Telltale signs a flag is going bad- An analysis of the Cameroonian flag fleet Telltale signs a flag is going bad: An analysis of the Cameroonian flag fleet

Telltale signs a flag is going bad: An analysis of the Cameroonian flag fleet

Over the past few decades, flag registries have again and again hit the headlines and come under criticism, much of which has centered around the practice of flags of convenience, their susceptibility to abuse by illicit players, and insufficient flag state regulations and enforcement. There are valid economic reasons for flags of convenience, but while some registries move to protect their flag, as was the case of the Panamanian flag registry when it moved to de-flag 60 vessels following sanctions-related activities, others have lost control over their flags and fleets. Governments have also recognized that not all flags are created equal and instituted port state controls such as the Paris MOU. But while port state controls and de-flagging are crucial to maintaining maritime standards, they are reactive designations applied only after damage has already been done.

In recent months, the flag of Cameroon has been starting to show up in the news leading us to take a deeper look into how monitoring flag registries and vessel flags can preemptively minimize risk and aid governments, flag and port authorities, and even commercial organizations identify flag weaknesses that illicit players and sanctioned regimes are exploiting. 

Flag red flags: An analysis of the Cameroonian flag fleet

If a tree falls in a forest and no one is around to hear it, does it still make a sound? Yes. Likewise, if a flag is being systematically exploited, there are telltale indicators that can point to hidden risks.

Accelerated fleet growth

In 2018, only 14 new vessels were registered with the Cameroonian flag (according to data transmitted over AIS). With thousands of flag changes taking place yearly in a population of over 80,000 IMO vessels, the Cameroonian flag wasn’t the most popular. In the following year, this number grew more than 4 times when throughout the year, more than 60 vessels registered with the Cameroonian flag, it would seem the flag registry was gaining popularity. With more than 75 newly registered vessels, 2020 marked an 435% jump in two years for this relatively small flag registry.

New vessels registered to the Cameroonian flag

Skewed fleet class composition

Fleet growth by itself is hardly a conclusive indicator. On the contrary, the Cameroonian flag fleet growth tapered out from 2019-2020, which could indicate stabilization. Perhaps 2018-2019 marked a commercial change to the registry that made the Cameroonian flag particularly attractive to shipping fleets? A deeper look at the fleet class composition doesn’t ease any doubts.  

In 2018, the fleet showed a relatively flat class distribution, without any tankers registered. In 2019, it grew significantly, with the class division showing a surge of interest from cargo and fishing shipowners. Interestingly enough, in 2020, the year of COVID slowdowns and the most sophisticated deceptive shipping practices seen to date, the class division shows that while overall fleet growth slowed down, the tanker division took off. 27 of these new vessels were tankers, and more than half of them were crude oil carriers capable of transferring large quantities of oil across oceans. This is an additional flag given that as of 2018, 79.4% of the world’s crude oil reserves rested with OPEC members, #1 and #3 of whom are the sanctioned regimes of Venezuela and Iran, respectively. 

Cameroonian flag changes overtime by vessel class

Adverse media

During 2020 the Cameroonian flag hit the news full tilt when a general cargo ship named the ARESSA was caught with the largest narcotics shipment in Aruba’s history. The vessel had registered with the Cameroonian flag registry a year prior, in February 2019, and immediately after the flag hop its pattern of operations changed radically as it began to call on West African ports for the first time. In December 2020, the vessel embarked on a journey calling ports in Brazil, Suriname, Venezuela, and Aruba, where open sources suggest the drugs originated. Eventually, the vessel was apprehended in international waters with more than a ton of narcotics onboard.

The ARESSA’s historical path, the darkest line represents the vessel’s path since changing to the Cameroon flag, Windward

Unfortunately, this was only the beginning. The new Cameroonian fleet found itself in the news once again after five Cameroonian flagged tankers were identified loading Venezuelan crude. These tankers were later sanctioned in January 2021 as the Trump administration moved in its final days to introduce new sanctions

Closing the gap with behavioral intelligence

Following the United Nations Convention on the Law of the Sea (UNCLOS), which came into effect in 1994, flag registries have a responsibility to see that their fleet complies with international regulation. But if fleet growth and class composition are not sufficiently solid flags and adverse media is too late, what can registries do to proactively protect their flag from illegal and sanctioned activities being carried out under its cover?

This is where behavioral intelligence powered by AI and ML can be applied to close the gap and uncover potential indications of vessels involved in illicit activity. In the case of the Cameroonian fleet, its security and compliance risk tells a shady story long before any news outlet. In the span of two years, the fleet’s risk assessment changed radically.

Security risk

From a border security perspective, the Cameroonian fleet went from an aggregate risk score of 14% due to their behavioral and static indicators in 2018 to 47% in 2019 and 2020, respectively. Given the continued growth of the fleet between 2019 and 2020 and the respective percentage of “risky” vessels, it is clear that “risky” vessels are flocking to the Cameroonian flag. 

This is a drastic change both in the aggregate risk score, the absolute number of “risky” vessels, and the ratio of new “risky” vessels registering under the Cameroonian flag. Windward’s security risk is an indicator that border protection and law enforcement agencies look-to to identify illicit activity. Still, regulators and the flag registries themselves can also utilize it to determine how exposed they are to liability for the vessels operating under their flag, thus mitigating the risk and protecting their reputation. 

Compliance risk

Compliance risk is derived from vessels’ actions in and around sanctioned programs as well as their connections to sanctioned entities and other “risky” vessels. On that end, things looked even worse. 

Until 2020, the Cameroonian fleet had 3 sanctioned vessels only one of which was a new addition. In 2020, the tables completely turned with 32 of the 75 new vessels flagged high compliance risk (Windward users should note that risk is calculated dynamically and may change depending on the period examined) due to activities relating to sanctioned programs. Even before sanctions designations or finding their way into the news, these vessels exhibited deceptive shipping practice behaviors matching the OFAC Advisory published in May 2020. In January 2021, the US government sanctioned an additional 3 tankers. Bringing the total Cameroonian flag vessels sanctioned to 6; and 2021 has only just begun.

Keep the flag flying?

Yes, flags of convenience are a contended topic, but like taxes, they serve an economic purpose, and they’re here to stay. While the maritime ecosystem must continue to develop checks and controls, we must recognize that criminals will always find a way and sanctions designations and fines are only part of what we need to minimize risk proactively. To protect themselves, organizations must expand their due diligence approach to go beyond sanctions list screening and be on the lookout for deceptive shipping practices, including:

  1. Flag fleet behavioral intelligence.
  2. Fraudulent flag abuse, otherwise known as fraudulent registries. 
  3. AIS spoofing, also known as false flagging.
  4. Flag hopping – Defined by OFAC as “repeatedly registering with new flag states to avoid detection,” this has become common practice amongst sanctions evaders (More to come on this soon).
  5. AIS swapping – a recent development and derivative of false flagging, termed by the UN Panel of Experts in its final report and recommendations to the UN Security Council, the Committee, and the Member States regarding sanction violations on the part of the Democratic People’s Republic of Korea; coordinated AIS manipulations on the part of multiple vessels.

Book your demo and see how maritime AI can help your organization