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Key Takeaways – Ghost Shipping

  • Ghost shipping is one of the common deceptive shipping practices where criminals mask vessel identity to engage in illicit activities.
  • Key red flags include AIS manipulation, vessel renaming or repainting, using forged documents, and others.
  • Regulatory authorities expect regulated entities to detect ghost shipping activities to prevent financial crime.
  • Citadel365 helps detect such dark fleet activity with automated tools for document verification, screening, and transaction monitoring.

What Is Ghost Shipping in an AML/CFT Context

Ghost shipping, also called dark fleet, is a deceptive shipping practice in which criminals use vessels (such as old tankers) to conceal their identity, location, or ownership. In simple terms, it means using a masked ship, turning off its location to bypass international sanctions and maritime rules and engage in illicit trade.

 

Criminals use tactics such as disabling Automatic Identification System (AIS) signals, falsifying documents, manipulating data (AIS Spoofing), or vessel renaming/repainting to enable ghost shipping. Such practices are often used to evade sanctions and enable illicit trade, resulting in high risk for money laundering and terrorist financing.

How Ghost Shipping Facilitates Financial Crime

Criminals use ghost shipping to move goods such as weapons, oil or restricted products, with involvement of high-risk jurisdictions. The use of vessels to move such goods results in a lack of transparency, enabling evasion of trade sanctions and embargoes. Ghost shipping is a tactic used to facilitate trade-based money laundering by allowing falsification of origin, value or destination of goods. It also leads to sanctions circumvention by allowing trade with sanctioned countries.

Red Flags and Indicators of Ghost Shipping Activity

The following red flags and indicators highlight ghost shipping activity:
  • Disabling AIS signals or falsifying tracking data in order to hide illicit activities.
  • Frequent changes in the name of vessels, flag (registration), or their ownership structure create a complex trail to hide beneficial owners and avoid regulatory scrutiny.
  • Inconsistency between the shipping documentation and the actual goods transported, or an unjustified explanation for deviating from the routes.
  • Transactions with third parties that operate in or are associated with high-risk jurisdictions or areas known for maritime sanctions evasion or illicit activities.

Regulatory Expectations for Managing Maritime Sanctions Risk

Regulatory expectations include screening of vessel owners, operators and counterparties against sanctions watchlists. Further, regulators require entities to identify fake invoices, verify the authenticity of shipping documents and ensure transparency of beneficial ownership by identifying true owners. Moreover, financial institutions and DNFBPs involved in maritime trade must conduct enhanced due diligence for high-risk customers or areas to prevent financial crime. With this, they must document every activity and transaction and escalate unusual patterns or suspicious activities for immediate investigations and timely reporting.

Managing Ghost Shipping Risk with Citadel365

Citadel365 is a centralised platform that helps detect and prevent financial crime related to ghost shipping by automating document verification and monitoring transactions. The name screening software screens vessel owners, beneficial owners, operators, and counterparties against the global sanctions and other watchlists to avoid trade with restricted parties.

 

Further, the customer risk assessment software incorporates factors such as trade routes, geographic exposures, and counterparties involved to assess risk and provide risk ratings. Moreover, the transaction monitoring software watches every transaction and detects unusual patterns and red flags in real-time to take timely action.

 

Citadel365, case management software supports case creation for suspicious customers, and its audit trails help record every activity in a timely manner to ease the investigation of suspicious maritime-related activity, ensuring compliance.

Integrating Ghost Shipping Controls into AML Frameworks

Regulated entities must integrate the following ghost shipping controls into their AML frameworks:

 

Customer Due Diligence: Entities must conduct enhanced due diligence for trade finance clients and shipping companies that pose a high risk for money laundering and terrorist financing.

Risk Assessment: Entities must embed factors such as sanctions screening results, vessel behaviour analysis, and real-time shipping data to assess risk and develop customer and transaction risk scoring.

Ongoing Monitoring: Entities should regularly identify and monitor changes to evolving threats, especially when dealing with complex ownership structures and high-risk trade corridors.

Governance & Reporting: Entities must use a centralised system to document compliance-related records, supporting regulatory investigations.

Ghost Shipping FAQs for AML Professionals

Ghost shipping is a deceptive trade practice where vessels are used to transport goods and evade trade sanctions.

Financial institutions must use technology to detect ghost-shipping-related risks that help automate document verification, screen vessel operators & counterparties, and monitor transactions.

Red flags such as falsified documents, manipulation of vessel tracking systems, changing routes, and renaming vessels indicate potential ghost shipping activities.