Suddenly! Panama announces: Once identified, cancel immediately!

 

01

Panama announces immediate cancellation

 

Recently, the President of Panama, Jose Raul Mulino, has officially signed an executive order authorizing the Panama Ship Registry.Immediate cancellation of all ship registrations associated with the Shadow Fleet. The move comes just ahead of the president's upcoming trip to Europe aimed at addressing the sensitive period of Panama's inclusion in Europe's tax avoidance blacklist.

 

 

The issuance of the executive decree marks Panama's immediate action to deregister ships that are sanctioned by the United States or the European Union and fly the Panamanian flag.

Executive Order No. 512 expressly directs the cancellation of all vessel registration information in the following lists:

S. Treasury Department's Office of Foreign Assets Control Sanctions List, including the Specially Designated Nationals List (SDN List) and the Non-Specially Designated Nationals List (Non-SDN List);

EU sanctions list;

United Nations Security Council (UNSC) sanctions list;

a consolidated list of individuals, groups and entities subject to EU financial sanctions (the EU Consolidated List);

a consolidated list of UK financial sanctions targets provided by the Office for the Implementation of Financial Sanctions (OFSI);

It should be noted that the list of non-specially designated nationals (Non-SDN List) can mislead people into thinking that the subjects on the list are not subject to sanctions, but this understanding is not correct. Non-SDN the List is not a "white list", it is more like a supplement to the negative list, that is, individuals and entities that OFAC has not explicitly designated as the target of sanctions.

The Panama Ship Registry has made it clearOnce these ships are identified, the deregistration procedure should be initiated immediately.. The aim is to simplify and speed up the write-off process, thereby avoiding a lengthy and cumbersome process that could last three to four months or more in the past.

Joaquin de Obario, President of the Panama Maritime Law Association (PMLA), said: "The administrative decree provides the ship registry with an efficient and due process fast cancellation method, while fully respecting the ship's mortgage and its The rights of the mortgagee."

Earlier this month, the Panama Maritime Authority had already planned to automatically cancel the registration of any vessel found to be involved in illegal activities or to change the flag to evade sanctions. The Agency has also taken a number of measures aimed at strengthening safety controls and prohibiting the transport of illegal goods by vessels flying its flag:

The transfer of its Monitoring and Control Section from the Department of Navigation and Safety to the Department of Ship Protection by the Panamanian Maritime Authority in order to harmonize its functions with those relating to international sanctions and surveillance of the merchant marine fleet;

In September, the Panama Flag Precheck Process was published, setting the pre-conditions for flying the Panamanian flag and allowing for due diligence on ships, owners and operators;

Panama has signed the Registration Information Exchange Agreement (RISC) to prevent ships from being transferred between different registries to engage in illegal activities or to evade sanctions.

 

02

The Panamanian flag is controversial.

 

obario further pointed out that,Panamanian-flagged vessels frequently appear on the sanctions list, has raised questions about Panama's slow response to the shadow fleet.

Shadow fleets, usually referring to certain ships used to transport oil and other commodities subject to sanctions, are known as shadow fleets because of their characteristics, including the usual closure of maritime tracking and identification systems, the use of simulated false ship names, frequent changes of flags or ship names, and difficulty in tracking their movements.

Among them, this frequent change of flag is called"Jump Flag(flag-hopping). According to the U.S. government's announcement in May 2020, "flag jumping" has been deemed a deceptive operation related to illegal shipping and sanctions evasion.

In order to facilitate the "flag jumping" and escape the sanctions of the United States, Britain and other countries, the shadow fleet usually chooses to hang the flag on the relatively loose regulations, the ship's registration procedures are simple flag state. Mainly include:PanamaLiberia, Saint Kitts and Nevis, Marshall Islands, Belize, Cook Islands, Cameroon, Palau, Viet Nam, Seychelles, Saint Lucia, etc.

According to statistics in September 2023,The largest flag state of the shadow fleet is Panama, with 48% of the ships in the shadow fleet flying the Panamanian flag.This is three times the market share of Panama in the global market.

 

 

Therefore, the United States, the European Union and the United Kingdom have repeatedly pressed Liberia, the Marshall Islands and Panama to strengthen the supervision of ships flying their flags to ensure that the relevant ships will not transport Russian oil whose price exceeds the upper limit.

Although Panama and other three countries themselves do not face the direct risk of Western sanctions against Russia, Panama is still facing greater pressure. At present, the European Union still has Panama and Costa Rica on the list of tax havens. For this reason, Panamanian President Jose Raul Mulino arrived in Paris, France on October 20 to try to remove Panama from the list. Therefore, the administrative order announced this time on the immediate cancellation of the flags of sanctioned ships is considered to be an increase in the number of ships.

 

03

Small flag states due to rapid expansion of sanctions

 

Although Panama announced the removal of the flag of sanctioned ships, there are still many options for the shadow fleet.

According to statistics, 2024, fromStates of registry of small flags in Africa, the Caribbean and EuropeThe expansion of the flag at a record pace was largely due to the admission of ships from the shadow fleet. These mainly include:Including Antigua and Barbuda, Barbados, Guyana, Honduras, San Marino and Sierra Leone.

According to the survey statistics of Lloyd's Daily, by 2024, more than 100 oil tankers have joined the flag registration of these countries. After being directly sanctioned or related to the sanctioned entities, these tankers have been withdrawn from Panama, Liberia, Gabon, the Cook Islands and Palau to join these flag-registered countries from Africa and the Caribbean.

In this trend,Cook Islands and Gabonquickly became the world's two fastest growing registrations,Hundreds of tankers join Cook Islands and Gabon in just 18 months. It is worth mentioning that even so, Panama is the flag state with the largest number of registered ships in the shadow fleet.

There are also some small flag States that have been sanctioned for receiving large numbers of shadow fleet vessels.

In August of this year, the United Arab Emirates (UAE) announced that it would ban ships flying the flag of the landlocked African country Eswatini (formerly "Swaziland") from entering its ports, after the flag of Cameroon was also included in the list.

Flag operations in Swaziland are said to be "opaque" and potentially fraudulent. The flag has never been publicly authorised by the Swaziland government, and the International Maritime Organization (IMO) has flagged it as a potential fraud. The Swaziland flag has become increasingly popular with so-called "shadow fleet" operators due to loose management and easy "flag jumping" procedures. Ship tracking data compiled by Bloomberg shows that of the 18 ships flying the Eswatini flag, the ownership of 16 is unknown.

 

04

Sanctions accelerated

 

Recently, the United Kingdom and the United States have successively announced a number of sanctions lists, which seems to have a tendency to accelerate the sanctions process. (For details:1000 one! The United States and Britain have increased sanctions on the "shadow fleet"! Experts: Behind or hidden 1.6 billion dollars hidden dangers,22 of them! Britain again imposed massive sanctions on Russian oil tankers）

On October 17, local time, OFAC announced that it would add eight ships and eight entities to the SDN list, all with secondary sanctions risks, two of which are Chinese companies. The reasons for the OFAC sanctions are: two Chinese companies are involved in the production of drones for the Russian war on Ukraine; the remaining entities and eight ships are involved in the transportation and sale of Iranian oil or petroleum products for the benefit of the Houthis.

 

List of ships

1.GRATIA, chemical/tanker, Palau flag, IMO:9260055,MMSI:511101304;

2.JUVENIS, chemical/tanker, Palau flag, IMO:9260067,MMSI:511101307;

3.KAPOK, crude oil tanker, Panama flag, IMO:9315654,MMSI:352003068;

4.KUKKI, chemical/tanker, Barbados flag, IMO:9247388,MMSI:314823000;

5.LIANA, oil tanker, Palau flag, IMO:9236755,MMSI 511100596;

6.MARBEL, chemical/tanker, Cook Islands flag, IMO:9220938,MMSI:518998494;

7.ONYX, oil tanker, Cook Islands flag, IMO:9252400,MMSI:518998663;

8.TROPHY, chemical/tanker, Cook Islands flag, IMO:9220940,MMSI:518998535.

 

Entity List

1. CHANGTAI SHIPPING LIMITED（又名CHANGTAI SHIPPING LTD）（马绍尔群岛）；

2. ECO MAX FZE (UAE);

3. ECO MAX TRADING FZE（又名ECO MAX FZE）（阿联酋）；

4.  INDO GULF SHIP MANAGEMENT LLC（阿联酋）；

5. LLC TRADING HOUSE VECTOR（俄罗斯）；

6. MOTIONAVIGATIONS LIMITED (Marshall Islands);

7. REDLEPUS VECTOR INDUSTRY SHENZHEN CO LTD（中国）；

8. XIAMEN LIMBACH AIRCRAFT ENGINE CO., LTD（中国）。