Introduction
Maritime sanctions evasion has become a critical frontier for anti-money laundering and counter-terrorist financing (AML/CFT) efforts.
Two overlapping yet distinct phenomena in this domain are the so-called shadow fleets and dark fleets.
Though terminology varies, the implications for compliance, regulation, and global financial crime infrastructure are profound, particularly when examining the activities of Russia and Iran under sweeping energy and military sanctions.
What Are Shadow Fleets and Dark Fleets?
The terms often appear interchangeably, but for clarity in this article, we adopt the following distinctions:
Shadow Fleet
A network of vessels (primarily ageing or repurposed tankers and cargo ships) that assist a sanctioned state or actor in exporting or importing prohibited goods (oil, dual-use technology, weapons) under the radar of regulators and insurers.
They typically operate through opaque ownership, flags of convenience, transshipment, AIS (Automatic Identification System) disabling, and manipulated documentation.
Dark Fleet
A subset of shadow fleet operations, where the vessel intentionally engages in clandestine behaviour (e.g., deliberate transponder “turn-off”, ghost identity, ship-to-ship transfers outside flagged routes) to evade detection.
These ships carry a heightened risk of regulatory, criminal, and reputational exposure.
In short, all dark-fleet ships are shadow-fleet ships, but not all shadow-fleet ships rise to the extreme clandestine tactics implied by “dark”.
Why This Matters for AML/CFT
From a regulatory and compliance vantage point, the relevance is threefold:
- Violations of Sanctions Regimes: Shadow and dark fleets enable prohibited trade flows, undermining the integrity of sanction regimes relevant to AML/CFT, export controls, and counter-proliferation.
- Money Laundering and Terrorist Financing Linkages: The proceeds of illicit flows (for example, from oil exports) can be laundered through shipping, insurance, and other financial conduits; and dual-use goods may feed into military or terror networks.
- Compliance Blind Spots: Traditional AML controls focus on banks, remittances, and suspicious transactions. These maritime flows cut across sectors (shipping, insurance, flag registration, commodities) that are often outside core financial-institution monitoring, yet they generate large illicit revenue streams.
Case Study: Russia’s Shadow Fleet
Since the outbreak of large-scale sanctions in 2022 following Russia’s invasion of Ukraine, Russia’s use of shadow fleets has surged.
Analysts estimate hundreds to over a thousand vessels are involved in circumventing oil- and gas-related sanctions by using flags of convenience, AIS manipulation, and ship-to-ship transfers.
One brief from the European Parliament noted that definitions of “shadow”, “dark” and “grey” fleets remain inconsistent, yet the operational characteristics are clear: opaque ownership, non-Western insurance, transshipment and evasive routing.
These vessels have helped keep Russian oil exports flowing despite G7/EU price caps and embargoes.
The sanctions evasion is not only financial but also technological: many ships have uncertain insurers and persist in operations without normal regulatory oversight.
For AML and CFT teams, this means that shipping and maritime domains are critical risk zones.
Case Study: Iran’s Shadow Fleet
Iran has long employed maritime sanction-evasion tactics via its so-called ghost or shadow fleet.
After the U.S. withdrawal from the JCPOA in 2018 and re-imposition of sanctions, Iran relied on clandestine tanker networks, ship-to-ship transfers, disabled transponders, and shell companies to export oil and generate hard-currency revenues.
In recent years, U.S. regulatory advisories have pointed to networks that facilitate these flows through shipping, insurance, and banking pathways.
The revenue generated often flows into IRGC proxies and regional terror-finance networks.
From an AML/CFT lens, the key lesson is that non-banking entities (tanker operators, marine insurers, brokerages) may act as facilitators of illicit flows, yet sit outside conventional transaction-monitoring frameworks.
Shadow Fleet vs Dark Fleet: Key Differences in Practice
| Feature | Shadow Fleet | Dark Fleet |
| Ownership/registration | Often opaque, use of shell companies, flags of convenience | Deliberately hidden, identity changed frequently, “ghost” flagged |
| Visibility/tracking | Reduced via transshipment or indirect routing | Extremely low: AIS turned off, vessel identity masked, ship-to-ship mid-ocean transfers |
| Risk profile | High regulatory/sanctions risk | Very high risk, including environmental, safety, maritime security, AML/CFT |
| Typical cargo | Sanctioned commodities (oil, dual-use goods) | Same cargo but with direct links to military/logistic missions or terror networks |
| Compliance knock-on | Hidden revenue flows, difficult to trace, shipping value chain | Complex laundering layers, cross-sector facilitation (insurance, marine services) |
Implications for AML/CFT Frameworks
Expand Monitoring Beyond Financial Flows
Financial institutions, fintechs, and compliance operations must partner with shipping and trade-compliance teams.
Monitoring ownership registries, flag-state changes, AIS anomalies, and insurance underwriting patterns becomes relevant for AML.
Strengthen Trade-and-Shipping Intelligence
Automated screening for sanctioned vessel IMS/IMO numbers, repeated name changes, ship-to-ship transfer events, and flagged flags of convenience is essential.
Platforms should integrate maritime data feed and sanctions list updates in near real-time.
Address Marine Insurance & Service Providers as AML Vulnerabilities
Marine insurers, P&I clubs, brokers, and ship managers may unknowingly enable sanction-evasion logistics.
One investigation revealed that vessels carrying Iranian or Russian oil had been insured by a New Zealand firm, exposing a supply-chain blind-spot for AML/CFT controls.
Ensure Cross-Sector Collaboration
Effective interruption of shadow/dark fleet operations requires cooperation across sectors: finance, shipping, insurance, commodities, customs, and intelligence agencies.
Regulators should encourage reporting of suspicious maritime logistics, akin to SARs (suspicious activity reports) in the financial world.
Build Adaptive Risk Models
Compliance systems must evolve from static rules (large cash flows) to behavioural analytics: vessel identity changes, ship-to-ship transfers, cargo-origin anomalies, transponder manipulation, and layering via insurance/charter services.
AI-powered platforms and pattern-matching algorithms can enhance the detection of these nuanced vectors.
Why Russia & Iran Are Front-line Examples
Russia and Iran illustrate how state actors under sanction pressure resort to shadow/dark fleet models to sustain revenue flows and military capacity.
Russia’s oil exports via shadow fleet entities help maintain defence budgets and war-economy operations despite sanctions.
Iran’s ghost fleet is tied to IRGC funding, terror-financing networks, and dual-use procurements.
Both cases show that shipping logistics, insurance underwriting, vessel-identity obfuscation, and cross-border trade form an illicit finance network that bypasses classic banking AML/CFT controls.
The Role of RegTech in Mitigating the Risk
Enterprise-grade compliance infrastructure must incorporate maritime, trade, and insurance data streams into AML/CFT monitoring.
Platforms like IDYC360, with AI-powered analytics, human-centred workflows, and 99.9 % uptime reliability, can correlate vessel-behaviour anomalies, cross-link charter-owners, and flag changes across global databases.
From a fraud-prevention perspective, pattern-speed matching of shipping/insurance/trade data is instrumental for detecting the “shadow-to-dark” transition and alerting compliance teams to high-risk supply-chain corridors supporting sanctioned states.
Conclusion
Shadow and dark fleets underscore a growing frontier in AML/CFT risk where maritime logistics, insurance, and trade facilitation converge with sanctioned state behaviour, military supply chains, and terror-finance networks.
For compliance professionals, the message is clear: the vantage point must expand beyond banks and remittances to include ships, insurers, charterers, and trading corridors.
Russia and Iran demonstrate the real-world implications of this risk model, and the integrity of global financial and trade systems depends on the closure of these blind spots.
In a world where sanctioned flows adapt rapidly, so must compliance frameworks.
References
- Complex Proliferation Financing and Sanctions Evasion Schemes – FATF Report
- FinCEN Advisory on the Iranian Regime’s Illicit Oil Smuggling
- Dark Fleets and Hidden Risks: Sanctions Screening for Vessels and Aircraft
- July 2025 Sanctions and Export Controls Update
- Countering Shadow Fleet Activity through Flag State Reform
- Maritime shadow fleet – formation, operation and continuing risk for sanctions-compliance teams
- Russia’s ‘shadow fleet’: Bringing the threat to light
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