Panama tightens controls on sanctioned vessels with new legal framework
Panama has established a new legal framework allowing for immediate revocation of vessel registrations that appear on international sanctions lists, expanding its 1 October pledge to crack down on sanctions evasion.
Executive Decree No. 512, published in Panama’s Official Gazette on 18 October, creates a mechanism for the Panama Maritime Authority (‘PMA’) to cancel registrations of vessels listed on major international sanctions lists, including those from the US Treasury’s Office of Foreign Assets Control (‘OFAC’), United Nations Security Council, European Union and United Kingdom.
The move follows Panama’s early October announcement that it would ‘automatically cancel the registration of any vessel found to be involved in illegal activities or that changes its flag to evade sanctions,’ which came in response to OFAC’s designation of seven Panamanian-flagged vessels allegedly involved in Iranian oil shipments.
Under the new decree:
- ‘The Directorate General of Merchant Marine (DGMM) will submit a report to the PMA Administrator, recommending the cancellation of the vessel’s registration. Upon review, the Administrator will authorize the DGMM to proceed with the cancellation through a formal resolution.’
- ‘If the vessel has any active mortgages registered with the Directorate General of Public Registry, those will remain intact to ensure creditors can enforce their rights. Meanwhile, financial institutions (banks) will be informed of the vessel’s status.’
- ‘Organizations recognized by or under the jurisdiction of the Republic of Panama are prohibited from offering classification or certification services to vessels undergoing or subject to cancellation.’
The strengthened controls follow OFAC’s 25 September action placing seven Panama-flagged vessels on its Specially Designated Nationals (‘SDN’) List ‘for their involvement in the shipment of Iranian crude oil and liquid petroleum gas to Syria and East Asia on behalf of the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and the Lebanese Hizballah.’
‘The PMA remains dedicated to protecting national interests by acting swiftly and efficiently to minimize the risks posed by vessels included on sanctions lists,’ the authority stated in its latest announcement.
