After a reduction of the original million-dollar penalty, Pyongyang paid USD 693,333.10, said canal administrator Jorge Quijano yesterday.
"They just paid the fine in cash," he added. "So the ship is free to set sail."
The North Korean freighter Chong Chon Gang was stopped on July 10 on suspicion of carrying drugs as it tried to enter the busy canal shortcut linking the Caribbean and Pacific.
Panamanian authorities' search uncovered 25 containers of Cuban military hardware, including two Soviet-era MiG-21 aircraft, air defence systems, missiles and command and control vehicles.
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More than 200,000 sacks of sugar concealed the weapons.
Panama's government has asked the United Nations to send a mission to determine whether the shipment violated the UN arms embargo against North Korea.
Last month, Panamanian authorities released 32 of the 35 North Koreans detained since July.
The remaining three North Koreans - the vessel's captain, first officer and political secretary - face trial on arms trafficking charges.