What are Flags of Convenience?
Flags of Convenience (FoCs) refer to the practice of registering ships in countries that offer lower taxes and regulations, allowing shipowners to avoid stricter oversight.
FoC is a business practice where a ship is registered in a different country than its owners, and flies the flag of that country.
The country that the ship is registered in is called the flag state.
This helps obscure the true ownership and operational details of vessels.
How do corporations with large fleets obscure ownership and origin of cargo?
Companies often create shell entities that own a small number of ships, hiding the true owner’s identity.
Ships frequently change their registered flags to evade scrutiny and sanctions.
Ships may be registered in countries that do not adhere to international maritime regulations, complicating enforcement.
Why has India been accused of hosting a shadow fleet?
Following sanctions, Russian vessels partnered with Indian firms, particularly in Dubai, to facilitate trade.
The Indian Register of Shipping (IRS) saw an uptick in certified vessels linked to Russian interests, leading to allegations of complicity in shadow fleets.
The IRS claims it prioritizes vessel safety and does not compromise its standards, but the increased registrations raise suspicions.
What are the different ways through which ships make sure they don’t lose their insurance?
Shipowners can shift management to a European entity that maintains Protection and Indemnity (P&I) insurance, allowing operations to continue under a new guise.
Vessels might change flags and classification societies to circumvent regulations while still being owned by the same entity.
Changing a ship's name can help erase past associations, making it harder to link them to sanctions violations.
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