A UN panel of Experts (PoE) tasked with monitoring the implementation of UN Security Council (UNSC) sanctions imposed on North Korea published its annual report on Tuesday.
The investigations and information within the report reveal wide-ranging sanctions violation and evasion activity by North Korea and third-party facilitators.
NK News has highlighted ten features of the latest annual PoE report, which covers the period from February 2, 2018, to February 1, 2019, and provided short summaries of certain sanctions evasion activities.
SHIP-TO-SHIP TRANSFERS OF OIL AND COAL
In December of 2017, the UNSC unanimously passed Resolution 2397, which included measures that capped the amount of crude oil and petroleum products North Korea was able to import per year at 525,000 tons and 500,000 barrels respectively.
While several countries – including Japan and the U.S. – publicized prohibited ship-to-ship (STS) transfers of fuel involving North Korean vessels, the PoE report reveals that the scale of such activities far exceeded prior public reporting and rendered the sanctions largely “ineffective”.
“These violations render the latest United Nations sanctions ineffective by flouting the caps on the DPRK’s import of petroleum products and crude oil,” the PoE report summary read.
“These transfers have increased in scope, scale, and sophistication with more than 50 vessels and 160 associated companies under investigation,” the report added.
The U.S. had previously reported that North Korea had exceeded its import cap via at least 89 STS transfers between January and May of 2018.
According to the panel report, the U.S. then reported in September 2018 that at least an additional 59 tanker deliveries were made to the DPRK between June 1 and August 18, 2018.
This, according to the U.S., brought “the 2018 total to at least 148 deliveries, all of which involved deliveries to North Korean ports to unload refined petroleum products procured through UN-prohibited STS transfers,” the report read
The panel said it could not definitively prove the U.S.’ claims that the cap had been breached, which appears to be a huge failing in the sanctions regime, but said that it has witnessed an increased frequency in STS transfers.
Additionally, North Korea is engaging in STS transfers of coal, which is subject to a complete export ban under UNSC resolutions, as its “primary means” of circumventing UN measures related to the commodity.
“Such illegal deliveries became regularized and systemic in 2018 with some of the largest vessels in the DPRK fleet documented as continuing to load coal at DPRK ports on a monthly basis before engaging in illegal ship-to-ship transfers, predominately in the Gulf of Tonkin,” it added.
MARITIME SANCTIONS EVASION
The panel detailed a range of maritime sanctions evasion techniques employed by North Korea and third country vessels involved in STS transfers of fuel and coal, transshipments and illegal fishing.
One such case involving an STS transfer by a vessel called the Yuk Tung was of particular significance to the panel which noted that such incidents are likely to reoccur as the “deception measures deployed by the Yuk Tung defeated all of the Democratic People’s Republic of Korea-related sanctions compliance mechanisms adopted by commodity traders as well as their associated banks, insurers and vessels.”
Such measures included false identification practices including the “spoofing” of AIS data used to identify ships, physical disguising of the ship and the employment of false documentation.
Many of the vessels involved in such transfers, according to the report, “routinely engage in identity fraud and other activities contrary to both UN Convention on the Law of the Sea (UNCLOS) and IMO regulations”, the report said.
The panel also said that brokers are using the Chinese messaging application WeChat to arrange STS transfers and that these brokers are using various techniques to evade detection. Blockchain technology was also possibly being explored by North Korea in its maritime sanctions evasion dealings.
“The platform could be used to generate money for the regime and as a potential means of evading sanctions on shipping by creating a new method of obscuring the ownership of a vessel,” an unnamed member state told the panel.
UNSC 2371 passed in August of 2017 prohibits North Korea from exporting seafood with 2397 additionally banning the DPRK from “from selling or transferring, directly or indirectly, fishing rights”.
Despite this, the panel reported that such activity continued throughout 2018 with one fisherman interviewed stating that there were around 200 Chinese fishing boats operating in DPRK waters.
According to the report, foreign fishing vessels are also using evasion techniques such as flying DPRK flags to hide their origins and carrying DPRK fishing permits.
NUCLEAR PROCUREMENT ACTIVITIES IN CHINA
The panel continued its investigation into a firm called Namchongang Trading Corporation, which was designated by the UNSC in 2009 for its activities related to North Korea’s nuclear program.
The company, according to the UNSC, is subordinate to the General Bureau of Atomic Energy (GBAE) and in its original listing, the council identified one of its representatives as a diplomat who served as DPRK’s representative for the IAEA inspection of the Yongbyon nuclear facilities in 2007.
“Namchongang’s proliferation activities are of grave concern given the DPRK’s past proliferation activities,” the UNSC sanctions listing said.
In its most recent report, the panel said it had received evidence from a member state that one of the company’s representatives – Kang Mun Kil – had successfully procured items used for nuclear programs. Kang was designated in 2016 for nuclear procurement activities.
“According to the documents obtained by the Member State, he had procured pressure transducers from a Chinese company, Shanghai Zhen Tai Instrument Corporation Limited (上海振太 仪表有限公司, hereafter Shanghai Zhen Tai), at least twice in 2013 and 2016,” the PoE report read. Such goods are used in nuclear programs.
“Shanghai Zhen Tai has also been advertised as an exporter of vacuum equipment to the Democratic People’s Republic of Korea on a commercial website,” it added. It was noted by the UNSC previously that Namchongang has been involved in the procurement of Japanese origin vacuum pumps that were identified at a DPRK nuclear facility.
Additionally, according to a member state and “supporting documentation”, Kang used a Hong Kong company “Y Y Shun Limited” for procurement activities.
The panel also detailed its communications with China regarding the case and despite the asserted fact that the panel had supporting documentation for the claims, the Chinese response denied that such procurement occurred.
“Relevant authorities have made a comprehensive and serious investigation into this case,” China told the panel adding that Shanghai Zhen Tai Instrument Corporation Limited did not possess the required export qualifications.
“Zhen Tai has neither directly carried out any export trade nor entrusted trade agent companies to do export on behalf of it since establishment,” China added. It also challenged the assertion that YY Shun was used by Kang in his procurement activities.
“Regarding the Hong Kong company Y Y Shun Company Ltd and Shunyi Limited, after an in-depth investigation by China there is no evidence proving that they are operating in China on behalf of Namchongang Trading Corporation,” China said.
The panel, however, also said that an unnamed member state asserted that Kang has been replaced by another North Korean national – Chong Won Ryol – “who is the official trade representative of the Democratic People’s Republic of Korea in Dalian in addition to working on behalf of Namchongang Trading Corporation”.
Such responses from China were present throughout the report and indicated what appeared to be a lack of willingness to provide information regarding violations involving Chinese territory, entities or individuals.
GLOBAL WEAPONS TRAFFICKING AND MILITARY COOPERATION
North Korean weapons trafficking and military cooperation with foreign countries continue to be a cause for concern and investigation by the panel.
New revelations in the PoE report show that the DPRK has been working with a Syrian arms trafficker called Hussein Al-Ali in order to sell its wears abroad.
“The Democratic People’s Republic of Korea continues to violate the arms embargo and has attempted to supply small arms and light weapons and other military equipment to Houthi rebels in Yemen, as well as to Libya and the Sudan, via foreign intermediaries, including Syrian arms trafficker Hussein al-Ali in the case of the Houthi rebels,” the report read.
“The Panel investigated efforts by the Ministry of Military Equipment of the Democratic People’s Republic of Korea and KOMID to supply a wide array of conventional arms and ballistic missiles to the Houthi group in Yemen,” it added.
The Yemen specific deals were organized, a member state said, between Al-Ali, a Houthi military leader and the Houthi Ambassador in Damascus – Naigh Ahmad Al Qanis – which resulted in the signing of a “protocol of cooperation” between the DPRK and Yemen.
“According to the Member State, this involved a ‘vast array of military equipment, including Kalahsnikov, PKC machine guns, RPG-7, RPG-29, Fagot missiles, Igla missiles, tanks, air defence systems, ballistic missiles’,” the report read.
Investigations, the report added, also continue into North Korean attempts to sell weapons throughout other counrties the Middle East and Africa. It also continues to investigate the travel of designated individuals or individuals affiliated with designated companies that appear to be operating throughout the regions with impunity.
Iran and Syria, a member state also submitted, continue to represent the most lucrative markets for the DPRK.
Despite the dire food and humanitarian situation in the country, North Korea continues to pursue the import of luxury goods in violation of UNSC resolutions.
The panel included details on its investigations into Kim Jong Un’s successful procurement of a Rolls-Royce Phantom and the attempted import of a Rolls-Royce Ghost, which was seized by Bangladeshi customs in 2017.
In addition to the above vehicles, the panel investigated Mercedez Benz limousines imports, a number of which were observed in use by a North Korean delegation attending the Singapore Summit in June 2018 and during a state visit to China.
“The Panel wrote to Singapore and China to request the vehicle identification number records following the temporary transfers of these vehicles, or checks by the Presidential Security Service of the Republic of Korea, the head of which was reported as a passenger in one of the vehicles,” the panel said.
“In its letter of 4 December 2018, Singapore informed the Panel that ‘it had requested for the vehicles’ chassis and engine numbers, but the DPRK officials declined to reveal this information due to national security reasons’,” the report added. Lexus vehicle imports were also investigated.
Recently Dutch customs revealed that it had intercepted a shipment of 90,000 bottles of Vodka likely bound for North Korea.
The panel report reveals that the Netherlands had also previously intercepted an additional consignment of vodka bound for the DPRK.
The Vodka was manufactured in Belarus and “was destined for Liaoning Danxing International Forwarding, the company investigated by the Panel as suspected of shipping Mercedes-Benz limousines to the Democratic People’s Republic of Korea,” the report read.
ACCESS TO THE GLOBAL FINANCIAL SYSTEM
Despite the expansion of financial sanctions against North Korea, the panel assessed that the DPRK continues to “enjoys ongoing access to the international financial system”.
“Financial sanctions remain some of the most poorly implemented and actively evaded measures of the sanctions regime,” it said.
“Individuals empowered to act as extensions of financial institutions of the Democratic People ’s Republic of Korea operate in at least five countries with seeming impunity.”
The lack of enforcement, the panel said, includes member states not expelling DPRK bank representatives and not closing down DPRK bank branches in their jurisdictions.
“The Panel found these banks to be operating through representatives in China, Libya, the Russian Federation, the Syrian Arab Republic and the United Arab Emirates,” it said.
Additionally, member states have not kept their obligations in freezing assets controlled by designated entities.
“In several cases investigated by the Panel, Member States closed but did not freeze account balances of individuals acting on behalf of designated entities, including the RGB, and allowed them to transfer funds to banks in other countries,” it said.
The RGB is North Korea’s Reconnaissance General Bureau a DPRK spy agency that has been involved in the arms trade.
“The Reconnaissance General Bureau continues its international financial operations by transferring funds from accounts closed in the European Union to those held at financial institutions in Asia,” the report added.
The panel indicated that RGB officials had been using Chinese bank branches in Shanghai, an occurrence that China said it had “not found”.
North Korea has been widely reported to be increasingly involved in cyber attacks related to financial institutions, which is an assessment endorsed up by the latest panel report.
“The Panel notes a trend in the DPRK’s evasion of financial sanctions using cyber attacks to illegally force the transfer of funds from financial institutions and cryptocurrency exchanges,” the report read.
No less than four unnamed members states shared information and assessments with the panel indicating that North Korean units, including the RGB and military units, are actively engaged in cyber attacks to generate revenue for the DPRK regime.
Among the cyber-related attacks included in the report were the 2016 cyber attack against an online shopping mall called InterPark, which South Korean policy attributed to the RGB.
“The Panel considers this case as an attempt by a designated entity to evade sanctions by using a cyber attack to force the transfer of 2.7 million USD,” the report said.
The panel also included details related to the $81 million Bangladeshi bank theft, as well as bank thefts involving Banco de Chil and Cosmos Bank in Indian.
“The Panel notes that in addition to attacks on fiat currency, cyber attacks involving cryptocurrencies provide the DPRK with more ways to evade sanctions given that they are harder to trace, can be laundered many times, and are independent from government regulation,” the report added.
THE HUMANITARIAN IMPACT OF SANCTIONS
The panel also included a section on the unintended impact of the UNSC resolutions that includes six main areas of concern for those conducting humanitarian work in the country.
It said that it consulted close to 20 NGOs and all of the UN agencies operating in the DPRK in order to gather information on the effects on sanctions on humanitarian operations.
As communicated to the panel, the main concerns include “delays in receiving exemptions, the collapse of the banking channel, delays in customs clearance, a decrease in willing foreign suppliers, increased cost of humanitarian-related items and operations, as well as diminished funding for operations”.
“These are negatively affecting their ability to implement humanitarian-related programs,” the panel wrote.
While the official section in the report was limited, the panel included much more detail in the report’s annexes and included examples of goods intended for humanitarian operations that had been blocked for entry into the DPRK due to sectoral sanctions against it.
While exemption processes have existed, few applications were approved on until recently – as extensively reported by NK News.
However, the panel now reveals the total amount of exemptions granted as of the start of February.
“The Committee has received 25 humanitarian exemption requests during the reporting period. Two requests were withdrawn, 16 requests were approved, while seven requests remain under consideration by the Committee,” it said.
While the majority of the report focuses on sanctions evasion cases the panel included its assessments of North Korea’s nuclear activities in the country.
This included information from an unnamed member state regarding the operational status of the Yongbyon nuclear complex which was largely sustained throughout 2018 — an assessment that matches other reporting from open source investigations published recently.
“The 5 MW (e) reactor has been in operation since December 2015 and, according to a Member State, while operations were suspended for a few days in February, March and April 2018, each period was insufficient to shut down for discharge and was likely for maintenance operations,” the panel reported.
“In November 2018, a Member State informed the Panel that the reactor’s operation had been suspended from September to October 2018 and that the discharge of spent fuel rods could have taken place during those two months,” it added.
The panel added that satellite imagery showed plumes of smoke and fluctuating piles of coal reserves at the sites radiochemical laboratory between late April and early May 2018, likely indicating maintenance work.
A member state, again unnamed, also provided the panel with information that indicated a “heat change” within the building which is indicative of operations.
The panel also monitored uranium concentration plants and mining site and observed the removal of spoil piles in 2019 “which indicates that mining may be ongoing”.
It also revealed it was monitoring a facility in Kangson, which last year was identified by the Diplomat and the Center for Nonproliferation Studies as a likely second uranium enrichment site in the DPRK.
“The Panel observed no significant change around the possible uranium enrichment facility in Kangson during the reporting period, except for the periodic movement of oversize trucks,” the panel reported.
BALLISTIC MISSILES LAUNCH LOCATIONS
The panel also included a member state assessment that North Korea has been using civilian sites in-country as a strategy to stave off possible military action against it.
“In April 2018, a Member State informed the Panel that the Democratic People’s Republic of Korea was repeatedly using civilian factories and other non-military facilities as part of a strategy to prevent any possible ‘decapitation’ strike on the country’s smaller number of identified nuclear and ballistic missile assembly and manufacturing sites,” it read.
The member state used the Hwasong-15 assembly and test launch at the Pyongsong Truck Factory – aka the March 16th Automotive Plant – as an example of this strategy. The panel appeared to agree with this assessment.
“The Panel surveyed, confirmed and reported ballistic missile activity sites and found evidence of a consistent trend on the part of the Democratic People’s Republic of Korea to disperse its assembly, storage and testing locations,” it said.
“In addition to the use of civilian facilities, the Panel found that the Democratic People’s Republic of Korea used previously idle or sprawling military-industrial sites as launch locations,” it added.
It cited the 2017 launches of ICBMs from Panghyon aircraft factory and the Pyongyang Sunan International Airport as evidence of this.
Featured Image: UNSC
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