The United States Department of the Treasury announced sanctions on Wednesday, October 21, against Karnakis and Karnakis, a law firm with offices in Panama and Greece, accusing it of creating companies used to conceal the owners of vessels transporting oil, chemicals, and steel of Iranian origin.
What Happened
The Treasury Department’s action targets the law firm Karnakis and Karnakis, which operates from both Panama and Greece. According to the US government, the firm established corporate entities that were used to hide the true ownership of ships carrying Iranian-origin oil, chemical products, and steel.
The sanctions are part of the US government’s broader use of financial penalties to disrupt networks it believes are involved in circumventing restrictions on Iranian trade. Being placed on a US sanctions list typically cuts off the designated entities from access to the US financial system and prohibits American persons from conducting business with them.
Background
Panama is one of the world’s largest ship registries, with thousands of vessels flying its flag. This prominence has repeatedly placed the country at the center of international efforts to police sanctions evasion, illicit shipping practices, and hidden vessel ownership. The use of layered corporate structures — often created with the help of lawyers and registered agents — has been a persistent challenge for regulators seeking to identify who ultimately controls ships engaged in sanctioned trade.
The United States has maintained sweeping sanctions on Iran’s oil and petrochemical sectors for years, and the Treasury Department regularly designates individuals, companies, and service providers — including shipping firms, managers, and intermediaries — it accuses of helping Iranian petroleum products reach global markets while concealing their origin.
What This Means for Panama
The designation of a Panama-based law firm in a US sanctions action puts renewed pressure on Panama’s corporate and maritime services sectors to strengthen due diligence. Panama has in recent years passed legislation increasing transparency around beneficial ownership, in part to escape international grey lists and improve its financial reputation. Cases like this one test the effectiveness of those reforms.
For Panama’s maritime registry, the case is a reminder that vessels or service providers linked to the country can draw scrutiny from Washington. The Panamanian authorities have previously responded to such designations by cooperating with US agencies, deregistering flagged vessels, and pursuing their own investigations.
Observers will be watching whether Panamanian regulators take follow-up action against the firm, and whether the case prompts further review of corporate service providers in the country. The sanctions also carry reputational implications for Panama as it continues working to balance its role as an international business hub with demands for greater financial transparency.
This story was originally reported by Telemetro.