Sanctions Drive Panama to Drop Hundreds of Ships from World’s Largest Registry

Panama’s Maritime Authority has removed more than 650 ships from its registry since 2019, responding to mounting international sanctions and the need for stricter oversight.

The registry, which is one of the world’s largest with over 8,500 ships, faces pressure from the United States and other sanctioning bodies to prevent its flag from being used by vessels involved in illicit trade.

Since October 2024, Panama has accelerated the process, delisting 214 ships in less than a year. These vessels made up over 12 million gross tonnes.

The removals follow Executive Decree No. 512, which allows Panama to quickly cancel the registration of ships whose owners appear on international sanctions lists. Once deregistered, ships cannot legally operate under Panama’s flag.

The move comes after criticism from organizations like United Against Nuclear Iran, which highlighted that about 17% of ships suspected of carrying Iranian oil sailed under Panama’s flag.

The group accused Panama of enabling billions of dollars in illicit oil trade, raising concerns about the impact on regional and global security.

Implications for Business and Maritime Industry

Panama’s deregistration process involves identifying vessels on sanctions lists, recommending cancellation, and notifying financial institutions to protect creditors’ rights.

Recognized organizations are barred from providing services to these ships. The country targets vessels linked to illegal activities, those on sanctions lists from the US, the UN, the EU, and the UK, and ships that change flags to evade sanctions.

Recent actions saw Panama revoke the registration of 128 ships, including at least 70 tankers, primarily targeting the “shadow fleet” that facilitates oil exports from Russia and Iran. The process, once taking up to six months, now completes in as little as a week.

This crackdown comes at a financial cost. Panama expects to lose up to $2 million in revenue from delisted ships. However, the Maritime Authority states that these measures are necessary to maintain compliance and protect the integrity of its registry.

Panama also improved its pre-registration analysis, using risk matrices and upgraded technology to identify high-risk vessels and owners. The country’s registry now claims a 96.5% compliance rate with international maritime safety and environmental standards, up from 96% last year.

These steps show Panama’s effort to balance commercial interests with the responsibility to uphold international laws. For businesses, the story is clear: regulatory compliance and transparency in shipping are now essential for access to the world’s largest maritime registries.