Panama, the world’s largest ship registry, has implemented stricter registration policies in response to pressure from the US and other Western nations to crack down on illicit trades such as oil smuggling. A new executive decree issued by Panama’s President Jose Raul Mulino on October 18 allows maritime vessels to be stripped of their domestic licences and registrations if they face global sanctions from the US, UK, UN Security Council, or EU.
Former US ambassador to Panama, John Feeley, praised the decree as a positive step towards improving Panama’s business climate and protecting its reputation as a key shipping route. The Panama Maritime Authority (PMA) has been tasked with carrying out registry cancellations, with potential consequences for ships that lose their licences.
Panama, known as a “flag of convenience” state, has long attracted global shipping companies due to comparably lax regulations and lower costs. However, the recent executive decree is expected to impact vessel owners and operators engaged in risky or illicit activities.
President Mulino has also pushed back against international scrutiny, arguing that Panama has been unfairly stigmatised. In a meeting with French President Emmanuel Macron, Mulino sought to have Panama removed from the EU’s list of non-cooperative jurisdictions for tax purposes.
The move by Panama is seen as a response to international sanctions, such as those imposed by the US Treasury on seven Panama-flagged vessels allegedly involved in transporting oil for Iran’s Islamic Revolutionary Guard Corps. Other “flag of convenience” states have also taken steps to crack down on vessels engaged in illicit activity, prompting industry watchers to expect similar actions from other flag states in the future.
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