Maritime fraud

Maritime fraud exists whenever there is intentional deception as to some fact or circumstance in connection with maritime activities which enables the unjust obtaining of money or goods. It frequently involves the misuse of commercial contracts and documents, such as bills of lading, charter parties and marine insurance policies.

Falsification of bills of lading causes the largest proportion of losses due to fraud. The importance of close controls on the preparation and transference of bills of lading arises from their service, not only as receipts, but as proofs of the transport contract and of ownership of the goods. A bogus bill may be sold along with forged accompanying documents to a buyer who may later find that the cargo and perhaps even the ship does not exist. Other major types of fraud include shipowner theft of cargo and/or fraud against insurance companies sometimes involving the scuttling of overinsured vessels in which case additional crimes are perpetrated, such as against personal property and life. Fraud is also committed by shipping agents billing customers for services never performed. There is also falsification of mortgage documents to enable intermediaries to pocket part of the mortgage repayments. Understated invoicing to avoid customs taxation or overstated invoicing to take foreign currency out of the buyer's country in violation of foreign exchange controls make governments victim of these maritime related crimes.

There has been an alarming increase of reported instances of maritime fraud and related acts occurring in the field of international shipping and trade in the last few years. Losses have been estimated by the shipping community at the equivalent of $1 billion per year. Developing countries are the most frequent victims of maritime fraud because they have not yet acquired the same level of experience in shipping and trade as exists elsewhere. However, the means by which they become victims derive from the same loopholes and inadequacies in the existing structure in which international shipping and trade are carried on.