Flags of convenience enable drug, cash and labour trafficking at sea

KUALA LUMPUR, 25 JULY 2026 —

Smugglers used a Bahamas-flagged ferry to hide 877 pounds of cocaine worth tens of millions of dollars in 2022, while traffickers moved $27 million in undeclared cash on a Togolese freighter the same year.

The same week, federal agents in San Juan seized $27 million in undeclared cash shrink-wrapped in 34 unmanifested boxes hidden among household goods aboard the Norma H II, a Togolese-flagged freighter preparing to sail to the U.S. Virgin Islands. The money had been prepared in Venezuela, routed through Curaçao and loaded on a vessel whose registry does not routinely inspect large cash movements, a Homeland Security investigator in San Juan said.

Drug cartels have also exploited container and bulk vessels to move narcotics. In 2019, authorities in Philadelphia found 450 bricks of cocaine weighing 1,185 pounds with an estimated street value of $38 million inside 13 duffel bags in a container on the MSC Desiree, a Portuguese-flagged container ship. A Panama-flagged bulk carrier, the Samjohn Solidarity, was boarded in Chesapeake Bay in 2021 and yielded 44 pounds of high-purity cocaine from its anchor locker.

“Flags of convenience are not just about lower fees,” said a senior U.S. customs official in Puerto Rico. “They are the getaway car for drug cartels, money launderers and rogue fishing fleets.”

Malaysia’s shipping sector is exposed to the same risks. Malaysian-owned vessels frequently register under foreign flags to cut costs and shield ownership, according to industry filings. When such ships later appear in narcotics, cash or labour trafficking cases, the owning company can face reputational damage, legal liability and loss of access to major ports.

The most severe abuses surface in distant-water fishing. In 2019, U.S. Customs issued its first import ban on seafood tied to a foreign vessel over forced labour concerns when it blocked tuna from the Vanuatu-flagged Tunago No. 61 after crew members reported beatings and the murder of the captain by six Indonesian fishermen who had worked 16 months without pay.

Two years later, CBP blocked another Fiji-flagged longliner, the Hangton No. 112, after discovering debt bondage, withheld wages and confiscated passports. The vessel had imported an estimated $40 million in tuna into the U.S. while allegedly keeping its crew in slave-like conditions.

In both cases, the vessels flew flags of small Pacific island states far from the crews’ home countries, allowing owners to sidestep labour laws and avoid oversight by the flag state.

Ships that run into trouble can simply change flag and name to erase their records. In 2021, the Pan Jasmine, a Panama-flagged bulk carrier, was expelled from U.S. waters after inspectors in New Orleans found invasive wood-boring insects in its dunnage. Within months the owners reflagged the vessel and renamed it Ethra Gold, scrubbing its history for port authorities.

Maritime security researchers estimate 600 to 1,000 vessels now operate under this shadow network, manipulating registries and tracking data to evade sanctions and hide prior violations. For Malaysian shipowners, the pattern shows that a cost-saving registry can become a costly liability when vessels are later tied to smuggling, sanctions breaches or labour abuses.