This article is the third of a series produced by the James Martin Center for Nonproliferation Studies (CNS) at the Middlebury Institute of International Studies exclusively for NK News. For this series, we’ve chosen to focus on the legal (mis)adventures of North Korean entities and individuals overseas.
Judge Juche is back, this time with a look at the Wise Honest. Though initially detained by Indonesia in April 2018, this North Korean vessel was more recently subject to a civil asset forfeiture complaint filed by the United States Department of Justice in the Southern District of New York. NK News’s Leo Byrne has covered the forfeiture complaint, but the specifics of the case itself are worth a deeper dive.
North Korean vessels have, of course, been seized before. The Chong Chon Gang was seized by Panama in 2013, while the Mu Du Bong was detained (and ultimately scrapped) by Mexico after running aground off the Mexican coast in 2014.
The use of civil asset forfeiture complaints for sanctions enforcement is also nothing new. The U.S. has filed forfeiture complaints in response to alleged violations of sanctions by Dandong Hongxiang Industrial Development Co Ltd (2016), Dandong Chengtai Trading Limited (2017), Velmur Management Pte Ltd & Transatlantic Partners Pte Ltd (2017), and Apex Choice Ltd & Yuanye Wood Ltd (2018).
But each of those forfeiture complaints targeted the funds of organizations, not physical assets. This is the first time a North Korean vessel has been seized by the United States, and through civil asset forfeiture no less! That’s notable, especially considering it might provide a template for future action.
TESTING THE WATERS
A civil asset forfeiture complaint filed in the United States must be based on some underlying crime that violates U.S. law. This makes using civil asset forfeiture to target violations of UN sanctions in other countries fairly complex.
This is the first time a North Korean vessel has been seized by the United States, and through civil asset forfeiture no less
In each case related to UN sanctions on North Korea, the forfeiture complaints have relied on two claims: (1) that the intended outcome of actions taken was to benefit a U.S.-sanctioned entity and (2) that these actions included unlawfully accessing the U.S. financial system.
The case of the Wise Honest is different. The complaint instead alleges that the Wise Honest was the beneficiary of the funds that the U.S.-sanctioned Korea Songi General Trading Corporation unlawfully passed through the financial system.
Specifically, the complaint describes payments made by Korea Songi General Trading Corporation representative Kwon Chol Nam in U.S. dollars for payments for, among other purchases, port disbursements, a piston, a crane controller, and a VHF radio.
Perhaps more interestingly, the forfeiture complaint—in describing the North Korean coal exports and imports of machinery directed by Kwon—makes reference to the ‘same vessels’ conducting both the import and exports.
So, while only the Wise Honest is subject to this forfeiture complaint, it is likely that the U.S. government already possesses sufficient evidence to pursue similar cases against other vessels should they be detained by a partner country.
MAKING A SPLASH
The forfeiture complaint against the Wise Honest is also notable because, well, it’s the Wise Honest. It is, as reported in the press release announcing forfeiture complaint against the vessel, one of North Korea’s largest bulk carriers.
Indeed, a review using IHS Maritime’s Sea-web platform shows it to be the DPRK’s second largest vessel overall by deadweight. It is capable of transporting thousands of tons of coal, and its shipments earn North Korea considerable sums: at the time of its detention by Indonesia in 2018, the Wise Honest was reportedly transporting coal valued at $2,990,000.
Removing the Wise Honest from North Korea’s fleet is certainly a step in the right direction
The coal aboard the Wise Honest appears to have been released, potentially diminishing the impact of the vessel’s detention. Its cargo was reportedly transferred to another vessel and transported from Indonesia, which Hugh Griffiths—the outgoing coordinator of the UN Panel of Experts—has called a “clear violation” of sanctions.
Yet even this is unclear: the vessel now transporting the coal, the Dong Thanh, has been detained by Malaysian authorities as relevant investigations proceed. Maybe the detention and seizure of the Wise Honest is an unqualified success. Right now, it remains to be seen.
Still, the loss to North Korea of the Wise Honest is likely impactful. Transfers to North Korea of new or used vessels are prohibited by UN Security Council resolution 2397 (2017), so North Korea’s fleet today is—at least in theory—the largest it will be before sanctions are rolled back.
But, there are reasons why North Korea’s fleet might grow in practice that range from the effective hijacking of the Wan Heng 11 as described in the most recent UN Panel of Experts report to the mundane fact that sanctions are likely to be violated. Still, removing the Wise Honest from North Korea’s fleet is certainly a step in the right direction.
The long-term effects of the detention and seizure of the Wise Honest will likely be a mix of benefits and new challenges to the UN sanctions regime on the DPRK.
On the one hand, the forfeiture complaint against the Wise Honest provides a typology for targeting other DPRK-linked vessels. An emphasis on civil asset forfeiture could make use of capabilities in partner countries strengthened through activities like the Proliferation Security Initiative’s Critical Capabilities & Practices effort.
That effort—aimed at improving critical counter-proliferation capabilities writ large—targets countries’ ability to detect and seize proliferation-related goods, as well as respond to requests for legal assistance.
In theory, these same capabilities would be used to detain or seize sanctioned vessels and allow the United States to pursue forfeiture complaints against them.
Similarly, the information gained through inspections of detained or seized DPRK vessels like the Wise Honest could lead to broader investigations and more forfeiture complaints or criminal charges. This is hinted at in the Wise Honest forfeiture complaint which lists two additional participants—identified only as “CC-1” and “CC-2”—in what the Department of Justice is calling the ‘Korea Songi Scheme’; their identities withheld presumably pending further legal action.
On the other hand, the detention and seizure also showed North Korea that its efforts to evade sanctions may be—at least in this one exceptional case—insufficient. According to the complaint, the Wise Honest avoided broadcasting AIS transmissions that would give information on the vessel’s identity, location, course, and speed.
This is in violation of the International Convention on the Safety of Life at Sea and has been identified by the U.S. Department of the Treasury as indicative of illicit activity.
The Wise Honest also carried fraudulent documents intended to disguise its illicit activity. It had two sets of registration documents (those of the DPRK and Sierra Leone), according to the most recent UN Panel of Experts report.
Despite evasive measures and outright fraud, the Wise Honest was still detained and ultimately seized
The Sierra Leone documents were likely fraudulent or improperly attained, as the vessel was and continues to be registered to the DPRK according to the International Maritime Organizations’ GISIS database. Finally, it also had a false bill of lading for its cargo, which purported the coal carried to be of Russian origin.
Despite evasive measures and outright fraud, the Wise Honest was still detained and ultimately seized. Though North Korea’s innovation in sanctions evasion is unceasing, its seizure will motivate the DPRK to further innovation in sanctions evasion.
Already, North Korea has been physically altering the identification numbers built into vessels’ hull or superstructure that are intended to assign vessels a unique identity. Though the inclusion of vessels in civil asset forfeiture proceedings is a welcome evolution to U.S. sanctions policy, this method of tampering may threaten future forfeiture complaints lodged by the United States.
Since U.S. sanctions target vessels by that identification number, use of a fraudulent number—particularly if perceived as legitimate—could undermine legal arguments like those used in the forfeiture complaint against the Wise Honest.
Right now, this is a hypothetical. But it lies just beneath the surface and is worth thinking about now. North Korea certainly will be.
Edited by Oliver Hotham
Featured image: Department of Justice, modified by NK News
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