Panama's Canal Authority has slapped a fine of up to US$1 million (NZ$1.21m) on the owners of a North Korean ship seized in July for smuggling Cuban weapons under 10,000 tons of sugar.
The fine was for failing to accurately disclose the cargo and putting the canal and canal workers at risk, said Jorge Quijano, head of the semi-autonomous Panama Canal Authority.
The amount is "a proposed sanction of up to US$1 million, and I say 'up to' because there is a process in which clarifications can be made and they can defend their point of view", Quijano said.
The ship, the Chong Chon Gang, and its 35-member crew remain in Panama, despite a request from Pyongyang seeking a "diplomatic manner" to resolve the situation.
The owners of the ship must also pay a US$650,000 bond before it is allowed to leave the canal, Quijano said.
Panamanian investigators detained the vessel in July near the Atlantic entrance to the canal after receiving a tip it was carrying drugs.
Cuban officials maintained the ship contained only a donation of sugar to North Korea, but investigators found military cargo hidden between containers stuffed with raw Cuban sugar.
Cuba later acknowledged it was sending 240 tons of what it called "obsolete" weapons, including two MiG jets, 15 MiG engines and nine anti-aircraft missiles, to be repaired in North Korea and returned to Cuba.
A team of United Nations Security Council experts is expected to issue a report on whether the weapons violate a seven-year-old ban on arms transfers to North Korea because of its nuclear weapons and missile development programem.