Maritime Sanctions Taskforce

Introduction

The Centre for Finance and Security at RUSI established the RUSI Maritime Sanctions Taskforce in November 2024. In the same month, the taskforce convened its first meeting, which primarily applied a UK lens to the maritime sanctions implementation challenge, gathering experts from the maritime industry, policymakers and government representatives to discuss the growing threat posed by Russia’s shadow fleet. This clandestine network of vessels plays a critical role in circumventing sanctions and undermining international enforcement mechanisms, and poses significant risks to maritime safety, global trade and environmental sustainability.

This report summarises the discussions from the meeting, offering an examination of the shadow fleet’s operational intricacies, the shortcomings of existing regulatory frameworks and the strategic measures necessary to counter the fleet’s activities. The taskforce’s deliberations provided a nuanced understanding of how shadow fleets operate, and underscored the urgency of strengthening maritime sanctions to maintain the integrity of global trade and security systems. None of the discussions at the event are attributable.

The Shadow Fleet Phenomenon: Origins and Current Trends

The concept of the shadow fleet is not new, but its scale, sophistication and geopolitical implications have reached unprecedented levels in the wake of Russia’s attempts to circumvent sanctions imposed by the international sanctions coalition. The taskforce discussed how, historically, shadow fleets have been associated with regimes such as North Korea, Venezuela and Iran, each employing illicit maritime networks to sustain their economies under sanction-induced constraints. However, Russia’s parallel fleet represents an evolutionary leap in scale and complexity.

Comprising approximately 1,000 vessels, up from an estimated 600 in 2023, taskforce members described the shadow fleet as a critical pillar of Russia’s strategy to maintain oil exports amid international restrictions. Reports estimate that the Kremlin has invested more than $10 billion since 2022 to acquire and sustain this fleet. These vessels transport 70% of Russian crude and oil products, including 89% of Russian crude, generating billions annually for the Russian government despite sanctions designed to cripple its economic base. With an estimated 4.1 million barrels of oil shipped daily in breach of the oil price cap (OPC), these operations provide Moscow with critical revenue streams. At the time the OPC took effect in December 2022, only 2.2 million barrels were shipped per day. For every $10 above the OPC Russia sells its oil, it gains an estimated $30 billion annually – funds that can be redirected to sustain its war efforts.

The shadow fleet’s operational techniques are both diverse and adaptable. Russia utilises the opaque ownership structures behind these vessels, false documentation, coordinated transshipments and deceptive flagging through jurisdictions with lax controls. Taskforce members noted that these vessels are typically flagged with “flags of convenience” from jurisdictions such as Panama, Gabon, the Marshall Islands and Liberia, benefiting from minimal regulatory oversight. A significant proportion of the vessels are ageing tankers, often exceeding the 15-year industry standard for scrapping, with an average age of 18 years. Many operate without proper maintenance or insurance, heightening the risks of accidents, spills and other environmental disasters. Participants referenced the Prestige oil spill disaster as an example of the financial and environmental consequences of poorly insured vessels. That disaster’s costs exceeded the cap for protection and indemnity (P&I) insurance, leaving affected states to bear the burden of clean-up efforts. In light of these risks, taskforce members suggested that interdiction measures – though potentially contentious under the UN Convention on the Law of the Sea (UNCLOS) – might be necessary to prevent such disasters. A taskforce member noted that UNCLOS is a codification of customary law, which is formed by two elements: state practice and opinio juris. After the Prestige incident, Spain banned single-hull vessels. This decision went against UNCLOS provisions, but the spirit of the measure was valid, and gradually became accepted.

Participants also discussed the fact that shadow fleet operators employ advanced tactics to evade detection. Disabling the ship’s automatic identification system (AIS) – a practice commonly referred to as “going dark” – is a prevalent technique, allowing vessels to obscure their movements. Participants pointed out that these risks were highlighted in a March 2024 incident in the Danish Strait, where a vessel from Russia’s shadow fleet disabled its AIS, resulting in a near-catastrophic collision on its way to load Russian oil. Had the tanker already been carrying oil at full capacity, the damage caused could have been far worse.

The International Maritime Organization (IMO) took steps in December 2023 to address the shadow fleet, extending the definition of shadow fleet vessels to include those engaged in dangerous activities such as avoiding flag state and port state control inspections; not maintaining adequate liability insurance; operating under opaque corporate structures; switching off their navigation systems; and concealing the ship’s identity. However, despite these measures, taskforce members agreed that enforcement remains challenging, due to the reluctance of flag states to perform their regulatory duties under conventions like the Convention on Civil Liability for Oil Pollution Damage (CLC). The CLC mandates flag states to issue “Blue Card” certificates only when satisfied that a vessel’s insurer has sufficient financial capacity to meet its obligations. Representatives from the P&I community in the taskforce stated that while the International Group of P&I Clubs system is widely trusted, many flag states issue certificates without proper verification, a problem that can only be rectified through education, diplomatic pressure, or even naming and shaming.

One taskforce member noted that the term “shadow fleet” is often misleading. While it draws attention to the issue, it also risks glamorising the problem. A more accurate description would be “parallel fleet”, as this network functions as an alternative system of trade outside the established norms of international governance. If left unchecked, this parallel infrastructure could thrive and develop into a permanent alternative market for actors seeking to evade sanctions. This would pose a long-term challenge to the legitimacy and safety of global trade institutions, and could enable a growing number of sanctioned entities to operate freely.

Participants highlighted the rapid expansion of insurance schemes developed within this ecosystem, often backed by state actors such as the Central Bank of the Russian Federation. This alternative insurance market operates outside established international standards, raising questions about its ability to provide adequate coverage in the event of accidents or claims. Similar concerns were raised regarding the role of trading intermediaries, brokers and port authorities, all of which contribute to the network enabling shadow fleet operations.

The fleet’s resilience and adaptability are further bolstered by its collaboration with other sanction-evading networks, notably those operated by Iran. Taskforce members described how, over the years, Iran has developed a sophisticated system for circumventing sanctions, which now provides invaluable expertise to Russian operators. These networks share vessels, knowledge and best practices, enabling the rapid scaling and operational efficiency of shadow fleet activities.

China’s involvement in supporting shadow fleet operations was also discussed. While its role remains less overt than that of Iran, Chinese businesses and entities have been implicated in facilitating Russian evasion. US Executive Order 14114 (issued in December 2023 and expanded in June 2024), which threatens foreign financial institutions with secondary sanctions for supporting transactions related to the Russian military–industrial complex, has shown signs of deterring Chinese banks from facilitating payments related to common high-priority items. Several taskforce members saw value in leveraging this concept to also deter Chinese involvement in maritime sanctions evasion.

As the shadow fleet evolves, it not only exacerbates environmental and economic risks but also threatens to undermine the framework of sanctions enforcement. Without decisive action to address the regulatory loopholes, enhance enforcement and hold flag states accountable, this parallel infrastructure will continue to expand and solidify.

Regulatory Frameworks and Enforcement Gaps

Current regulatory frameworks have struggled to keep pace with the scale and growing sophistication of the shadow fleet. Taskforce members discussed how the international sanctions coalition in support of Ukraine has sought to strike a delicate balance, seeking to limit Russia’s revenue and counter its circumvention tactics without imposing overly restrictive measures on G7 operators or creating shocks to the global price and supply of oil. The taskforce agreed that excessively stringent sanctions risk pushing more vessels into the shadow fleet’s orbit, while lenient enforcement undermines the credibility and efficacy of sanctions regimes. There was far less consensus on the extent to which sanctioning more vessels would affect the global oil price and supply.

Participants noted that governments have taken steps to try to address the challenges posed by the shadow fleet. For example, the UK has introduced legislative amendments to enable vessel designations, enhanced enforcement mechanisms and a stronger focus on vessel tracking. At the time of the taskforce meeting, the UK had sanctioned 43 Russian oil tankers under these powers, with some participants suggesting this had significantly disrupted shadow fleet operations. They estimated that of the sanctioned vessels, a third remain idle, and another third have experienced significant operational disruptions. Despite the effectiveness of designations, participants noted that automatic blanket designations could lead to legal challenges and unintended economic consequences, such as adverse impacts on global oil prices, so countries remain cautious about expanding the list of designations too quickly. Proportionality and accuracy in sanctions designations have therefore become critical principles, as targeted measures based on robust evidence and clear criteria are essential to maintaining the legitimacy and effectiveness of enforcement.

Participants described the steps that the UK has taken to incentivise the return of legitimate trade back into G7-compliant services and reverse unnecessary moves to use shadow fleet vessels. Through partnerships with international stakeholders, the UK has worked to leverage geographical chokepoints, particularly along critical trade routes such as the English Channel, which sees around 30 shadow fleet vessels pass through each month. The UK’s Department for Transport and the Maritime and Coastguard Agency have enhanced their scrutiny of vessels passing through these areas, collecting information about their insurance arrangements and operational practices. Additionally, the UK government has invested in specialist capabilities through the Joint Maritime Security Centre, supported by cross-government funding under the Economic Deterrence Initiative. These measures enable more effective monitoring of shadow fleet activities while encouraging compliance among legitimate operators.

The taskforce also discussed the challenges posed by the overlapping restrictions within sanctions regimes. The OPC, the bans on maritime transportation services and associated services, restrictions on access to UK and European ports, bans on certain Russian vessels, prohibition of the supply of vessels to or for use in Russia, and restrictions on goods, services and technology for these vessels, among others, create a complex compliance environment. Representatives from the insurance community in the taskforce acknowledged that this complexity often leads to over-compliance, where legitimate operators avoid high-risk activities entirely. Conversely, this also inadvertently strengthens shadow fleet operations by driving more vessels into the unregulated parallel infrastructure and reducing the opportunities for enforcement action through compliance under G7-provided services.

The taskforce identified several critical areas where enforcement measures could be improved to counter shadow fleet activities. One of the most pressing challenges is the lack of comprehensive intelligence sharing among international stakeholders. Shadow fleet operators rely on fragmented enforcement systems, exploiting gaps in communication and data sharing to evade detection. Effective enforcement requires integrating information from multiple sources, including AIS data, insurance records and ownership registries, to track the lifecycle of shadow fleet activities. However, the sheer volume of data presents its own challenges. Participants noted that without advanced analytics and machine learning, enforcement agencies and private operators may struggle to identify patterns and anomalies indicative of shadow fleet operations.

The role of the private sector in sanctions enforcement also came under scrutiny. Taskforce members discussed the fact that banks operate under comprehensive anti-money laundering programmes and file suspicious activity reports (SARs), while most commercial insurers and P&I Clubs lack similar compliance requirements. Some taskforce members proposed the introduction of a voluntary disclosure regime for the shipping industry. Similar to the legal requirement to file SARs in banking, this framework would incentivise operators to report suspicious activities without fear of penalties, providing valuable intelligence for enforcement efforts.

The taskforce also addressed the UK’s approach to fostering international collaboration. They discussed the fact that the government has engaged with international partners, notably leveraging the European Political Community to publish a shadow fleet “call to action”, which now gathers 46 countries and the EU in efforts to counter Russia’s shadow fleet activity. By coordinating enforcement actions, sharing intelligence and harmonising sanctions frameworks, such partnerships aim to close regulatory gaps and enhance the overall effectiveness of sanctions. However, participants warned of the risks associated with overly aggressive enforcement measures. For instance, measures such as vessel interdictions, while effective, could provoke reciprocal actions in contested regions such as the Black Sea, the Taiwan Strait or the South China Sea.

Participants discussed the Grace 1 tanker, detained in Gibraltar, which serves as a compelling case study underscoring both the strengths and the limitations of current enforcement mechanisms against vessels suspected of breaching or circumventing sanctions. The vessel, an Iranian tanker flying a Panamanian flag, was intercepted in Gibraltar waters on the suspicion that it was transporting oil to Syria in violation of EU sanctions. The operation highlighted the effectiveness of cross-border collaboration, robust intelligence sharing, and well-established legal frameworks, all of which played critical roles in facilitating the vessel’s detention. However, participants pointed out that the case also revealed significant challenges. The Grace 1 utilised evasive tactics, such as AIS spoofing and the use of complex ownership structures, which can complicate investigations and prolong judicial processes. These strategies not only obscure the origins and intentions of vessels, but also place a considerable burden on enforcement agencies tasked with ensuring compliance. The detention of the Grace 1 also illustrated the potential for retaliatory actions by sanctioned states. Shortly after the incident, Iran seized the British-flagged tanker Stena Impero, escalating tensions and raising concerns about the unintended consequences of enforcement actions.

This example underscores the delicate balance required in enforcing sanctions robustly while mitigating risks to legitimate maritime operators and ensuring that enforcement actions do not provoke reciprocal measures that destabilise global trade routes.

Taskforce Recommendations

Countering Russia’s evolving circumvention tactics and the expansion of its shadow fleet requires a comprehensive and proactive approach. The taskforce identified several actionable strategies to bolster maritime sanctions and enhance their enforcement:

1. Ensure efficacy of attestations: National authorities must ensure that attestations are not abused by illicit traders. Transiting tankers should be required to engage only with accountable trading houses based in or maintaining substantial business ties with G7 countries, to ensure reliable attestations. Strengthening the credibility and reliability of attestations would help rebuild trust among G7 operators and draw trade back into compliant systems.

2. Encourage voluntary self-disclosures: Many G7 operators have disengaged from Russia-related trade, particularly related to Russian crude oil, under fears of enforcement for potential sanctions breaches, even of an involuntary nature. Governments should develop mechanisms for maritime operators to report suspicious activities without the threat of enforcement, in the style of SARs for banks, to reduce over-compliance and unintended consequences, encourage the return of legitimate trade into G7 services, increase oversight, ensure compliance and collect intelligence.

3. Expand vessel designations: Coastal states should be empowered to sanction vessels that are inadequately or non-transparently insured while transiting sensitive areas. Designations should focus on tankers, rather than the shell companies behind them, which can be quickly re-registered or replaced, whereas vessels have IMO numbers that are more difficult to disguise, and designation directly impacts their operations. Building an international coalition to use vessel designations as a deterrent would amplify this measure’s impact and facilitate coordination to avoid unintended consequences.

4. Assess the impact of designations on oil prices: The designation of vessels has proved to be an impactful tool, but it also raises concerns about potential adverse effects on the global oil price and supply. Governments should develop a metric that measures the impact on oil prices of a vessel designation package, to ensure that this power is used to its full potential while avoiding unintended consequences.

5. Impose secondary sanctions: Secondary sanctions targeting individuals and entities supporting shadow fleet operations in third-party jurisdictions can be an effective deterrent. The success of Executive Order 14114 in deterring large Chinese financial institutions from facilitating payments related to Russian imports of high-priority items demonstrates the potential effectiveness of this approach. Such measures should be extended to all actors enabling shadow fleet activities, including insurers, brokers and port authorities.

6. Address flag hopping and flags of convenience: The G7 should enhance outreach to flag states and apply diplomatic pressure to discourage the flagging of shadow fleet vessels and enhance registration requirements. Successful examples, such as US-led efforts to pressure Panama into de-flagging Iranian tankers, underscore the value of this strategy. These efforts must, however, be supported by international organisations such as the IMO to establish standards and coordinate efforts to hold flag states accountable for their obligations under conventions such as the CLC.

7. Leverage strategic chokepoints: Coastal states should impose mandatory requirements for oil spill insurance and criminal liability for violations. These measures would significantly raise pressure on shadow fleet operators and increase accountability. International conventions, such as the Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation, could be applied to address practices like AIS spoofing and document falsification, further strengthening enforcement.

8. Develop an exit route for sanctioned vessels: G7 government should establish and advertise mechanisms to lift sanctions against vessels to incentivise vessel operators to cease illicit activities and reduce the shadow fleet’s capacity, rather than forcing designated vessels to be scrapped. Governments should also address scrapping practices; currently, ships often end up in scrapyards located in countries with deficient regulatory standards, exacerbating environmental risks.

Russia’s shadow fleet represents a multifaceted challenge, threatening the integrity of global sanctions regimes, maritime safety and environmental sustainability. The taskforce’s recommendations provide a framework for addressing these challenges, emphasising the importance of collaboration, innovation and targeted enforcement against the shadow fleet. As the shadow fleet evolves, sustained efforts will be required to safeguard the principles of international law and ensure a level playing field in global trade. The taskforce will continue to refine its strategies and engage with stakeholders to build a resilient and accountable maritime governance system and restrict Russia’s access to its key revenue source, oil.

Gonzalo Saiz 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, primarily through SIFMANet (Sanctions and Illicit Finance Monitoring and Analysis Network). Gonzalo’s research on counter-threat finance includes work on the abuse of non-profit organisations for terrorist financing, crime-enabled terrorist financing, and the financing of right-wing extremism.