In Canada when you buy or import an aircraft, or change any of the information (e.g. your name or address or the registration of the aircraft) you must obtain a certificate of registration for said aircraft. It's a piece of paper, about the size of a trade paperback, with another similar piece of paper stapled to it. The paper lists the basic information on the aircraft: make, model, registration, serial number, owner's name and address and commercial or private registration. The other piece of paper attached has the aircraft information and blanks for the name and address. If you sell the airplane or move, you fill in the new owner information on both pieces of paper, and send the main one into Transport. The secondary piece serves as a C of R until Transport sends you an amended one.
If you rent, borrow, ferry, or otherwise take command of an airplane, one of the things you do before flying is is check to ensure that the C of R and other key documents are on board and valid. Licence applicants are asked to list the required document and then asked questions like "when does this C of R expire?" They are expected to recognize that it's kind of a trick question, because it doesn't expire. A good answer would be, "It doesn't, but you need a new one if any of the information on it changes, or if this one becomes illegible." Most people keep their documents in a waterproof envelope, and it's pretty common to see a slightly dog-eared Canadian C of R that dates back to an aircraft import date in the 1970s.
I assume that the procedure is not completely different in the US. Except they're going to change it. It turns out that either Americans haven't been very good at sending in their aircraft registration cards, or that the FAA hasn't been very good at filing them and keeping their data entry up to date. Of the 357,000 private and commercial aircraft they do know about, they are aware of problems in the paperwork of 119,000, about a third.
This has come to light because, in pursuit of terrorists and drug runners, the US tracks the movement of aircraft based on their registration numbers. Not knowing who owns an airplane makes it less useful to track it. I guess you could say that right now the US tracks airplanes the way they track kids. You're expected to register them when you first get them, but they don't check back every year to make sure you still have that kid. The new system will make them more like automobiles, where you have to renew the registration every year. Canadians and Americans already do this every year with cars, with new licence plates or licence plate stickers (the Americans call them DEEcals), so it's not an alien concept, but I expect resistance.
Here's an anecdote from another news story, one I don't have a link to:
There have already been cases of criminals using U.S. registration numbers, also known as N-numbers or tail numbers, to disguise their airplanes. In 2008, Venezuela authorities seized a twin-engine plane with the registration number N395CA on the fuselage and more than 1,500 pounds of cocaine on board.
Soon afterward, airplane owner Steven Lathrop of Ellensburg, Wash., received a call from a reporter. "He sort of started the conversation with, 'Do you know where your airplane is? ... Your airplane's in a jungle in South America,'" Lathrop said.
Lathrop's Piper Cheyenne II XL was locked safely in its hangar at the Ellensburg airport. The smugglers had apparently chosen his tail number because the model was similar to their plane. "Anybody with a roll of duct tape can put any number they want on an airplane," Lathrop said.
The re-registration of hundreds of thousands of aircraft wouldn't eliminate that tactic. Just find an airplane that doesn't fly much, and that is similar to your stolen or re-marked airplane, and make your questionable flights under that registration. It would narrow the pool of suitable registrations, by removing thousands of derelict, abandoned or I've seen some US aircraft with registrations in tiny letters and numbers. Many do have large numbers. I suspect that specification of the required size of registration number included a clause that grandfathered existing ones until the aircraft were repainted, and some people never repaint their airplanes.
In Canada we send in an AAIR (Annual Airworthiness Information Report) on each registered aircraft, so if an airplane is sold, scrapped or disused, that information reaches Transport Canada through that channel. It's still possible, I suppose that Canadian records are in disarray, but they've always been okay for any aircraft I've been familiar with that I've looked up. If Canada instituted an annual aircraft registration scheme it would be awful: we would have to pay a fee and no matter how much they charged, the bureaucracy collecting the fee would cost more than it made, and they'd still screw up the database. Such confidence I have in government and in databases.
The FAA plans over the next few years to cancel the registration certificates of all 357,000 aircraft, and require owners to re-register. The first batch of notices have already been sent to aircraft owners. I expect American aircraft owners to be displeased.