How Yacht Brokers, Managers, & Crew Are Getting Caught in a Wider Sanctions Net

Sanctions enforcement in yachting spreads far beyond Russia-Ukraine headlines. In this episode, we talk through why the U.S. is casting a wider net across superyachts and the people who service them. We dig into how AI-driven pattern spotting turns routine yacht behavior into red flags, and what that means for owners, captains, managers, brokers, and insurers: 
• the surge in sanctioned vessels globally and how designations link back to individuals 
• why U.S. Treasury attention is expanding beyond yachts to service providers 
• how KYC expectations collide with reputational triggers around superyachts 
• what “irregular yacht movements” can look like in practice and why previously innocuous measures are becoming a tripwire 
• AIS as a compliance signal, when switching it off is justified, and how satellites fill the gaps 
• how investigations can build from a yacht’s visibility to allegations like money laundering 
• the real-world damage of frozen yachts, from maintenance decay to environmental risk. 

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Transcript

Why Sanctions Matter In Yachting

Diane M. Byrne 0:00

Michael, it is good to see you as always.

Michael Moore 0:03

Thank you, Daniel. Good to be here.

Diane M. Byrne 0:06

So you and I have been talking the past couple of weeks about the topic of sanctions. And I think in yachting, there's a tendency to almost exclusively associate sanctions with the Russian invasion of Ukraine and the ongoing penalties against some of the wealthy Russian individuals who own yachts. Clearly, sanctions have existed well before that. They will continue to exist well after the invasion. And they are levied for a variety of different reasons. You and I have been talking more lately because of some movement on the US federal government level that I think might take a lot of people by surprise. It certainly took me by surprise when you brought it up. It seems like the U.S. Treasury is broadening sanctions from what you were telling me. So why don't you explain what you received and how it applies to yachting?

Michael Moore 1:06

Absolutely. I think one of the things to it for sure is the fact that the number of sanctioned vessels worldwide has exploded. Okay. Now, I'm not suggesting that those are all linked to yachting, but only that some eighteen hundred vessels are now linked to sanctions globally. Now, some of those are yachts, but they don't really the authorities are not interested in designating yachts per se. They simply say

The Explosion Of Sanctioned Vessels

Michael Moore 1:45

these are entities that are frozen as being controlled by a sanctioned individual. There always has to be a human involved. And you're basically the way you understand or try to understand what's happening is by getting to an individual who has a some kind of a notice, and then they contact you and say, I've got I think I've got a problem. The authorities have expanded the types of individuals that can be caught by their net, which includes for sure brokers, insurance companies, the groups that actually manage yachts, the ones that are based in places like Guernsey and Jersey and Isle of Man that we all know and love, Malta. So yeah, it's a broader net. That's it, that's for sure.

Diane M. Byrne 2:35

So what do you think is the cause behind this? Why do you think the net has been broadened so much?

Michael Moore 2:44

I think that it just seems like yachts have always been a trigger for almost a Hollywood type uh reputational thing. But the global Fenson network, which is the treasury in the United States, the Treasury's Financial Crimes Enforcement Network, has clearly been expanded. And so that does incorporate not just the things coming out of the 2022 era, but more so into related things like helping a Russia

Why The Net Keeps Widening

Michael Moore 3:25

buy oil is one example. Money laundering is another example. I think the worlds of KYC, I know your client rules, have combined with just the idea that a yacht. It's almost like uh behind every great fortune is a great crime attitude. I think it was Victor Hugo who said that. But it is that kind of where do you start? You start with the big yacht. You could just go to Monaco Harbor and start running the numbers on the biggest yachts in the harbor. And I think there's some of that going on and trying to find the crime after finding the yacht, so to speak.

Diane M. Byrne 4:07

Yeah, I'm just gonna say it sounds like an assumption of guilt before there actually is a red flag. So speaking of red flags, some of the typical red flags, in illicit activity, um violating the laws of using certain banks or clearing houses for certain activity, those are pretty obvious. Are there other activities that are now become red flags?

Michael Moore 4:34

Well, I think so. And I think what's happening, this is the specter of AI entering the world of yachting and the world of are these people sanctioned dodging? And the red flags are irregular yacht movements, uh, rapid ownership changes or numerous ownership changes, flag changes. Most people buy a yacht, they flag it in a given state, and they they hold it there for three or four years and they sell the boat, no big deal. But

AI Red Flags And Yacht Behavior

Michael Moore 5:10

what's happening now is turning off your AIS will create the it will, it is a red flag. AIS was this wonderful thing that was developed to help keep track of yachts and identify yachts. You may remember the initial IMO when the IMO passed a law that required all yachts of a certain class to put the numbers after the letters IMO on the top of the superstructure. You'd only see it from a satellite, but there are people that every day of their life and every hour of every day, they're sitting there looking all at the IMO numbers on vessels. And if those numbers don't match the vessel that they're related to in their data bank database, you've got a problem. So AI is the next iteration of what we used to just think of as the most this amazing Google search thing, has now become this even more amazing AI Google search thing. But anything that's out of the ordinary now triggers a full, I think a full on the investigation is what I'm sensing. For example, it didn't seem that long ago when banks, if they got more the rule was more than $10,000, you have to report. Remember that? That became quickly the bad guys, if you want to call them, started depositing $9,999. Through AI, if you do, if you start depositing things in that range of $9,000 plus, it's gonna, it's gonna it does raise a red flag. So lots of red flags. It's how you spend your money, where you spend your money. The recent example of the yacht, I want to make sure I got this right. I think it was the yacht noni. The guy simply went down to Tunisia. Tunisia is a simply a sovereign nation, but just that simple fact of leaving the waters of the Mediterranean on the north side to a non-EU country on the south side was the red flag. That was uh it was just deemed to be why would you take a yacht to Tunisia? It's

Tunisia Trips That Trigger Investigations

Michael Moore 7:30

a new world, a kind of a scary, brave new world just by going to a country that I happen to like the country, by the way, because I've actually had involvements there. But that was, in fact, the trigger that led to the arrest of the yacht in 92 and the captain on board and the people that were suspected of money lundering. Not way beyond the old Russian-sanctioned person, and more into the full-scale fence and global efforts to combat the lawlessness.

Diane M. Byrne 8:05

Right. So that sounds like that that example of Noni 2 sounds like it falls under what you just said a moment ago that the government is categorizing as irregular yacht movements. Has there been any communication as to what irregular yacht movements actually means? Has it said something like uh along the lines of certain countries or you're strongly dissuaded from visiting?

Michael Moore 8:35

Yeah, no, it's there was a second vessel that also came on the radar screen to answer your question, also went to Tunisia. And let me roll it back to your question. Is uh it is a search for the crime after you find the Great Fortune. So the Great Fortune is obviously uh a mega yacht. So I don't know the yacht uh Mrs. L, uh per se, that yacht, but it's a yacht of some significance. It was owned by an oil trader who looked perfectly legitimate, who was based on out of, I think, Singapore. But his movement to Tunisia like a sorry, apparently, if you just visit Tunisia these days, you're on the radar screen, okay? Which I think is ridiculous because let me just throw in an introduction here. When you depart an EU country, let's say you've taken a new delivery, new vessel, to start with Italy. Italy is the number one deliverer of yachts in the world. If you need to touch a non-EU country to show your intent to export from Italy, what's the nearest country? So Tunisia, in my experience, was always a beautiful option. You simply would leave, use a typical example via ratio, go to Tunisia, buy a pack of gum, get a receipt, take a picture of yourself on the dock, whatever. And then you've achieved that first presumption that we did intend to export. Then you go into flagging. So now you flag offshore. Not all of this is perfectly legitimate, perfectly legal. And then when you come back into the Met and make entry, maybe you come back and you make entry into Connor Nice or one of the French ports, for example, you're good to go. You're a you're a uh Keman Island flag vessel that's calling to visit, and by the way, dump vast sums of money into the local economy. So there's nothing wrong with that. Last time I checked with people that make their living by taking care of yachts. The simple truth I'm trying to get to is this ever-expanding, is it reasonable suspicion? It's not probable cause, which would lead to an arrest at that point, but they're backpedaling. Boat goes to Nisha. Oh, that looks odd. Maybe uh I'd like to believe they might say there's some lawyers involved here. Let's there's a firm in Miami. What the hell is a firm in Miami doing sending a boat to Nisha? Well, you know, you know the answer to that. It's just what we do. But that leads to an investigation of the oil trader who owns the yacht, which leads to a to a situation of where is he trading oil and is it being traded to Russia, which in this case is was the allegation. And that led to basically the vessel that was not on the sanctions list, had not had nothing going on that would have raised any suspicion, but is suddenly added to the sanctions list, and the charge of helping Russia buy oil is added to the charge. The guy's a worker, basically. He's just an oil trader. He's in the middle. He's like any broker for a yacht. But like all brokers now, all insurance companies now, uh, all of the people that manage boats now in the places like the Crown Dominions, Guernsey, Jersey, Olive Man, and Malta. Malta, by the way, is an EU member, so that's a little different. But it's they're backing up, they're backing up these red flags based on what most people would say. That's not really a red flag. That's just somebody maybe leaving because he was afraid to stay where he was before going to Tunisia. And just thinking, I'll go to Tunisia and think about it. That set off the red flags. That led to the investigation, that led to the charges. So that boat, Mrs. L, is now on the on the sanctions list, and the owner, Mr. Lock Coney, is on the sanctions list. I don't know, honestly, if he's been arrested per se, but it I wouldn't doubt it. I know that everything else has been done to the man. Everything else is true. For sure, the vessel was stopped for sure. It was the relocation that was the warning sign.

Diane M. Byrne 13:10

No, the one of the other things you mentioned, the turning off of AIS. That's that to me sounds like a legitimate red flag because we have seen vessel movements, not just yachts, turning off their AIS, crossing oceans, seemingly suddenly arriving in a particular destination somewhere. Like let's use the Russian sanctions as an example, and use actually a specific case, Nord. Nord has turned off her AIS in a couple of cases. Um I don't know whether her AIS was off. I don't remember. Um recently she chant transited from Dubai to Oman

AIS Rules And Satellite Tracking

Diane M. Byrne 13:50

along the Iranian coast in full view of the US forces that were there. That's one that seems very strange to me because the US forces were there. The owner is sanctioned, has been sanctioned for many years. Um, according to a source close to the owner, there was an interview in Reuters.

SPEAKER_02 14:14

Okay.

Diane M. Byrne 14:14

The individual said that Iran didn't interfere with the movement of the odd, had no problem since it was a civilian vessel from a friendly country. And apparently also the American side didn't raise any objections to the vessel's movement, which seems counter to both belonging to a sanctioned individual. And I don't believe she had her AIS off, actually. Now that I think about it, I don't believe she had her AIS off on that transit, but she has had it off for other transits. So it just begs a question as to why that was all allowed.

Michael Moore 14:54

You know, it it's it's again well, these recent things. So AIS comes on the scene. Everyone thinks it's wonderful, it's a beautiful way to keep up with vessels, global traffic situations. These are all the part of the IMO initiative regarding safety and navigation. And it's all good. And then the section comes up, which is the IMO says the only legitimate reason to turn off your AIS, which is required by law to be there if you're over 300 gross tons, is to come is when you're to not to leave it on would compromise the safety of the vessel. I think there are ways to inform the people that operate the automatic identification system to let them know you're going through the Malacca Straits, for example, that would be an example of a higher piracy area. But that is no longer the case because what happened was they started noticing, and I remember Paul Allen, that great American, God rest his soul, was one of the first persons to figure out when he looked at satellite imagery. He was involved in so many things. The guy was brilliant. But he would see all these little vessels congregating on a certain imaginary line, and he would realize that every vessel that he was looking at had their AIS system on. But what he couldn't see was where the vessels had turned off their AIS and had gone into marine protected areas. So that was a big, that was a big sort of revelation that the bad guys are not stupid. And they would in fact turn off the AIS when they would go into, for whatever reason, waters of countries without authorization. So I think it's now become, again, if you turn off your AIS, it is a red flag. Now you will be tracked using other means of tracking, like satellites. That's it's a cat and mouse thing that's now becoming it's the mouse is always making its moves, and the cat is becoming big brother. Again, the the there's been there has been this uptick, and the uptick started with the tr the invasion of Ukraine, and that's led to I like I like with so many of these things, the doctrine of unintended consequences. And so now it's into illegal oil trading, money laundering, drug smuggling, and all the above. But in the yacht world, it's it's just it's unfortunate because it's just this massive, wonderful uh industry, if you want to call it the yachting industry globally, where we all make our living on people that are involved in things like the yacht logcast. But the simple truth is they're casting a wider and wider net. And it's becoming a very difficult problem for a lot of people who may be innocent and just the the first, it's the big yachts, like we we talked about it last time you and I talked about Fi. It's just amazing to me that Fi has was arrested back in the 2022 and remains under arrest, and with an arrest that's upheld by the London court system, the English court system, and the guy was never personally sanctioned in the first place. That to me is just astonishing when you think about it, whether court reason would know the any income from uh produced by that vessel would necessarily find its way into the well hands of Russia when Russia's elite circles, whatever that means.

Diane M. Byrne 19:04

Right.

Michael Moore 19:05

So it's the boat remains frozen and deteriorating.

Diane M. Byrne 19:09

Yeah, terribly.

Michael Moore 19:10

Yeah.

Diane M. Byrne 19:11

Which is one of the worst possible scenarios that you could have happened because then you have, God forbid, if it's allowed to just continue to sit there and there's no real government movement one way or the other to move the vessel, you could have an environmental disaster on your hands. That could be that was completely preventable in the first place.

Michael Moore 19:30

Totally. And to that point, things have changed. We had this yacht. I want to say it was the Galactica Star. I'm

Frozen Yachts And Safety Risks

Michael Moore 19:40

not entirely sure. But Galactica Star, when it had uh it was on the radar screen of the United States, had a breakdown on the Pacific side of the Panama Canal. But because of the yacht's size and class, with a total breakdown with people on board, everybody on that boat is at risk. That's a maritime peril. That's if your yacht is not capable of navigating, maintaining headway, all systems go, then you are by definition in what is called a marine peril. We actually asked for authority to bring that boat into U.S. waters, to bring it to South Florida, have it worked on for the overall safety of the crew on board and the vessel itself. If that vessel had a any number of things could have happened, but like an environmental incident, it would have been a catastrophe that to me just overrides the singular focus of law enforcement in this particular case. A boat that was not involved in a crime. It was actually owned by someone who was accused of a car a crime in Nigeria. But in those days, the United States government was very helpful. We're talking pre-2022, but again, the attitude of the government has changed, I think. There is a take no prisoners, grant no quarter attitude now, and it's completely scooping up. Whereas before the so-called TCSPs, which was the trust and corporate service providers, live, you know, in these places offshore like Cayman Islands and so forth. Those people are clearly in the crosshairs now, in my view.

Diane M. Byrne 21:29

Yeah, that was I was actually even thinking as you were speaking. I'm wondering if this could lead to more assets being frozen, um, even arrested, and then another step after that, if a government really wants to push it, um trying to go for a court order to force an auction. You could argue successfully, I think, an argument that has been attempted several times, which is that there's no clear tunnel.

Michael Moore 22:01

Completely. Absolutely. There's a there's a hierarchy of liens that go beyond the so-called uh Maritime Lien Act of the United States. That's it's almost globally that's been building since the time immemorial since the Phoenicians first went to sea. This is what's called general maritime law. And I think you're you have these, these are de facto situations that kind of lead into the whole uh idea of yacht ownership. Unfortunately for us, it's not, it doesn't seem to be having a just a catastrophic effect, but it certainly is catastrophic to the individuals who get hit. The you know, yacht crew management firms have been arrested and indicted. We know all about Imperial yachts that has gone out of business. I think there's a couple of others less well known than Imperial. There have been certain masters of yachts that have been arrested. Haven't really followed their cases very well, but we know for sure they have they were arrested and incarcerated in one example. But I think that maybe the silver lining is the fact that the government of the United States has suddenly come to realize that his spending taxpayer dollars holding a vessel at a fairly brisk cliff. You know, Amadea was an example where they finally got around to prosecuting it properly, getting a court order, putting it on the courthouse steps, effectively having a private auction that was well attended and well run, and finally getting Amadea out from under the United States of America's control and putting a hundred of

Auctions, Liens, And Moving Seized Assets

Michael Moore 23:50

more than a hundred million dollars in the coffers of the United States. Now that vessel is out and about. I keep getting snippets of that. It's apparently not without its own little troubles. I don't know exactly what is causing the troubles, but I'm sure not the least of which was sitting up and not being maintained for several years. Apparently it was beautifully maintained from a visual point of view. People that went on board reported back that it was people that were keeping it did a beautiful job. But you've got to worry about the engines and all the systems, and you're never going to really have those kept up properly with the with the adrenal shoestring budget. But I think that maybe the United States government's attitude, I don't really know right now if what yachts are under current arrest by the United States government. In other words, that they have to like the Galactica Star, they had for a while, it's gone. They had Waku was arrested, it's gone into private hands. And of course, Amadea has not been sold. So to that extent, they're getting better at moving them through the system. But I don't know, but it just seems like they're still expanding the reach. These most recent arrest actions were not dealing with Russia actions. They were dealing with money laundering. And they were dealing with Russia, but in a direct sense of helping the Russians sell their illegal oil. And I think that was selling it out of Russia or maybe selling it into Russia, but either way, it's going to be a sanctionable event. But that it does seem like the and this is what happens when you get these fin CEN type actions. They don't just stop at the early focus of helping Russia in its war effort against Ukraine. We're way beyond that now. Doesn't even make news anymore when Russia bombs Kyiv and where Kiev bombs some facility in Russia. It just seems like it's almost even not even a newsworthy event anymore. But the yacht world is still being impacted. Someone was saying that the um it's interesting because the oil is such a dominant thing in a big motor yacht, and the use of oil and fuel and all that, it seems very time you bunker up your your yacht, you're running a risk of being accused of something. But there seems to be a rise, for example, in the sailing world, people are trying to be a little more sustainable. Let's put it that way.

Diane M. Byrne 26:25

This is certainly something we're gonna have to keep our eyes on in terms of any uh any arrest activity, any sanctions activity when a a yacht is bunkering or moves to a a seemingly unusual country or some other measure that the government deems is not typical arises. So Michael, as always, interesting conversation, thought-provoking conversation. Probably more questions are in people's minds, certainly in mine, that'll that are gonna be remaining unanswered until we actually see some more activity. But maybe we can do a follow-up when there is some development on this front.

Michael Moore 27:06

Totally. I think that's that's what's gonna happen is I think we're at that collection point where you know there just has to be a you know, running off to Tunisia should not be a red flag. Changing your flag state should not actually be a red flag. Changing the name of your yacht. I d I do know of a certain vessel. I'll close with these thoughts. I do know of a yacht that's changed his name several times, but clearly just a private matter. It's a fellow that owes people lots of money, and he's decided that one way to at least forestall what I think will be the inevitable is to keep changing the name of the yacht, which is

Name Changes, Flag Swaps, Final Thoughts

Michael Moore 27:45

not a very effective way of accomplishing much, although yacht names are by law have to be there. They that's a mark carving and marking obligation, and it's just interesting. But at the end of the day, this is a private dispute between this gentleman who's got deep few financial problems, and he's trying to and but the one thing he doesn't want to give up is yacht.

Diane M. Byrne 28:08

Yeah.

Michael Moore 28:09

That's probably a good thing at the end of the day for people like you and me.

Diane M. Byrne 28:12

We'll see what happens there, that's for sure. I know, right? That's the last thing he wants to give up. Well, exactly everybody. Thank you as always for listening. If you have a question or a topic you would like us to address on an upcoming episode of the Outlaw podcast, you can reach out to Michael or me, and our contact information is in the show notes for the episode. Until next time, I'm Diane Byrne. Michael, as always, you have the last word.

Michael Moore 28:41

I'm Michael Moore, and it's been a pleasure, Diane, as always. Take care.