Panama Canal officials say a North Korean ship seized as it was smuggling weapons is free to leave because the owner has paid a fine of nearly $US700,000. ($A783,348).

The Canal Authority says the fine was imposed for violating navigation regulations by not reporting that the Chong Chon Gang was transporting war material.

Three of the vessel’s operators still face charges, while 32 crew members are free to return to North Korea.

The vessel was detained in July when a search revealed it was carrying weapons from Cuba.

A Panamanian official said the ship carried two Cuban fighter jets in perfect condition, contradicting Cuba’s explanation that the cargo included “obsolete defensive weapons”.

A preliminary report by UN experts determined the seized ship violated UN sanctions against North Korea.