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Analyses Last Updated: Sep 2, 2019 - 2:22:20 PM

How North Korea Skirts Sanctions at Sea
By Cameron Trainer, Diplomat 1/9/19
Aug 30, 2019 - 11:46:34 AM

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As sanctions tighten, North Korea’s efforts at evasion intensify. How long can Pyongyang outpace international enforcement efforts?

Despite the high profile of negotiations between North Korea and the United States, the United Nations (UN) sanctions regime on North Korea remains a core component of international efforts to curtail the country’s nuclear and missile programs. These sanctions restrict – among other things – imports and exports of select commodities, as well as the means by which North Korea can access the global economy.

While not of the same immediate relevancy as imports of advanced missile technologies, UN restrictions on the export of bulk commodities (coal, iron, etc.) and the import of petroleum products are important. These restrictions aim, respectively, to limit the funds and fuel that North Korea devotes to its nuclear and missile programs. Yet North Korea has continuously evaded restrictions on these imports and exports. Although that’s partially due to inconsistent implementation and enforcement of UN resolutions, North Korea has also developed a suite of tactics designed to disguise maritime activity that might fall afoul of the UN sanctions regime.

A subset of North Korea’s sanctions evasion tactics aims to hide imports or exports violating the sanctions regime. Both ship-to-ship transfers and the disabling of Automatic Identification System (AIS) transponders broadcasting a vessel’s location and identity are key examples of this sort of evasion tactic.

The first of these two tactics, ship-to-ship transfers, allows North Korea to import or export restricted commodities without needing to send its vessels into foreign ports and without requiring other vessels to enter North Korean waters. The benefits of this are pretty straightforward: No port visit means no customs declaration, no customs declaration makes it a lot harder to keep track of what North Korea is importing or exporting. For this reason, ship-to-ship transfers have long been a way for North Korea to import refined petroleum products in excess of the limits imposed by the UN sanctions regime.

The UN sanctions regime has adapted to try to combat such transfers. In September 2017, UN Security Council resolution 2375 explicitly prohibited them. Yet they still remain central to North Korea’s ability to surpass limits on its import of refined petroleum products. Indeed, in their March 2019 report, the UN Panel of Experts established pursuant to resolution 1874 (2009) that “ship-to-ship transfers of petroleum products greatly accelerated in 2018” despite the prohibition on ship-to-ship transfers introduced in 2017. That same report provided an assessment by the United States that, given petroleum imported from ship-to-ship transfers alone, North Korea had surpassed the cap set forth in UN Security Council resolution 2397 (2017).

The second of these two tactics, disabling AIS transponders, allows vessels to operate with minimal oversight. This is not necessarily a new tactic. In 2013, the North Korean vessel Chong Chon Gang – according to the March 2014 report by the UN Panel of Experts – disabled its AIS transponders while picking up a cargo of armaments and related materiel in Cuba in violation of UN Security Council resolution 1874 (2009). That resolution prohibited the transfer of armaments, excepting small arms and light weapons, and related materiel to North Korea. In fulfilment of its UN obligations, Panama seized the Chong Chon Gang during the vessel’s return to North Korea.

More recently, the Wise Honest – another North Korean vessel – sailed with its AIS disabled from North Korea to Indonesia, where Indonesian authorities detained it in April 2018. According to the March 2019 report by the UN Panel of Experts, the Wise Honest had been exporting coal in violation of UN Security Council resolution 2371 (2017). The Panel also noted that the Wise Honest planned to conduct a ship-to-ship transfer and relay its cargo via another vessel to a customer in South Korea, thereby further disassociating the cargo from its North Korean origin. This layering of sanctions evasion tactics maximizes the potential of any given shipment to evade efforts to enforce the UN sanctions regime.

Another set of tactics, instead of merely concealing illicit activity, seek to pass it off as legitimate. Tactics that fall into this category include registering North Korean vessels abroad, manipulating AIS transmissions to assume the identities of other vessels, and chartering vessels without pre-existing links to North Korea.

Registration of North Korean vessels abroad gives North Korean vessels the ability to fly another country’s flag, effectively allowing them to trade on the reputation of that country. So, at first glance, a vessel may appear legitimate yet be owned, controlled, or operated by North Korea. This complicates efforts at sanctions compliance by expanding the pool of vessels that must be screened for ties to North Korea.

In an effort to force North Korean vessels back to the North Korean shipping registry, UN Security Council resolution 2321 (2016) required countries to deregister vessels owned, controlled, or operated by the country. It further stipulates that vessels deregistered for ties to North Korea shall not then be registered by other countries.

Efforts to implement this resolution have been frustrated by the tendency of vessels linked to North Korea to cycle through flags. Take, for example, the vessel now known as the Dong Fang Shen Long. It was identified as under North Korean control in the February 2015 report of the UN Panel of Experts while registered to Cambodia, and then subsequently registered to Sierra Leone in June 2015 and to Panama in March 2017. Despite being noted as deregistered by Panama for its ties to North Korea in Panama Maritime Authority Merchant Marine Circular 361, it was registered by China in 2017. It is therefore a great example of how – aided by ambivalence toward sanctions or confusion about the circumstances of a vessel’s deregistration – vessels linked to North Korea switch from flag to flag in spite of sanctions measures designed to prevent them from doing so.

Of course, vessels owned, controlled, or operated by North Korea may also simply lie about their flag or their identity through manipulating their AIS transmissions. This process can actually be quite complex. In one instance, detailed in a June 2019 report by the Royal United Services Institute (contributed to by this article’s author), the North Korean Tae Yang was found to have transmitted via AIS a unique ID number belonging to another vessel and at least five fake names to facilitate its export of coal from North Korea in violation of UN sanctions. These false identifiers would have given the vessel a semblance of legitimacy that it would have lacked, for example, if travelling with its AIS disabled. In any case, it appears to have been sufficient cover to allow the vessel to – again according to the Royal United Services Institute report – offload its cargo, likely via ship-to-ship transfers.

Whereas both the registration of North Korean vessels abroad and the manipulation of AIS transmissions aim to take suspicious vessels and pass them off as legitimate, North Korea’s tactic of chartering foreign vessels does something nearly the opposite: It takes legitimate vessels and directs them toward illicit activity. Once again, the UN sought to prohibit this with UN Security Council resolution 2270 (2016), which prohibits the leasing or chartering of vessels to that country. But North Korea – either through its network of front companies or by finding willing partners – has nonetheless chartered foreign vessels in several high profile cases.

One involves the Wan Heng 11, which – according to photos published February 2018 by the Japanese Ministry of Foreign Affairs – engaged in a prohibited ship-to-ship transfer with a North Korean vessel while flagged by Belize. The March 2019 report by the UN Panel of Experts notes that the vessel was chartered by Hong Kong Cosnewvi International Shipping and the vessel’s illicit activity was apparently done without the knowledge of its actual owner, Zhejiang Wanheng Shipping Company. Moreover, when Zhejiang Wanheng Shipping Company attempted to regain control over the vessel, the vessel’s crew absconded with it. North Korea now operates the vessel under its flag as the Kum Jin Gang.

Another case is that of the Lighthouse Winmore. The Lighthouse Winmore – then registered in Hong Kong –  conducted a prohibited ship-to-ship transfer of petroleum products in October 2017 with the North Korean Sam Jong 2 while chartered by a Taiwanese company, as outlined in the March 2018 report of the UN Panel of Experts. Consequently, the Lighthouse Winmore was detained by South Korea in November 2017. Though the vessel was deregistered by Hong Kong, it was reported by Reuters to have been released in July 2019 after South Korea determined that its breach of sanctions had not been intentional.

The release of the Lighthouse Winmore on the grounds that its violation of sanctions had been inadvertent may be detrimental to future efforts at sanctions implementation and enforcement. Indeed, all of the sanctions evasion tactics discussed here – whether by design or as a side effect – give those engaging commercially with North Korea a type of plausible deniability. They don’t do this by providing perfect cover. They don’t need to; instead, they just need to provide a claim to ignorance compelling enough to dissuade or limit law enforcement action.

Demonstrating that a sanctions violation was intentional, in theory, requires proving that the individual or entity under investigation knew or should have known two things: That it was interacting with a North Korean party or one operating on its behalf and that its activity was prohibited by national or international law. This threshold can be incredibly hard to meet.

One potential avenue for mitigating the plausible deniability that North Korean sanctions evasion tactics confer on their foreign partners is better information sharing. By providing more information on North Korea’s illicit maritime activity, national governments and international institutions can broaden the circumstances under which individuals and entities in their jurisdictions would have reason to know they were engaged in prohibited conduct. Such an effort would give the private sector the resources necessary to avoid inadvertent sanctions violations and establish that those engaged in prohibited activities were aware of its illegality.

Efforts to do this are underway. The United States Office of Foreign Asset Control has published advisories on the subject, as have the International Maritime Organization and some countries’ shipping registries. The UN, particularly through the UN Panel of Experts whose reports are referenced extensively in this piece, has also contributed a wealth of information to the public space. Still, national and international organizations can do much more to ensure such information – particularly the details of vessels identified as linked to North Korea – is presented to entities in the maritime transport sector. These efforts stand to go a long way toward increasing the ability to punish sanctions violations and keep the legitimacy of the UN sanctions regime afloat.

Source:Ocnus.net 2019

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