Maritime Sanctions Taskforce

RUSI’s Maritime Sanctions Taskforce convened again in May 2025 to examine the evolving threat posed by Russia’s shadow fleet and identify policy initiatives to counter its oil-exporting operations aimed at funding Russia’s military–industrial complex. The Taskforce brings together 60 representatives from government and industry, including major insurers, banks, law firms and maritime data providers. In the latest meeting, the Taskforce addressed three interrelated themes that form the structure of this report:

• Understanding the role of the insurance sector in maritime sanctions.

• Identifying strategies for enhancing flag state accountability.

• Enhancing the targeting of the network of enablers supporting maritime sanctions evasion.

The report concludes with policy recommendations identified by the Taskforce intended to enhance the implementation and enforcement of maritime sanctions, as well as to improve compliance with international maritime standards. Contributions from Taskforce members are made on an unattributable basis and this report does not necessarily represent the views of all Taskforce members.

The Role of the Insurance Sector in Maritime Sanctions

The Taskforce began by examining how insurance – particularly protection and indemnity (P&I), cargo, and hull coverage – interacts with sanctions compliance.

While P&I insurers have received most regulatory attention, participants stressed the need to consider how all categories of insurance relate to shadow fleet activity.

P&I insurance is especially visible in relation to sanctions compliance due to its role in liability coverage and its requirement for vessels to obtain entry into ports. All P&I clubs that are members of the International Group (IG) publicise the vessels they insure, making the clubs identifiable when potential breaches occur. Hull and cargo insurers carry the same sanctions compliance obligations but do not publicise the names of their assureds. Similarly, non-IG P&I insurers do not routinely publish lists of vessels insured.

Some hull and machinery and cargo insurers may monitor bills of lading and track vessel activities, but others may have less granular insight into shipping behaviour. Cargo insurance was flagged by participants as particularly opaque, and the “open cover” policies offered by many cargo insurers were discussed. These policies provide coverage across multiple shipments during the policy period and often do not allow for systematic disclosure of shipment-specific risk, especially when certain goods are prohibited in some destinations but not in others. Brokers and insurers are often unable to detect whether sanctioned goods – often subject to misrepresentation – are being traded unless counterparties voluntarily disclose such information or regulators provide specific warnings. Insurers may seek representations from clients but often lack the tools to enforce sanctions compliance at the cargo level. Some Taskforce members argued that mandatory voyage-by-voyage reporting mechanisms could improve compliance.

Hull insurance, though less prominent, becomes critical when the vessel itself is sanctioned, according to industry representatives at the Taskforce. A sanctioned ship without hull coverage represents a significant risk to cargo owners and financial institutions involved in the trade. Yet hull coverage is often overlooked in enforcement discussions, despite playing an important role when sanctioned vessels are transferred, damaged, or abandoned and left adrift.

Participants highlighted the limited ability of insurers to verify downstream actors in complex transactions. Direct insurers typically contract with the commodity trader or shipowner, but they cannot easily identify or verify charterers, ship managers or port agents involved in the insured voyage. Many Taskforce members agreed that Know Your Customer’s Customer (KYCC) expectations are unrealistic unless insurers receive legal support and intelligence-sharing from authorities. But without access to data from customs, financial intelligence units or vessel inspection reports, insurers cannot effectively flag high-risk activity. Even when asked to avoid sanctionable transactions, brokers and carriers often rely on client declarations and lack the ability to conduct independent verification. This points to the limits of voluntary attestation-based compliance in high-risk environments.

To address the challenge of accessing compliance documentation, particularly when new requirements such as the oil price cap (OPC) or restrictions on Russian diamonds are introduced mid-contract, the Lloyd’s Market Association (LMA) has issued a clause welcomed by many Taskforce members that imposes two key obligations on the (re)insured: to maintain records demonstrating compliance with relevant laws and regulations regarding the insured subject matter; and to provide, upon reasonable request, evidence needed by the (re)insurer or broker to satisfy themselves or any regulator of such compliance.

Concerns also arose regarding unintended consequences. Overregulation might encourage insurers to withdraw from high-risk sectors entirely, creating a vacuum filled by less reputable insurers. Some Taskforce members noted that advisory notices issued by governments are useful documents but frequently extend beyond the scope of formal legal measures, creating uncertainty. Insurers often act with caution, denying coverage to avoid regulatory exposure even in the absence of a formal prohibition. This decreases transparency and increases the likelihood that shadow fleet operations will continue undetected.

The Taskforce advised regulators to engage more consistently with marine insurance associations to develop workable compliance expectations. Insurers requested that expectations around risk screening and reporting should reflect commercial realities, as pushing for perfect compliance may result in market exits and rising dependence on insurers without adequate governance. This will lead to further growing gaps in global coverage and make room for poorly regulated alternative operators to gain ground, allowing the shadow fleet’s parallel operating infrastructure to expand.

The discussion also highlighted the emergence of non-IG P&I insurers operating outside traditional jurisdictions. The growth of Russian and regionally based insurance backed by the Russian Central Bank enables sanctioned vessels to demonstrate insurance coverage despite failing to meet international transparency and solvency standards. Even where such coverage is adequately capitalised, it may be unable to function properly because of the impact of Western sanctions. Although flag states are responsible for verifying the validity of liability insurance under International Maritime Organization (IMO) guidelines, many registries lack the technical capacity or willingness to evaluate the adequacy of insurance providers. The result is a gap in oversight whereby sanctioned vessels obtain questionable coverage and continue operations. Participants also noted a growing number of insurers based in Asia and the Middle East, specifically China and the UAE, entering the market with minimal transparency.

The Taskforce also discussed the introduction by the Nordic-Baltic 8++ countries of the voluntary insurance reporting mechanism (VIRM), which requests vessels transiting their territorial waters to disclose their insurance details. Governments use this system to collect data on insurance coverage, verify compliance and request additional information where red flags appear. Representatives from the UK government at the meeting stated that the VIRM has prompted high levels of voluntary cooperation and has helped identify over 270 individual vessels of concern. While the reporting mechanism is voluntary, a lack of response from vessels might increase scrutiny and can prompt further investigations. Taskforce members welcomed the VIRM’s deterrence effect and recognised the value of sharing this approach with European partners. The Taskforce highlighted the significant step taken by the EU with the amendment to the Vessel Monitoring Directive, which requires all vessels, including those merely passing through EU waters without entering an EU port, to provide insurance information. However, questions persisted around the actions to be taken against vessels that decline to disclose their insurance under the EU’s mandatory regime.

Enhancing Flag State Accountability

The Taskforce turned next to the issue of flag state compliance with international maritime obligations, with a focus on how weak oversight and opaque registries have allowed the shadow fleet to operate unchecked. Flag states provide vessels with their legal nationality and are responsible for ensuring compliance with safety, environmental and insurance standards, under Article 94 of the United Nations Convention on the Law of the Sea (UNCLOS). Thus, flag states must exercise jurisdiction and control over ships flying their flag, but the Taskforce stressed that these obligations remain largely unenforced.

UNCLOS contains no practical enforcement mechanism beyond interstate litigation, and there is no tribunal or international process for revoking the registry privileges of non-compliant states. As a result, countries that offer so-called “flags of convenience” face little consequence for failing to uphold international standards. Participants noted that flag registries often function with minimal state oversight – especially in countries that outsource their registry management to private operators – and that shadow fleet vessels can exploit these gaps by hopping rapidly through multiple flag registries. Participants identified countries such as Gambia, Honduras, Mongolia, São Tomé and Príncipe, Sierra Leone and Tanzania as jurisdictions where registries have become popular with the shadow fleet because they impose few entry requirements, lack rigorous inspection regimes and rarely scrutinise the insurance coverage or ownership structures of the vessels they flag. In one recent example raised by a participant, a vessel reflagged four times in a matter of weeks, passing through several of these permissive jurisdictions.

This frequent switching makes it difficult for flag states to maintain oversight and accountability. Participants observed that even when port state control authorities identify deficiencies during inspections, the corresponding flag state is rarely held to account. In many cases, such deficiencies only come to light after port authorities intervene. However, Taskforce members also observed that sustained diplomatic engagement can achieve results in countering illicit operations and raise the costs for shadow fleet operators. As explored in past Taskforce reports, countries like Panama and Liberia, which operate some of the world’s largest registries, have responded positively to UK and EU outreach. Persistent diplomatic efforts have led additional countries like Gabon and Barbados to deregister sanctioned vessels and take steps to distance themselves from shadow fleet activity.

While private companies may operate a registry, the Taskforce argued that the government of the country/flag state where the registry is located should retain ultimate responsibility and must be held accountable under international law. Registry activity reflects on the sovereign state, and failure to exercise proper control not only violates UNCLOS but also contributes to broader systemic risks. The Taskforce emphasised that countries must be mindful of how their national symbols are used. As one participant framed it, a country’s flag is not just a business tool; it is a signal of the country’s regulatory integrity and global reputation.

The Taskforce considered the role of the IMO in strengthening compliance. Under current IMO rules, flag states are responsible for verifying that insurers issuing Blue Cards meet adequate solvency and transparency standards. However, as explained above, this requirement is inconsistently applied. Some Taskforce members cited instances where flag state personnel lacked basic awareness of financial solvency indicators or how to evaluate insurance documents. Several flag registries were said to accept Blue Cards issued by insurers with no public records, no credit rating, no audited financials and no track record of claims payouts. These lapses illustrate a profound gap between legal obligations and actual regulatory practice. An example of these risks can be found in the case of the now sanctioned Norway-based insurer Ro Marine, which provided forged documentation to fraudulently insure dozens of shadow fleet vessels.

To address this gap, Taskforce participants recommended that IMO guidance be strengthened to require public disclosure of insurer information, including capital adequacy, credit ratings and financial audit data. While acknowledging that the IMO is not – and must not become – a sanctions enforcement body, participants argued that enhancing insurance transparency aligns with the IMO’s mandate to protect the marine environment and improve safety standards. The information disclosure would help flag state and port state control authorities assess the legitimacy of insurance coverage, and would improve the transparency of vessels operating under flags that continue to facilitate shadow fleet activity under the guise of formal compliance. It would also reduce the risk of environmental damage caused by poorly insured vessels and enhance the ability of regulators to detect problematic registry practices.

The Taskforce also explored the viability of the Financial Action Task Force (FATF) including flag registry oversight in its mutual evaluation process. FATF already assesses the implementation of UN-related counter-proliferation financing (CPF) sanctions (primarily in relation to North Korea). Some Taskforce members argued that this framework should include the assessment of whether countries hosting flag registries are enabling sanctions evasion, including through deficient flag state oversight of vessel insurance and compliance standards. Despite FATF’s scope being limited to UN sanctions, raising flag state standards would impact all shadow fleets, not only North Korea’s. Evaluating flag state performance as part of a country’s broader financial integrity could elevate the issue politically and incentivise better registry governance. This would move accountability from the private operators of the registry to the government that authorises and benefits from its operations. A FATF finding of deficiency could be labelled as a technical compliance failure and potentially lead to greylisting, which would increase international scrutiny and trigger reputational and economic consequences for the country concerned. As one Taskforce member put it, “if a country wants the economic benefits of hosting a major registry, it must also accept the regulatory responsibilities”.

Recognising that enhancing the roles of the IMO and FATF might take time, the Taskforce recommended in the meantime that a list of high-risk flag registries based on internationally recognised criteria be developed to help regulators and industry identify problematic jurisdictions. This list could draw from existing frameworks such as the “white-grey-black” lists of the Paris and Tokyo Memoranda of Understanding (MoUs) and the International Chamber of Shipping’s Shipping Industry Flag State Performance Table, which evaluates flags based on specific criteria such as port state control inspection records, average age of the fleet, and ratification of international conventions. While some participants questioned the practicality of “naming and shaming” registries, others argued that such a list would help guide industry risk assessments and encourage registries to improve performance. One participant noted that the UK and most EU member states, as members of the Paris MoU, already participate in the creation of such lists to prioritise port state control actions, and should consider incorporating similar metrics to produce a list of all high-risk flag registries. The EU and UK also maintain FATF-based lists of anti-money laundering/countering the financing of terrorism high-risk countries, and that approach could serve as a model for developing a maritime equivalent.

High-risk flags could be subjected to increased inspections, detentions or even port entry restrictions. Some Taskforce members recommended compiling and maintaining a high-risk registry list based on port state control records, FATF assessments and insurance validation failures. Such a list could guide due diligence for insurers, financiers and port authorities, increasing the operational burden on shadow fleet vessels and making registries more cautious in accepting questionable applicants. A shared understanding among international governments and industry would have a significant impact in raising standards globally.

Once a ship is removed from a registry that seeks to raise its standards, it will probably seek to continue its operations under a different, more permissive flag. Taskforce members recommended that enforcement authorities should therefore extend flag state outreach to develop deeper coordination between flag states and enforcement agencies to track vessels across registry changes and share information in real time. One participant suggested the creation of an international flag state information-sharing mechanism, similar to the Registry Information Sharing Compact (RISC) but expanded to more jurisdictions – though others noted the legal and institutional barriers to implementing such a mechanism. Several Taskforce members also advocated for harsher measures to target the enabling infrastructures that allow shadow fleet vessels to operate globally. This is further explored in the next section.

Addressing Maritime Sanctions Evasion Networks

The Taskforce then focused on the ecosystem of actors, tactics and structural enablers that allow the shadow fleet to continue operating despite increasing enforcement pressure. Taskforce members highlighted that sanctions evasion in the maritime domain does not occur in isolation. Instead, it relies on a broad infrastructure of third-party service providers – including brokers, shipowners, vessel management companies and financial intermediaries – which knowingly or negligently enables continued trade with sanctioned entities. Participants highlighted the central role of certain London-based ship brokers in assembling clusters of vessels to supply to the shadow fleet, by structuring opaque ownership arrangements, matching buyers and sellers, and identifying permissive registries.

Taskforce members noted that the sale of tankers often involves a standard practice whereby sellers request a declaration from buyers confirming that the vessel will not be used in violation of the OPC or to trade with sanctioned jurisdictions. However, these declarations are largely performative. A recent case highlighted by Taskforce members involved the UK’s decision to sanction British ship finance veteran John Ormerod for facilitating the supply of 25 second-hand tankers into Russia’s shadow fleet. The case illustrates how experienced actors in the shipping and finance sectors have supported sanctions evasion through structuring complex ownership arrangements and networks of offshore companies. Despite the scale and sophistication of the operation, intermediaries and brokers involved in similar deals have largely avoided enforcement action.

Several participants questioned why intermediaries involved in high-value tanker transactions with clear links to sanctioned entities had not faced any enforcement action, and they considered this gap in the sanctions strategy a priority. In the case of Ormerod, the seller was sanctioned, but the broker and the financier involved in structuring the transaction were not. The absence of consequences risks creating incentives for intermediaries to ignore red flags and facilitate ongoing violations of sanctions measures. This undermines the deterrent effect of sanctions and allows enablers to adapt quickly to designation actions.

The Taskforce also addressed the role of non-aligned jurisdictions and their permissive ports and logistics hubs in enabling shadow fleet operations. Ports and refineries in China and India continue to accept Russian crude carried by designated or high-risk vessels, often without any apparent concern for the origin of the cargo or the insurance status of the ship. Participants noted that while some jurisdictions, such as India, have started to reject high-risk vessels out of a desire to remain integrated in global markets, others have emerged as safe havens for shadow fleet operations. Taskforce members highlighted that bunkering services, crew changes and maintenance are frequently provided in countries such as Indonesia, Malaysia and Singapore, allowing the fleet to maintain operational continuity. These jurisdictions are also used to store oil offshore or conduct ship-to-ship transfers in remote anchorages, evading G7 regulatory oversight.

One member described Malaysia as “the epicentre of lawlessness”, with dozens of shadow fleet tankers regularly engaging in ship-to-ship transfers and manipulating their automatic identification systems. Taskforce members warned that these practices risked catastrophic maritime incidents and urged states to apply existing maritime safety conventions more rigorously, especially in high-risk zones, as a means of curbing the operational viability of the shadow fleet.

Taskforce members thus stressed the need for a policy shift that mirrors the recent US actions against Iran, where the entire supply chain, including refineries, ports, shipping agents and other stakeholders in third countries, has been designated to increase pressure on the broader network. The US uses secondary sanctions aggressively, heightening the risks for third parties to engage with designated entities. Vessels involved in Iranian trade, for example, are therefore often treated as untouchable under US sanctions. The Taskforce acknowledged that UK and EU sanctions lack the secondary reach of US measures and are primarily limited to direct jurisdictional reach, offering less deterrence. Without the ability to impose sanctions on third-country entities, the UK and EU have limited options for curbing this activity. Several members argued that the UK and EU must adopt similar approaches to the US if they are to have an impact on not only the vessels but also the surrounding infrastructure that sustains them.

Taskforce Recommendations

The Taskforce concluded that while diplomatic engagement and reputational pressure have yielded some success, systemic reform remains difficult. UNCLOS lacks the enforcement tools to compel compliance, and many flag states have little incentive to tighten their oversight over the insurance coverage of the vessels under their registration. An effective response must include revising IMO guidelines, incorporating registry oversight into FATF evaluations, deepening diplomatic engagement and coordinating with the insurance community. Only by aligning these levers can regulators close the governance loopholes that allow the shadow fleet to continue operating under the cover of legal registration. The Taskforce reiterated that strengthening flag state accountability is essential not only to enforcing maritime sanctions but also to preserving the integrity of the international maritime system. Yet the Taskforce also acknowledged that securing revisions to IMO guidelines or the FATF standards is unlikely in the near term, necessitating the development of a high-risk list that can be used to “name and shame” those registries that fail to meet international standards and act as a warning mechanism for private sector actors conducting due diligence.

The Taskforce also reaffirmed that disrupting sanctions evasion requires attention to not only the vessels but also the full network of actors that sustain them. Brokers, registries, ports and refineries all play critical roles in enabling illicit maritime activity. Regulatory strategies must therefore target these enablers collectively, rather than focusing on vessels in isolation. Strengthening enforcement against enablers and increasing international pressure on jurisdictions hosting them will be essential to reduce the economic viability of shadow fleet operations and restore the effectiveness of global sanctions frameworks.

To achieve these policy goals, the following recommendations emerged from the Taskforce discussion:

1. Enhance public sector cooperation with the insurance industry

   Governments and regulators should enhance their collaboration with the insurance industry through structured information-sharing mechanisms. The complexity of the insurance sector demands greater understanding by the public sector, and regulatory expectations should be fine-tuned to the capabilities of industry. The insurance sector is a key player in compliance with maritime sanctions and a valuable source of information. Public–private collaboration should be deepened to leverage industry expertise and access to operational intelligence.

2. Scale up the VIRM

   The VIRM should be scaled up into a reliable dataset on vessel insurance and ownership, with non-compliance triggering heightened scrutiny. The UK should explore making it mandatory in line with the EU’s recent amendment to the Vessel Monitoring Directive. Additionally, an action plan should be developed in case of non-compliance.

3. Strengthen the IMO guidelines on insurance disclosures

   The IMO should revise its guidelines to enhance the public disclosures of insurer solvency data, credit ratings and audited financial statements, and improve compliance by flag states.

4. Include flag registries in FATF evaluations

   The key role played by flag registries in achieving compliance with CPF standards should lead FATF to ensure that its mutual evaluation procedure includes an assessment of their effective oversight. FATF has proved to be an effective body in raising transparency and government performance globally, and could help ensure the enforcement of flag state obligations to observe CPF standards, which would hinder the operations of all shadow fleets.

5. Develop a public list of high-risk flag registries

   This list should guide insurer, shipper and financier risk assessments and deter engagement with systematically non-compliant jurisdictions. This initiative could be built on tools like the Paris and Tokyo MoUs and the International Chamber of Shipping’s Shipping Industry Flag State Performance Table.

6. Build a cross-jurisdictional flag registry coordination mechanism

   The UK and G7+ should support efforts to develop an intergovernmental platform to track deregistered vessels and prevent their rapid reflagging in permissive states. RISC should serve as an inspirational model.

7. Designate the entire sanctions evasion supply chain

   Enforcement agencies should target brokers, escrow agents, financiers and intermediaries, as well as ports, port authorities and refineries, which knowingly support and contribute to shadow fleet operations. The EU and UK should enhance their designations of third-country entities in order to reduce the effectiveness gap between their sanctions and those of the US.

While there has been heightened activity on maritime sanctions in the UK and EU in recent weeks, significant gaps persist in the ability of G7 allies to disrupt Russia’s funding from the sale of oil. As the Taskforce discussion highlighted, scrutiny of the infrastructure that supports Russia’s shadow fleet must be heightened in order to close loopholes and vulnerabilities that the Kremlin continues to exploit.

Gonzalo Saiz Erausquin is a Research Fellow at the Centre for Finance and Security at RUSI, focusing on sanctions and counter threat finance. His research focuses on sanctions implementation, circumvention and evasion tactics, and sanctions enforcement. He leads the research of Euro SIFMANet (European Sanctions and Illicit Finance Monitoring and Analysis Network). Gonzalo also researches counter threat finance, including abuse of NPOs for terrorist financing, crime-enabled terrorist financing, and financing of right-wing extremism. He is part of Project CRAAFT (Collaboration, Research and Analysis Against Financing of Terrorism).