps happen for legitimate reasons, so the question to ask is about pattern: how long, how often, and where.

Ship-to-ship transfers away from designated areas. Transfers at sea are routine and lawful. Unreported transfers, at night, in international waters, between a listed and an unlisted hull, are the mechanism that separates a cargo from its origin.

Loitering at known transfer anchorages. Time spent at a well-known transfer area without a commercial reason.

Voyage patterns that make no commercial sense. A laden tanker taking a route that costs far more than the freight it earns is usually solving a problem other than transport economics.

Documents

Missing or generic attestations. Under the price cap, service providers rely on attestations. Blanket rather than per-voyage attestations, or a refusal to provide itemised ancillary cost information on request, are precisely what the coalition’s tightened guidance addresses.

Freight or insurance costs far above market. Inflated ancillary costs can conceal a cargo price above the cap.

Certificates of origin that do not fit the voyage. Origin documentation inconsistent with where the vessel has been.

Reluctance to share tracking data or logs, or documents that arrive only after the cargo has moved.

Counterparties

A newly incorporated single-ship company as owner, especially in a jurisdiction with minimal disclosure, with no trading history and no other assets.

Management that changed shortly after a designation. Watch the ISM manager in particular; it is the entity with safety responsibility and it rotates quickly under pressure.

Unfamiliar insurers, or protection and indemnity cover from a provider whose capacity to pay a large pollution claim you cannot verify.

Classification by a society outside the International Association of Classification Societies, especially where the vessel recently left an association member.

Any connection to a designated person. Stop and take advice. This is not a scoring exercise.

Structure

Age. A tanker past twenty years old entering a new trade with a new owner is worth understanding, because the economics of that purchase have to come from somewhere.

A purchase price well above scrap value for a vessel near the end of its life.

Insurance, class and flag all changing at once. Individually explainable, together a pattern.

Documenting the answer

Guidance from both OFSI and the coalition frames the expectation the same way: due diligence proportionate to your position and access to information, with contemporaneous records. In practice that means writing down what you checked, when, what you were told, and why you concluded what you did. A file that shows a question asked and answered is worth more than one that shows a clean screening hit with no reasoning behind it.

For the mechanics of the screening step itself, see how to check whether a ship is sanctioned.