Illegal, unreported and unregulated (IUU) fishing hinders sustainability of the ocean’s valuable fish, costing billions of dollars in economic losses each year—to governments, coastal communities and law-abiding fishers—and taking an extreme toll on the marine environment. Although advancements in satellite tracking of ships and legal requirements for vessel identification have helped reduce IUU fishing, bad actors continue to exploit loopholes in the system, particularly around vessel ownership and who is ultimately responsible for a fishing boat’s activities.
The legal owner of a vessel is the individual or company that owns a ship’s license and registration documents, but that entity typically receives only nominal payment from the actual vessel owner—known as the ultimate beneficial owner (UBO). The UBO is the eventual end of the ownership chain. There are often multiple layers of people and corporations between that legal owner and the UBO, and there can be multiple beneficial owners. Authorities and others who track fishing often have a very hard time determining who the UBO is, especially in cases—such as IUU fishing—in which the person or persons do not want to be identified.
People who hide their beneficial ownership are not necessarily committing a crime, but the opacity of the UBO, which can flummox even the best-trained financial investigators, has helped many IUU fishing perpetrators evade legal punishment. And although 83 countries, including the United States, have laws mandating a beneficial ownership registry, that information is not always available to authorities—let alone the public—or even verified when submitted, further complicating investigation and prosecution of illegal fishing.
In many cases, fines or penalties fall onto the crew, captain and legal owner of a vessel, rather than the ultimate profiteer. The UBO is rarely penalized and often can continue breaking the law without penalty. And entities that obscure their beneficial owners are also more likely to be linked to other illegal acts, including tax evasion and corruption. In an industry in which vessels can be flagged to one country, be crewed by people from a second country and fish in a third nation’s waters, obstructing beneficial ownership adds further layers of confusion and creates more opportunities for illegal activities.
Lack of consistent, transparent rules for beneficial ownership causes additional challenges
Regulations regarding beneficial ownership registries vary from country to country. Of the countries with some type of beneficial ownership registry, only 37 mandate that information about such owners be updated on a semi-regular basis, and just six have any sort of publicly available registry of UBOs. Defining the beneficial owner also varies between countries, with many classifying them as those who own 25% or more of a company, while a few (such as Ecuador) mandate that a person who owns one or more shares be listed.
However, having a beneficial ownership registry does not automatically translate to increased transparency in the fisheries sector. UBO information is rarely, if ever, collected during the licensing or vessel registration process. In effect, ownership information on only the legal owner is collected.
Transparency experts around the world advocate for robust beneficial ownership registries as part of the financial regulatory system. But although this is a difficult task for many governments to put in place, the countries with existing registries can take basic steps to strengthen their regulations and apply them to fisheries management.
First, those governments should require UBO information whenever they issue a flag, and whenever a vessel applies for a license to fish in that country’s exclusive economic zone. That UBO information should also be made publicly available through registries and vessel-tracking sites. Further, regional fishery management organizations should mandate UBO information when authorizing vessels to fish within their boundaries.
Knowing the ultimate beneficial owner of a fishing vessel is an important part of stopping IUU fishing and helps governments know who is profiting from—and is legally accountable for—fishing in their waters. Existing UBO registries should be expanded, and more countries must require this information and make it available to the public.
Through better tracking of UBO, fisheries managers and enforcement officials can peel back the curtain on the notoriously opaque fishing industry and reduce the likelihood of illicit activity associated with obscured vessel ownership.
Peter Horn is the project director and Gina Fiore is a principal associate with The Pew Charitable Trusts’ international fisheries project.