‘Red flags’ of North Korean maritime smuggling

   The Treasury Department, along with the Coast Guard and State Department, are stepping up the pressure on maritime shipping companies that use “deceptive practices” to assist the North Korean government with evading U.S. and U.N. sanctions.
   The department warned that North Korea continues to “engage in illicit ship-to-ship transfers of refined petroleum, which exposes parties involved in the shipping industry, including insurers, flag registries, shipping companies and financial institutions to significant sanctions risk.”
   On Thursday, the agencies released an advisory that consists of “new red flags and typologies for industry to be aware of and provides an update on the deceptive shipping tactics used by North Korea.”
   The agencies recommended that ship owners, managers, operators, brokers, flag registries, oil companies, port operators, classification societies, insurers and financial institutions make themselves aware of the advisory. 
    According to the Treasury Department, North Korean ports last year received at least 263 tanker deliveries of refined petroleum procured from U.N.-prohibited ship-to-ship transfers. The country also has resumed exports of coal in the Gulf of Tonkin.
   “The United States will continue to use its sanctions authorities to target persons in various industries, including, but not limited to, the shipping industry that further North Korea’s illicit revenue-generating schemes that fund the regime’s nuclear weapons and ballistic missile programs,” the Treasury Department said in the advisory.
   Also on Thursday, Treasury’s Office of Foreign Assets Control (OFAC) added two Chinese companies to its Specially Designated Nationals (SDN) List for violating North Korean sanctions. They include Dalian Haibo International Freight Co. Ltd. and Liaoning Danxing International Forwarding Co. Ltd., both located in Dalian, China. 
   Haibo International provided goods and services to U.S.-designated Paeksol Trading Corp, which is a subordinate to the U.S.- and U.N.-sanctioned Reconnaissance General Bureau (RGB), both of North Korea. Paeksol has sold, supplied, transferred or purchased metal or coal from North Korea. In early 2018, Dalian Haibo shipped cargo from Dalian to Paeksol in Nampo aboard North Korean-flagged vessels.
   Liaoning Danxing has routinely used “deceptive practices” that allowed EU-based North Korean procurement entities to operate and purchase goods for the North Korean government, the Treasury Department said.
   These SDN designations block all property and interests in property of those individuals and entities. U.S. persons and businesses also are generally prohibited from transacting with those listed on the SDN List. In addition, any entities owning 50 percent or more by these designated entities are blocked.
   “Treasury will continue to enforce our sanctions, and we are making it explicitly clear that shipping companies employing deceptive tactics to mask illicit trade with North Korea expose themselves to great risk,” said Treasury Secretary Steven T. Mnuchin in a statement.