Panama warns of deflagging and fines if vessels turn off AIS

The Panamanian Maritime Authority has warned that it could impose sanctions on vessels if they deliberately deactivate, tamper or alter the operation of their AIS tracking transponders.

The potential penalties include fines of up to $10,000 and the withdrawal of the Panamanian flag from the ship.

The General Directorate of Merchant Marine said that it would “impose sanctions to all those Panamanian flagged vessels that deliberately deactivate, tamper or alter the operation of Long Range Identification and Tracking System (LRIT) or the Automatic Identification System (AIS)”.

Panama’s Merchant Marine head Rafael Cigarruista told Reuters that the decision to sanction ships that failed to comply with the rules were a part of commitments made by Panama to avoid sanctions from international organizations.

“We want our ships to not deliberately turn off their equipment,” said Cigarruista.

The Panama Maritime Authority said that it was constantly monitoring its fleet and that it would initiate an internal investigation if it detects a vessel’s transponder is down or not reporting. It said that such an investigation could “culminate with sanctions that will be deemed appropriate (and) in some cases where the vessel is found having this conduct on regular bases could be de-flagged or deleted from the registry.”

The actions by Panama would appear to be a rapid response to a Global Maritime Advisory issued by the US on May 14th to help ship owners and insurers avoid the risks of sanctions penalties, standards that were modified following months of discussions with industry.

The State Department said that it was committed to disrupting sanctions evasion and smuggling of goods, including oil exports from Iran. However, some shipowners and operators responded that the Advisory’s position on AIS could put ships that had turned off their AIS for valid reasons (such as being in politically dangerous waters) at risk of sanctions.

Previously, ship owners and insurers had said that it could be impossible for the maritime industry to comply fully with the Trump administration’s new guidelines on how to avoid sanctions penalties related to Iran, North Korea and Syria.

The advisory was the first US sanctions guidance for the global maritime sector. Analyists said that it would test the US’s ability to prevent sanctions-busting without disrupting the shipping industry.

The final version of the US guidance, amended in several places after feedback from maritime professionals, asked for enhanced data-sharing between the shipping industry and US authorities, constant location-tracking of vessels, and industry-led investigations into suspicious activity.

The US State Department seems to have backed down slightly from the impression given on first release, with “recommended best practices” being put forward, rather than hard requirements.

However, Mike Salthouse, chairman of the sanctions sub-committee with the International Group, said that “there are parts in there that we cannot do”.

He said that, while the industry welcomed the opportunity to consult on the guidance, the advisory’s data-sharing suggestions, for example, will bump up against European privacy laws: “We can’t share information about members we have ceased to insure on the basis of a suspicion of breaking sanctions because that contravenes competition law”, Salthouse said, noting that “we are also constrained in relation to sharing personal data by GDPR (General Data Protection Regulation)”.

The US guidelines asking for constant location monitoring of ships, and investigations by insurers of gaps in that tracking, could also prove difficult.

Weather often interferes with AIS transponders, and ship captains’ have, and should have, the discretion to go dark to avoid pirates or militants on the high seas. “Importantly, a signal not received is not the same as a signal not sent,” said Neil Roberts, head of marine underwriting at the Lloyd’s Market Association. He added that it was “not commercially practical for insurers to track ships 24/7.”

Michele White, general counsel with oil tanker association Intertanko, said that “this is asking private marine sector effectively to do the enforcers’ job, whilst at the same time opening itself up to potential sanctions breach”.