Panama Registry to Automatically Expel Sanction Busters

The growth of the shadow fleet and the use of sanctions by the U.S., the EU, and now the UK against vessels involved in sanction evasion or other illegal activities has increased pressure on the leading registries to enhance enforcement and deny registry to vessels. The Panama Maritime Authority (PMA) has highlighted several previous efforts to scrub its registry and now is announcing new steps to enhance its enforcement.

Among the latest steps, the PMA reports it is now authorized to automatically cancel the registration of any vessel found to be involved in illegal activities. This will also increase the enforcement to cancel the registration for vessels that change their flag to evade sanctions.

Panama highlights that it is taking these actions “in response to the recent inclusion of seven Panamanian-flagged vessels on the Office of Foreign Assets Control (OFAC) list.” 

There have been increasing calls for the crackdown including a visit by U.S. State Department officials earlier this year to discuss the registry. Based on the history and size of the Panama registry, the authority has said in the past it required purging while highlighting its prior efforts.

Critics such as the NGO UANI (United Against Nuclear Iran) however highlight that vessels registered in Panama continue to be involved in the illicit Iranian oil trade while recent sanctions have also included vessels registered in Panama used to transport Russian oil. UANI for example says a quarter of all the vessels it has tracked in the Iranian oil trade are registered in Panama.

The registry states emphatically that it will not negotiate with ships seeking to use it improperly and will apply the established legal mechanisms to act. There are legal mechanisms used to cancel the registration of vessels on sanction lists. Other causes for an automatic cancelation include the use of the ship for smuggling, illegal trade, piracy, or other crimes.

PMA highlights other steps it is taking to further enhance enforcement including an internal reorganization to strengthen its monitoring and control section. They published last month a circular establishing the prerequisites for flagging and allowing for due diligence on the ship, the owner, and its operator. They also signed the Registry Information Sharing Compact which is designed to prevent a ship from moving from one registry to another to evade sanctions or commit illegal activity.

Panama’s General Directorate of Merchant Marine reports it is evaluating additional strategic measures that would allow the swift removal of vessels.