Main Image Credit Locked out: Russian cargo ships being loaded in St Petersburg. Image: irimeiff / Adobe Stock
Legislation banning Russian-linked merchant ships from UK ports raises an urgent need for fast and effective solutions for screening ships, as well as clear guidance for port authorities on detecting Russian-linked ships or cargoes.
On 1 March, the UK government banned Russian vessels from UK ports. The updated regulations prohibit the registration on the UK Ship Register of ‘ships owned, controlled, chartered or operated’ by designated individuals or individuals connected with Russia. Under the measures, UK port authorities have the power to detain Russian ships at ports and issue port barring directions to the pilot of specified ships. On 5 April, the European Commission proposed similar measures that would ban Russian ships from EU ports.
Official guidance defines a Russian ship as a ship that is owned, controlled, chartered, operated or registered by a designated person or person connected with Russia, as well as a ship flying the Russian flag. The guidance does not specify what is meant by ‘persons connected with Russia’. Sanctions do not apply to other ships originating from or destined for Russian ports, ships carrying Russian cargo to or from Russia, or ships with a Russian captain or crew.
On 8 March the British Ports Association suggested the task of identifying vessels covered by the ban might be better placed on the UK’s Maritime Security Directorate or the Maritime and Coastguard Agency. For now, responsibility for identifying links to a fleet that may number over 6,000 vessels continues to rest with ports themselves. Ports wishing to develop capabilities in this area should be encouraged by the extensive range of tools and resources available.
Russian Flags, Beneficial Ownership and Tracking Locations
The International Maritime Organization (IMO) gathers and publishes data that provides information on current and previous flags and any companies linked to a merchant ship. Data from onboard automatic identification system (AIS) transceivers provides the current and recent locations of vessels. Several online tools offer solutions based on IMO and AIS data, allowing compliance teams to conduct risk assessments and identify red flags for ships following port entry requests. The authors of this Commentary advise a systematic checklist comprising the following searches:
- The current and previous flags of the ship. A Russian flag is a clear breach of sanctions and a recent change to an international flag registry may signal a continued Russian connection.
- All companies associated with the ship. Any merchant ship will have several associated companies that serve different functions. These include the ship’s owner, operator, manager and the entity that holds its Document of Compliance. Often harder to identify is the group owner, also seen as the ‘ultimate beneficial owner’ – the true controlling interest that will often hide behind a front company domiciled elsewhere acting as the ‘registered owner’. Recent UN reporting on North Korea cites numerous cases.
- Recent movements of the ship. Many maritime tracking tools provide movements and port calls over the last 12 months. These tools typically base their information on AIS data. Although visiting Russian ports is not prohibited, this can help build a broader risk profile or raise red flags that prompt closer checks. A ship can switch off its AIS to hide its position, but the existence of a significant gap is visible and should at least prompt further enquiry.
The fact that Russian cargoes aboard non-Russian owned vessels are not targeted by the ban leaves a potential loophole enabling Russian goods to continue flowing into the UK
Sanctions typically take time to work and must be considered as one part of a wider strategy. Also, sanctions compliance tools are only as reliable as the (IMO, AIS and corporate) data that they ingest. Compliance teams need to be aware of the limitations of such tools.
Loopholes, a United European Front and the Need for Clear Guidance
Even at this early stage of the ban, three features are striking.
First, the fact that Russian cargoes aboard non-Russian owned vessels are not targeted by the ban leaves a potential loophole enabling Russian goods to continue flowing into the UK. Actions by port workers to refuse to unload the Cypriot-flagged LNG tankers Boris Vilkitsky and Fedor Litke in Kent, and the German-flagged Seacod in Liverpool on 3 and 4 March, demonstrate two things: a desire in the industry to comply with the spirit of the law, even where the letter of the law may be insufficient; and an urgent need to introduce certain restrictions on Russian oil and gas, even if transported on non-Russian ships.
Second, the importance of a united front among Western allies should not be underestimated. According to AIS data, when turned away from the UK, the Boris Litkovsky headed to France and the Fedor Litke to Belgium. Such an easy escape should no longer be possible following the European Commission’s decision to ban Russian vessels and Russian-operated vessels from accessing EU ports under the EU’s fifth package of restrictive measures. Apart from certain exemptions, the EU legislation appears to mirror the UK measures. EU restrictions on Russian oil imports are still under discussion. Actions by non-EU allies such as Norway to avoid becoming ‘safe havens’ will also be key.
Third, the need for guidance and training. As companies versed in sanctions due diligence know, compliance requires a dedicated and specialist team familiar with tools, techniques, regulations and guidance. Decisions that may be subject to legal challenges must be based on sound processes. If there is a desire to cut connections to Russian cargoes as well as ships, then supply chain due diligence, particularly in the oil and gas trade, also becomes essential. This is another area where ports are vulnerable. Many core components of the maritime industry occur away from ports, so the sanctions implementation gap will be felt across the industry. But while banks, insurance companies and commodity traders are relatively well equipped to take on the new compliance obligations, it may be unrealistic to place such a compliance burden on each UK port. This suggests a case for a centralised service, which might respond to pre-arrival notices submitted by ships and give clear, consistent and legally protective instructions to a port.
Only by extending the UK ban to include Russian oil and gas cargoes will it be possible to close the loophole allowing oil and gas to ship on non-Russian vessels
How Will Russia Respond to the Restrictive Measures?
In response to the UK and EU bans, we can expect Russian behaviour to change in the following ways:
- Moving Russian-flagged ships to open or international registries (namely those such as Panama, Liberia or Sierra Leone that do not require the owner to be a resident or national). Although entirely legal, such a move in the context of sanctions would indicate an attempt to conceal a connection with Russia. Open registries worldwide must be alert to the risk that Russian ships will apply to join their registry, and UK ports should be aware that a ship under any flag may nevertheless be under Russian control.
- Switching off AIS. North Korean ships evading sanctions, aware that AIS data may incriminate them, routinely switch off the equipment. It would not be surprising if Russian ships start to do likewise. Ports (and other teams involved in due diligence) should check the AIS history and challenge any gaps.
- Other spoofing behaviours to create ambiguity around the identity of ships. Reporting on sanctions evasion and illegal fishing notes cases of MMSI spoofing, where one identity appears to be shared across several ships, making positive identification impossible.
- Transferring control to non-Russian front companies. Guidance to ports and other practitioners should include how to detect this.
- Displacement of traffic away from countries that do effective screening to those that don't.
- Ship-to-ship transfers. Like re-flagging, this is a legal and common practice, but in the context of sanctions, particularly a port ban, would represent an attempt to trade beyond the scrutiny or jurisdiction of port states. It is up to flag states, which have jurisdiction on the high seas, to prohibit such practice.
Ports would benefit from clear guidance on effective screening practices. This might range from a list of vessels and advice on best practise up to a centralised screening service. Meanwhile, ports should take advantage of the range of maritime tracking and intelligence tools available. It is vital that ports are aware of flags indicating Russian presence and likely sanctions-evading techniques.
It is reassuring that EU ports have followed the UK’s lead. Only by extending the UK ban to include Russian oil and gas cargoes will it be possible to close the loophole allowing oil and gas to ship on non-Russian vessels. If the UK ban is extended to cargo, there is a strong case for a centralised service to lessen the compliance burden on UK ports.
The views expressed in this Commentary are the author’s, and do not represent those of RUSI or any other institution.
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