I don't think it's Visual confirm... I torp'd a Large freighter, and was followed 2km behind, and watched it sink. Turned gray, checked my log and had no credit. Had to reload it 3 times to figure itr out, As the first timne I was submurged, 2d was >2km and 3rd was closer.
I think it's "other" sinking methods, as I've seen a ship, I was setting up an attack, sink/turn gray in bad weather.
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