It does indeed sound like a nice gift, and you're correct in being concerned about laws.

The Ensign (flag) flown on a boat is supposed to be an indication of the country in which the boat is registered. You wouldn't fly another country's flag as your ensign if your boat isn't registered in that country.

Having said that, your father would probably still love to have that flag onboard, as he might want to fly it as another flag aside from his ensign.

There are some maritime traditions that are observed. For example, it's commonly accepted that you can fly another country's flag, as your ensign, when you have a guest from that country onboard. I don't know how well known this tradition is in the US, but it's observed in the UK and commonwealth countries.

Also, it really depends on where your father sails. In some areas, a local yacht club might actively encourage their members to observe proper flag protocol, which can allow for multiple flags, as long as your ensign flag represents your boat's country of registration.