The U.S. Treasury Department on Friday issued new designations against two Taiwanese nationals, three Taiwanese companies, and one oil tanker, for supplying oil to North Korea in breach of UN resolutions.
Treasury’s Office of Foreign Assets Control (OFAC) designated the Taiwan-based entities Jui Pang Shipping and Jui Zong Ship Management, as well as Hong Kong-based entity Jui Cheng Shipping Company, and their directors Huang Wang Ken and Chen Mei Hsiang.
An oil tanker called the Shang Yuan Bao – which was already investigated by the UN Panel of Experts (PoE) and blacklisted by the UN Security Council (UNSC) last year – was also designated.
“Treasury will implement and enforce existing US and UN sanctions on individuals, entities, and vessels involved in illicit ship-to-ship transfers with North Korean flagged vessels,” Treasury Under Secretary Sigal Mandelker said in an OFAC press release.
“Shipping companies trading with North Korea are exposing themselves to significant sanctions risk, despite the deceptive practices they try to employ.”
According to OFAC, Huang organized the export of 1.7 million liters of refined petroleum – over 10,000 barrels – to North Korea using the Shang Yuan Bao to deliver the products to a designated DPRK tanker at sea in February 2018.
The sanctioned tanker also carried an additional ship-to-ship transfer in June, with a second North Korean tanker called the Myong Ru 1.
“Huang and his partners falsely reported that the petroleum products were destined for the Philippines. The Shang Yuan Bao, however, transported them beyond the territorial waters of any state to carry out the STS transfer to the Paek Ma,” the OFAC press release reads.
“OFAC assesses that the persons who owned and controlled the Shang Yuan Bao at the time of the petroleum transfers are ultimately responsible for the petroleum products that were illicitly transferred to the North Korean vessels and ultimately delivered to North Korean territory.”
The Office of Foreign Assets Control also warned that other companies or institutions involved in prohibited trade with North Korea could face designations.
“In addition, persons that engage in certain transactions with the persons designated today may themselves be exposed to designation,” OFAC wrote.
“Furthermore, any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals designated today could be subject to U.S. correspondent account or payable-through sanctions.”
According to the NK Pro ship tracker, the Shang Yuan Bao loitered near the Chinese coast a short distance from Taiwan for months, with occasional gaps in its Automatic Identification System (AIS) location transmissions.
The UNSC designated the vessel for the same ship-to-ship transfers, though did not add the Taiwanese companies or nationals to its sanctions lists.
But according to a press release accompanying the designation, the Shang Yuan Bao is “subject to de-flagging pursuant to paragraph 12 of resolution 2321 and prohibited from port entry pursuant to paragraph 6 of resolution 2371.”
In July, the vessel may have docked at a Chinese port, which should oblige China to seize the vessel, though it returned to holding position near a series of small islands shortly afterward.
The ship’s last broadcast to terrestrial tracking systems came on July 18, and according to its AIS transmissions, it was sailing under a Saint Vincent and the Grenadines flag.
If the new registration is genuine, it could also constitute a breach of UN resolutions, which prohibit vessel registries from providing paperwork and documentation to sanctioned vessels.
According to the PoE’s most recent report, the tanker’s owners said the Shang Yuan Bao’s first cargo transfer to a DPRK ship at sea was “a big misunderstanding,” and claimed it was transferring drinking water, though it subsequently carried out another transfer.
“The Shang Yuan Bao … share(s) a profile similar to most foreign-flagged vessels involved in illegal ship-to-ship transfers or ships from which fuel has ultimately been transferred to the DPRK,” the PoE wrote.
“This vessel profile consists of coastal, product and general-purpose tankers operating out of ports within 600 nautical miles of previously identified zones in the East China Sea.”
The PoE noted how the Shang Yuan Bao engaged in vessel identity fraud before carrying out the first STS transfer, obscuring its name to make identification more difficult.