Thursday, November 5, 2026
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Trade & Customs Nov 5, 2026 · 7 min read

Treasury sanctions the people selling fake ship flags

The fake flag is now a sanctions problem. Screen the registry, not just the name

On 4 November the US Treasury sanctioned 14 people and companies, most of them part of a network it says has sold fake flags and fake certificates to tankers carrying Iranian oil. The network is led by India-based Suniel Kumar Sharma and his wife, Jaspreet Preeti Shahid. Treasury says they built websites that posed as the ship registries of countries that never authorised them.

Our view is simple. For years, sanctions screening in freight meant checking names: the shipper, the consignee, the owner, the vessel. That is no longer enough. The flag a ship flies, and the registry behind it, is now something a forwarder has to verify. A fake flag means no real flag state watching the ship and no valid insurance behind it. And Washington has just said that dealing with such ships carries sanctions risk.

What Treasury did

The action came from Treasury’s Office of Foreign Assets Control (OFAC), the US government’s sanctions agency. It was taken under Executive Order 13902, which targets sectors of Iran’s economy including petroleum. It is part of “Operation Economic Outcast”, a campaign Treasury says was announced on 24 August 2026 to cut off money flowing to Iran.

Four people were named: Sharma, Shahid, Ashwani Kumar Dhiman and Ishwinder Singh. Nine entities tied to the network were named too. Most are in India, including Oceaniek Technologies India and Aryavart Ship Management Private Limited. One, Eswatini Maritime Affairs and International Ship Registry PTE. Ltd., is based in Singapore. The fourteenth designee is Fugo Ground Services Inc, a Türkiye-based company Treasury says provides ground handling to several sanctioned Iranian airlines.

Treasury Secretary Scott Bessent framed it bluntly: “As we have said many times, under Operation Economic Outcast, you are either with us or against us.” He added: “We know where you are, and we will sanction those who continue supporting the Iranian regime, whether by land, sea, or air.”

At the same time, OFAC said it “is issuing a new alert to industry to warn of the sanctions risks of dealing with potentially falsely flagged vessels”.

How the fake-flag business worked

A ship’s flag state is the country it is registered in. That country is meant to inspect the ship, certify it and answer for it under international rules. Sanctioned tankers lose their real flags when registries de-list them. They need a new one to keep trading, enter ports and look legitimate on tracking screens.

Treasury says Sharma’s network filled that gap. It purported “to represent nations from nearly every continent, from Guyana to Eswatini and Laos”. The release lists “Aruba, Guyana, Mali, Mozambique, Malawi, Sint Maarten, and Timor-Leste, among others” as countries whose registries the network claimed to run without authorisation.

It is not new. Treasury says the couple’s “operations began as early as 2014”, when they tried to impersonate a flag administration. gCaptain reports that was Dominica’s. In 2023, gCaptain says, Sharma set up the Singapore-based “Eswatini” registry. It kept operating after Eswatini publicly disavowed it. Eswatini is a landlocked country in southern Africa.

Treasury named five tankers it says the network supported: PING SHUN (IMO 9231901), LATTAFA (IMO 9245794), BINARY STAR (IMO 9380570), VERA (IMO 9304655) and MAJESTIC X, formerly PHONIX (IMO 9198317). An IMO number is a ship’s permanent seven-digit ID. It stays the same when the name or flag changes. Treasury says MAJESTIC X was seized by the US on 22 April 2026. gCaptain reports it was carrying Iranian oil under a fraudulent Guyana flag at the time.

Treasury describes these tankers as customers of the network, and calls several of them already sanctioned. This action went after the people selling the flags, not the ships. That matters, and we come back to it below.

Why this is bigger than one network

The Sharma network is one supplier in a crowded market. The International Maritime Organization (IMO), the UN shipping body, has counted 529 ships falsely flying a country’s flag, Maritime Executive reported in April. The same report said nearly 40 member states had their flags used without their knowledge or consent. It added that African flags accounted for more than half of reported cases.

The country detail is striking. An IMO tally reported by Shipping Position in February listed 74 falsely flagged ships claiming Guyana, 35 claiming Aruba, 17 claiming Sint Maarten and 17 claiming Mali. Several of those are names on Treasury’s list this week. The same report said 356 of the 529 ships were not classed by any classification society. A class society is the private body that surveys a ship’s hull and machinery for insurers.

The IMO has started to act. Its Legal Committee approved new guidelines on ship registration in April, covering verification, due diligence and ownership records. But, as Maritime Executive reported, there is still no binding international framework for how ships get registered. That gap is what networks like Sharma’s sell into.

The insurance and liability problem

This is where it stops being a tanker-trade story and becomes a forwarder’s story.

Treasury says: “Falsely flagged vessels carry no valid protection and indemnity insurance.” P&I insurance (protection and indemnity) is the mutual cover that pays for oil spills, wreck removal, crew injury and, often, cargo claims. If the flag is fake, the certificates are fake, and so is the cover.

Treasury goes further. It says shadow fleet ships under false flags “could potentially cause billions of dollars in damages” to “the economies of the countries in whose territorial waters they operate”. It also says these ships use false flags “to evade international regulations aimed at ensuring crew safety and safeguarding against environmental harm.”

For anyone with cargo on such a ship, the practical result is ugly. If the ship is detained, seized or involved in an accident, there may be no flag state to deal with and no insurer to claim against. And under the new alert, there may be a sanctions problem as well.

gCaptain summarises the red flags OFAC lists. They include unknown flags, registration documents that cannot be verified, flags from countries without recognised registries, and a mismatch between a ship’s flag and its MMSI number. The MMSI is the nine-digit radio ID a ship broadcasts on AIS, the tracking system. Its first three digits identify the country. If a ship claims one flag and broadcasts another country’s code, that is a warning sign.

What forwarders should do now

Most container forwarders booking on mainline carriers will never touch these ships. The risk sits elsewhere. It is in breakbulk, project cargo, small tanker and parcel-chemical bookings, and in feeder or charter tonnage arranged through brokers. It is sharpest on lanes into the Gulf, India, East Africa and West Africa, where older tonnage under unfamiliar flags is common.

Our suggestions:

  • Check the flag, not just the name. If a fixture or booking names a flag you do not recognise, confirm the registry through the flag state’s own government channels. Do not rely on a website that claims to be the registry. That is exactly what this network built.
  • Run IMO numbers, not just ship names, against OFAC’s lists. Names change. IMO numbers do not.
  • Compare the stated flag with the ship’s MMSI country code on AIS. A mismatch is one of OFAC’s listed red flags.
  • Ask for the P&I certificate and check it with the named club. A fake flag usually comes with fake paperwork.
  • Air forwarders should check ground handlers. Fugo Ground Services is now designated, and Bessent’s “land, sea, or air” line was not decoration.

None of this is new advice in principle. What is new is that the US has formally tied falsely flagged ships to sanctions exposure in an industry alert. “We didn’t know the flag was fake” is a weaker defence today than it was last week.

What comes next

This action named people and companies. The tankers it cited were not the target, and several were already sanctioned. We think the next step is the rest of the network’s customer list. Treasury now has a mapped network, a list of fake registries and a public alert. Designating other ships that used those registries is a short move from there.

Pressure on the real flag states is likely to grow too. OFAC encouraged governments to investigate fraudulent registries operating in their names, gCaptain reports. Some, like Eswatini, have already spoken up. Expect more public disavowals, and more registries cleaning their books.

Our prediction: by the end of March 2027, OFAC will add more vessels tied to the Sharma network’s fake registries, beyond the tankers named this week, to its sanctions list by IMO number. If that happens, any forwarder still booking on those ships will be dealing with a designated vessel, not just a warning sign.

Sources

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