29 N. Koreans arrested in China at risk of repatriation and execution

Via the Chosun Ilbo:

Twenty-nine North Korean defectors and five of their South Korean helpers were arrested in China on July 15-17. They were nabbed in Qingdao, Shandong Province, and Kunming, Yunnan Province, on an established escape route to Southeast Asia, and face deportation, possible torture and execution in North Korea. 

Kwon Na-hyun of an activist group for defectors on Tuesday said 20 defectors were arrested in Qingdao and nine others in Kunming. One of the helpers who were arrested is Na Su-hyun (39), himself a defector who now has a South Korean passport.

They have been transferred to a detention center in the border town of Tumen and face deportation to the North, Kwon added.

All defectors had stayed in a safe house in Qingdao, but some of them left for Kunming first. “Nine of them left for Kunming on July 14, because it would have been dangerous if all 29 defectors traveled together,” Kwon said. 

This is the largest-scale arrest of North Korean defectors and their helpers in China so far.

Here’s some background information explaining why it would be unlawful for China to repatriate these people, and here’s a link where you can spam your local Chinese Embassy to pressure its government to refrain from murdering these people.

The arrest of these South Korean heroes means the ROK government will have to be notified, pursuant to that new consular agreement with Xi Jinping. We’ll soon see whether South Korea has the backbone and principle to demand the safe passage to Seoul of those Koreans unfortunate enough to be born north of the DMZ.

APG needs N. Korea like the Vienna Boys’ Choir needs Jerry Sandusky

The Asia/Pacific Group on Money Laundering describes itself as “an autonomous and collaborative international organisation … consisting of 41 members and a number of international and regional observers [who] are committed to the effective implementation and enforcement of internationally accepted standards against money laundering and the financing of terrorism, in particular the Forty Recommendations of the Financial Action Task Force on Money Laundering (FATF).”

APG has an Associate Membership in FATF, the world’s primary international organization dedicated to fighting money laundering and terrorist financing, and one of the few international organizations in this world that actually works. Although membership in APG does not confer membership in FATF, it does allow the member (or observer) a degree of secondary influence over FATF’s decision-making. And since 2010, FATF has issued statement after statement cautioning banks and finance ministries about North Korea’s “failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system.”

No doubt, Kim Jong Un’s financiers in Pyongyang understand the potential consequence of being severed from the global financial system, which is why, since February, Pyongyang has “engaged” with FATF to “discuss” its deficiencies. Presumably, those discussions are nothing more than discussions; otherwise, FATF wouldn’t still be urging Pyongyang to “immediately and meaningfully address” the deficiencies. It also explains why North Korea wants into APG.

As always, the flaw in this engagement is the absence of evidence that Pyongyang has made a decision to abide by the rules and common values of the association engaged with. As U.N. Security Council Resolution 2094 points out, FATF also supports “targeted financial sanctions related to proliferation.” North Korea not only remains constitutionally dedicated to developing nuclear weapons in violation of that resolution (and others), it is also dedicated to financing its WMD programs by any means necessary. We saw this most recently when North Korea lost a World Cup match of sorts — no, not that internet hoax, but the one it played against the Cambodian police.

~   ~   ~

Earlier this month, Yonhap reported that Cambodian authorities had arrested 15 North Koreans in Phnom Penh for running illegal gambling websites that were booking bets on the World Cup, which North Korea did not win, and for conducting cyber warfare against South Korea. The report was sourced to “a South Korean government source,” who also said the Cambodians “seized computers and other related equipment.”

It’s a far better thing to seize computers, which talk, than to seize North Koreans, who don’t. The computers could provide valuable information about North Korean bank accounts, financial relationships, co-conspirators, and the currencies and media of exchange used. It might even provide proof to support longstanding suspicions that North Korea’s overseas restaurants, including those in Cambodia, are fronts to launder money from the proceeds of activities like illegal gambling.

If the Treasury Department were at all serious about targeting North Korea’s financial enablers — a purely theoretical discussion, because it isn’t — an effective computer forensic analysis could give Treasury the basis to sanction North Korea’s third-country enablers.

North Korea has a long history of using illegal online gambling to finance itself. In 2011, the rheumy-eyed, snaggle-toothed old Trotskyists at The Guardian reported that “an elaborate hacking network” run by 30 North Koreas based in China “broke into online sites hosted in South Korea and stole prize points worth almost £3.7m ($6m)” using malicious code. Authorities also arrested five South Koreans for distributing the malware. Just four months before that report, the Russian Foreign Ministry “reprimanded the North Korean and Belarusian ambassadors for running illegal gambling on their premises in Moscow;” specifically, “a large network of underground casinos.” Even Dennis Rodman’s recent visit to Pyongyang was sponsored by Paddy Power, a (legal) Irish online gambling site. More here, here, here, and here.

~   ~   ~

Given North Korea’s long, promiscuous history of counterfeiting, proliferation, arms sales to terrorists, and money laundering – and the fact that this history leads right up to the present day – I can’t help wondering whose bright idea it was to offer North Korea “observer” status in APG, whose “members and … observers” are supposed to be “committed to the effective implementation and enforcement of internationally accepted standards against money laundering and the financing of terrorism.”

The arguments against this are as obvious as the reasons why those Craigslist ads say “disease-free.” North Korea will use its usual Jedi mind tricks to make contacts, schmooze, and persuade APG members (and indirectly, FATF) that it’s this close to some endlessly receding horizon that may or may not be a real step toward financial transparency. If, like me, you spent the last ten years watching how well those tricks worked on South Korea and our State Department, you can imagine how they’ll work against APG. The consequence will be the relaxation, rather than the strengthening, of anti-money laundering enforcement standards.

It’s clear enough how accepting this invitation serves North Korea’s interest in perpetuating its money laundering and proliferation.

The APG will decide later whether to elevate North Korea from observer status to a member country once it evaluates Pyongyang based on its annual reports to the organization and visits by the representatives of the group over the next three years.

South Korea and many other members are trying to figure out the motive behind the unexpected move by Pyongyang, because North Korea was previously opposed to joining the APG.

“[North Korea’s motive] is a mystery to us,” said a high ranking government official, who requested anonymity. “We suspect that North Korea, while looking for ways to ease the international financial restrictions imposed on them, decided to show their efforts in improving their global image [by joining the APG].

“But since the lists that they need to follow are long, we will probably have wait and see how sincere and determined they are with their decision.”

In other words, it could be a facade as a way for North Korea to ease the sanctions imposed on it, since the possibility that Pyongyang will give up its nuclear ambitions is low.

The action is particularly suspicious because up until last year’s APG meeting held in Shanghai, North Korea refused to join the organization because of the rule requiring members and observers to follow global standards. North Korea at the time argued that it would join the APG only after the agreement to follow UN resolutions was taken out. [Joongang Ilbo]

It’s hard to see what good this invitation does for APG, FATF, or the financial system. North Korea clearly hasn’t made the fundamental decision to abide by the shared values of any of those associations. And that fundamental decision is what gives “engagement” the potential for those associations to change North Korea, as opposed to the very opposite outcome.

It’s easier to see the dangers this move creates — again, absent evidence that North Korea has seen the evil of its ways and decided to change them. The most obvious is that it gives North Korea undeserved legitimacy in area where it has been the world’s most flagrant recidivist.

Then, there is the example of the U.N. Human Rights Commission to draw from. I suppose that once, long ago, some addlebrained diplomat hypothesized that if only the leaders of China, Cuba, and Libya could be exposed to the principles by which the rest of civilized humanity lives, their leaders would feel compelled to conform themselves to those principles. What happened instead was that China, Cuba, and Libya took over the Human Rights Council, eviscerated its founding values, and destroyed it. So it goes whenever international institutions welcome members who don’t share the common principles of the institutions.

Test something louder, Dear Leader. John Kerry still can’t hear you.

With the world erupting in the greatest cascade of escalating conflicts since 1975 and President Obama’s approval rating on foreign policy at negative 21.2% — 11% lower than his overall (dis)approval rating — John Kerry eked out some time over the weekend to tempt fate with a dubious boast:

I just came back from China, where we are engaged with the Chinese in dealing with North Korea. And you will notice, since the visit last year, North Korea has been quieter. We haven’t done what we want to do yet with respect to the de-nuclearization. But we are working on that and moving forward. [John Kerry, Meet the Press, July 20, 2014]

If you’re in Seoul or certain parts of Washington, that clapping sound isn’t applause; it’s the smack of palms against foreheads. Kerry’s observation rubs a lamp that wiser men do not touch for fear of the genies they would rather not summon. One may as well compliment a politician’s moderate views during primary season, or announce one’s arrival in the cellblock by telling the gang leader that he seems a decent enough fellow. As if on cue, yesterday, North Korea threatened South Korea and the United States with “practical retaliatory actions of justice.”

As South Koreans are keenly aware, North Korea has not been quiet. Under the direct supervision of His Porcine Majesty, it has been testing SCUDs in violation of multiple U.N. Security Council resolutions, along with massive barrages of artillery rockets. The U.S. and U.N. responses to this have been negligible.

At best, Kerry’s comment suggests poor coordination with one of our most important allies that still hasn’t been attacked this year. At worst, it suggests dangerously wishful and complacent thinking. It clearly means that Kerry neither knows nor cares much about North Korea. Such revelations cause unease among our allies, which is why the State Department had to “clarify” Kerry’s remarks yesterday:

U.S. Secretary of State John Kerry is clearly concerned about North Korea’s provocative actions and did not mean to downplay the seriousness of the issue when he said Pyongyang is “quieter” than before, a government official said Monday.

“The secretary and we all have been very clear in condemning North Korea’s aggressive actions when they occur. We’ve talked recently about the ballistic missiles and how those were in violation of U.N. Security Council resolutions,” State Department deputy spokeswoman Marie Harf said at a regular press briefing.

“So I think the secretary has been very clear about our concern with North Korea’s activity,” she said in response to a question whether Kerry’s statement is a correct assessment of the situation. “He wasn’t trying to convey something different than we’ve conveyed in the past.” [Yonhap]

Concern, however, is no substitute for a coherence in matters of policy. Under Kerry’s tenure, the Obama Administration has shown a lack of seriousness about enforcing existing U.N. Security Council sanctions, even after North Korea was caught in flagrante delicto. It has imposed targeted financial sanctions on Zimbabwe, Russia, and Belarus – and grudgingly enforced tough financial sanctions against Iran – while its tepid trade sanctions against North Korea are stuck in the 1970s. Treasury has sanctioned and blocked the assets of the top leaders of these nations, but none of the top leaders of North Korea.

Our government has designated Burma and Iran to be primary money laundering concerns, a potentially devastating measure that is the financial industry’s equivalent of a sex offender registration, isolating them from a community where reputation means everything. It has made no such designation with respect to North Korea, the world’s most prolific state sponsor of money laundering, counterfeiting, drug dealing, and illegal proliferation.

Most unforgivably, it has offered no policy response whatsoever to a U.N. Commission of Inquiry’s finding that Kim Jong Un’s regime is committing crimes against humanity. Kerry is as deaf to the cries of the North Korean people as he is to roar of Kim Jong Un’s rockets. That is why North Korea continues to defy the Commission of Inquiry and all those who support its recommendations.

It’s as if this administration has no North Korea policy at all.

Meanwhile, as gravity of the threat from North Korea builds, President Park is so convinced that a North Korean provocation is imminent that she has directed her military commanders to return fire immediately if fired on by North Korea. This puts us one ill-advised temptation away from the miscalculation that could start Korean War II.

But perhaps, Koreans wonder, this isn’t what Kerry meant:

[C]ritics said [Kerry’s] assessment is far from reality. 

While characterizing the North as “quieter,” Kerry might have referred to the fact that the provocative nation has not carried out a nuclear test or a long-range rocket launch — the two main types of provocations Pyongyang has used to rattle the world.

Even without such major provocations, however, the North has continued to rattle its saber in recent months, firing a number of rockets, missiles and artillery rounds off its coast with some launches in violation of multiple U.N. Security Council resolutions.

Last week, the council issued a statement condemning the North’s ballistic missile launches.  [Yonhap]

To claim success for Kim Jong Un’s failure to nuke off is to confuse coincidence with causation. There is no evidence that Kerry’s diplomacy has resulted in serious movement toward disarming North Korea. There is more evidence that the Obama Administration itself is moving away from denuclearization as an objective.

One could just as well claim that the House’s introduction last April of tough financial sanctions targeted at Kim Jong Un’s financial jugular may be deterring him from a nuclear test. Or, it could simply be that North Korea’s nuclear tests will conform to their previous interval of three to four years. A test of something louder would at least get the attention of everyone else in Washington who would otherwise forget that North Korea exists. One can hope that this time, Congress might just respond with more credible policy options than John Kerry has to offer.

FBME Bank denies money laundering allegations

FBME Bank, whose correspondent accounts were ordered closed by a Treasury Department action under Section 311 of the USA PATRIOT Act last week, has responded to Treasury’s allegations of money laundering:

FBME said it was “shocked” by the content of the US Department of the Treasury notice “that sets out unexplained allegations of weak AML controls,” which, the bank said, it had not been given any opportunity to comment on or refute.

The bank denied the allegations, saying it had commissioned the German division of an international accountancy firm to carry out a detailed assessment into its operations and practices over the past two years.

FBME, it said, was found in compliance with applicable rules on AML regulations of both Cyprus and the European Union.

“FBME Bank welcomes the involvement of its regulator, is cooperating fully with it and reiterates its absolute continued commitment to full compliance with applicable laws and regulations,” the bank said in an announcement posted on its website. [Cyprus Mail]

That welcome may be a bit superfluous, because according to the Cyprus Mail and the Lebanese news site Ya Libnan, the Central Bank of Cyprus has taken over FBME’s operations for “as long as the central bank deems it necessary.” The move is similar to the Macanese government’s takeover of Banco Delta Asia in 2005, after Treasury published a similar set of notices against it for laundering money for North Korea. With Cyprus trying to stave off a broader banking crisis now, the last thing it needs is for a bank operating on the island to collapse, even if that bank is chartered in Tanzania and serving a largely non-Cypriot clientele.

I’ll offer a few points in response to FBME’s statement, which largely misapprehends how Section 311 (codified at 31 U.S.C. sec. 5318A) operates.

First, it is both technically true and legally irrelevant that FBME had no notice of this specific action. A Notice of Finding and a Notice of Proposed Rulemaking under Section 311 are intended to be no-notice actions to block correspondents accounts that may contain illegally derived funds. FBME’s opportunity to respond began with the publication of the notice and will end 60 days after that. After considering any comments on the proposed action, Treasury will make its final findings and conclusions and publish its Final Rule. Presumably, this process will give FBME an opportunity to hire lawyers to argue Treasury hasn’t met the criteria of 31 U.S.C. sec. 5318A(b).

Second, until that point, it would be fair to say the allegations are “unproven,” but it would not be fair to call them unexplained. Treasury’s notices explain them in great detail.

Third, Treasury has no obligation to warn the target of a law enforcement investigation that it is investigating the target for suspected illicit activity; rather, it is the duty of the financial institution to know its customers and make reasonable inquiries about suspicious transactions – that is, to perform due diligence. If true, FBME’s alleged provision of financial services to an unnamed front for a Syrian entity involved in WMD co-development with North Korea suggests that it fell short of these “know your customer” obligations. Presumably, FBME’s response and Treasury’s evidence will be given due consideration before Treasury publishes its Final Rule. If FBME can make the case that it didn’t fall short of these obligations, or that the shortfalls were inadvertent, Treasury should mitigate or rescind the special measure.

Finally, if half the allegations in Treasury’s Notice of Finding are true, FBME can’t honestly claim that it wasn’t on notice of deficiencies in its “know your customer” and anti-money laundering obligations. Of course, FBME has another 55 days to make its case to the contrary. After that, FBME can appeal Treasury’s decision to the federal courts, in which case Treasury’s decision would get a high degree of judicial deference, but its evidence would still be subject to judicial scrutiny. Even classified evidence Treasury relies on would be subject to the court’s in camera review.

You can read the full statement at FBME’s web site, which is loading rather slowly. For some reason.

U.S. should ask Mexico to search the M/V Mu Du Bong

Last week, I linked to a piece by investigative journalist Claudia Rosett (third item), noting the travels of the North Korean freighter Mu Du Bong from Cuba into points unknown in the Gulf of Mexico. Now, thanks to intrepid Miami Herald reporter Juan Tamayo, we learn that the Mu Du Bong has run aground in the Mexican Gulf Coast port of Tuxpan, not far from Veracruz. The ship is said to be empty, but there are a number of suspicious aspects of its behavior.

The 430-foot Mu Du Bong grounded Monday on a reef about seven miles from the Mexican port of Tuxpan, according to shipping industry officials. The job of pulling it off the reef will be complicated and take several days, they said.

The ship was empty and planning to pick up cargo in Tuxpan when it ran aground because its captain “lost his bearings,” according to a report by the Agence France Presse. Tuxpan is known as one of Mexico’s main sugar exporting ports.

Port administrators told El Nuevo Herald aid they did not know whether the Mu Du Bong was entering or leaving the port. An official at the Captain of the Port’s office said no one there was authorized to give information on the case. [Miami Herald]

Like the Chong Chon Gang, the North Korean ship that was caught carrying weapons from Cuba through the Panama Canal last year, the Mu Du Bong had its automatic location beacon switched off for several days, creating a potentially unsafe condition for other ships.

The Mu Du Bong crossed the Panama Canal into the Caribbean June 15. Its transponder signaled June 25 that it was near the port of Mariel, and on June 29-30 that it was in Havana, according to a Forbes magazine article Sunday that first reported its voyage.

For the next nine days its transponder fell silent, Forbes reported. It started working again on July 10, showing the ship was in Havana and then sailed north into the Gulf of Mexico, according to the magazine article.

One shipping industry official called the freighter built in 1983 “an ugly old rust bucket” and said photos of the ship’s deck show an odd mast surrounded by wires that could be some sort of jerry-rigged crane or an antenna. [....]

The Forbes report said shipping records show the two vessels share the same commercial agent, Ocean Maritime Management Company Ltd. U.N. experts who investigated the Chong Chon Gang incident said that company “played a key role in arranging the shipment of the concealed cargo of (Cuban) arms and related materiel.” [Miami Herald]

The Mu Du Bong’s shipping agent was Ocean Maritime Management, the same company that arranged for the voyage of the Chong Chon Gang.

Mu Du Bong

[Image source]

In other words, four months after a U.N. Panel of Experts report laid out conclusive evidence of OMM’s deliberate and premeditated violation of U.N. Security Council sanctions, the U.S. Treasury Department has not sanctioned OMM or any other entity under Executive Order 13551 over the Chong Chon Gang incident, or added it to the list of Specially Designated Nationals. Meanwhile, OMM is still acting as an agent for suspicious North Korean shipping traffic to Cuba.

Under a recent U.N. Security Council resolution, Mexican authorities have the legal authority to inspect the Mu Du Bong.

Moreover, in the effort to prevent the direct or indirect supply, sale or transfer to or from the Democratic People’s Republic or Korea or its nationals of any banned items, States are authorized to inspect all cargo within or transiting through their territory that has originated in the Democratic People’s Republic of Korea or that is destined for that country.  They are to deny permission to any aircraft to take off from, land in or overfly their territory, if they have reasonable grounds to believe the aircraft contains prohibited items. [UNSCR 2094]

I don’t know whether the U.S. government is currently pressing the Mexican government to assert that right, but a U.S. government with a genuine interest in enforcing U.N. Security Council sanctions would be pressing for an inspection of the Mu Du Bong.

A number of analysts quoted in various press reports doubted that the Mu Du Bong could be carrying weapons because its bills of lading list only civilian goods. But by the same faulty argumentum ad ignorantiam logic, North Korea has no concentration camps because it denies having them, and O.J. is still looking for the real killer. At page 92 of this U.N. Panel of Experts report, you can see the bills of lading for the Chong Chon Gang. They mention 210,000 bags of sugar, and nothing about MiGs or missile parts. The real answer is that we won’t know what the Mu Du Bong is carrying until the ship is inspected.

Update: I changed “press” to “ask” in the title of this post. Better to ask nicely the first time, and “press” only if asking nicely doesn’t work, right?

Update 2: More on this story via Reuters.

Open Sources, July 18, 2014

~   1   ~

THAT’LL SHOW ‘EM: The State Department is sending the International Civil Aviation Organization a strongly worded complaint about North Korea’s rocket launches. Oh, and the U.N. Security Council issued a press release of disapproval:

[You can change the puppets, but the strings still move the same way.]

Somewhere in Pyongyang, Kim Jong Un is asking his generals how many divisions the ICAO has, and Park Geun-Hye is asking her Foreign Minister whether she should send him to Xi Jinping’s throne with 1,000 taels of gold or 5,000.

~   2   ~

HOW NORTH KOREANS ARE CONDITIONED not to ask “why.”

~   3   ~

HOW NORTH KOREA obtains and distributes consumer goods, according to a recent defector.

~   4   ~

SUE MI TERRY’S article, “A Korea Whole and Free,” is now available at Foreign Affairs. Hat tip to this piece in The National Interest, which discusses some of the things I hope the ROK Army is preparing to do to stabilize the North if things do fall apart. I hope the lesson we learn from Syria is that even the most peaceful, democratic revolution can turn into hell on earth if we don’t support those who share our values and our interests.

~   5   ~

THOSE WHO ADVOCATE for North Korea’s referral to the International Criminal Court would be well advised to consider its institutional decline in Africa, and the growing reliance on ad hoc courts as a replacement. That’s particularly worthy of consideration in North Korea’s case, because (1) everyone knows that China would veto an ICC referral, and (2) South Korea, as a highly developed nation, can afford to support an ad hoc tribunal.

~   6   ~

THE CHOSUN ILBO keeps you up on the latest unconfirmed rumors about State Department kremlinology. I suppose Sung Kim will end up in some position of influence over North Korea policy, and given his background as a Chris Hill crony, we have little reason to expect that he’d exercise it with much competence.

~   7   ~

KIM JONG UN’S BORDER CRACKDOWN catches a woman who was smuggling out “sensitive internal documents.” May God help her … and her family.

~   8   ~

PARK SANG-HAK AND seven fellow defectors have launched more leaflet balloons against North Korea:

“Since the start of this year, the North fired missiles and artillery shells on dozens of occasions, firing away (money) worth three months of food for North Korean people,” Park Sang-hak, the head of the activist group Fighters for Free North Korea, said. “We decided to launch the anti-Pyongyang leaflets since the government did not take any action.” [Yonhap]

~   9   ~

IN A RARE CASE of rising humanitarian spending, North Korea has increased its spending on used medical supplies, including radiology equipment (meaning, x-ray machines?). The new spending may or may not move North Korea up from near last place in global rankings for health care spending. Yonhap speculates that importing drugs could give North Korea a means to reverse-engineer and re-export the drugs. Or, that the new imports may have been necessitated by the recent apartment collapse in Pyongyang, which would suggest that North Korean hospitals were unprepared to treat survivors of the disaster.

Obviously, it remains to be seen where the equipment would be installed and how equally its benefits would be distributed, but I can think of a lot of worse things North Korea has imported recently.

~   10   ~

AFTER ALL THE INK THAT HAS BEEN SPILLED over it and all of the money that’s being spent on it, I still have no idea how President Park plans to reunify Korea, but she’s established a blue-ribbon committee to carry out those cryptic plans.

Treasury nukes bank with possible North Korea links (updated)

The Treasury Department has gone full Banco Delta on Cyprus-based, Tanzanian-chartered FBME Bank for money laundering, terrorist financing, and possibly even Syrian WMD proliferation — proliferation that is closely linked to North Korea.

According to Treasury’s press release, FBME promoted itself as a provider of no-questions-asked banking services with loose anti-money laundering controls, although I saw no evidence of this at FBME’s Web site. But according to Treasury’s more detailed Notice of Finding, FBME was laundering money for Hezbollah, illegal online gamblers, phishing hucksters, drug lords, African kleptocrats, and various swindlers who ripped off victims in California, Ohio, and Michigan.

Treasury invoked Section 311 of the USA PATRIOT Act against FBME, applying the dreaded Fifth Special Measure, which closes the target’s correspondent accounts and effectively cuts it off from the global financial system. You can read Treasury’s Notice of Proposed Rule-Making here. Or, for those of you who aren’t banking lawyers, I’ll simplify:

Well, almost. A bank can survive that sort of thing and continue to do business, but only on a small, local scale. Banco Delta Asia itself continues to do business for a local customers in Chinese Yuan and Macanese Petacas. In the case of FBME, however, its business model depends on international transactions. It isn’t offering commercial banking services in Cyprus, and it only has four branches in Tanzania.

So far, Treasury has invoked Section 311 against four jurisdictions — the Ukraine and Nauru (since rescinded), Burma, and Iran. It has also listed 13 financial institutions, including Banco Delta Asia, which remains listed to this day.

North Korea, the only existing state known to sponsor currency counterfeiting and drug trafficking, and to encourage illicit activity by its diplomats abroad, has never been listed. Discuss among yourselves.

Treasury’s case against FBME makes no direct reference to North Korea, but according to the Notice of Finding, one of FBME’s customers was a front for a sanctioned Syrian entity, the Scientific Studies and Research Center (SSRC), and used FBME to process transactions through the U.S. financial system. (This is the part that people never get — the bad guys love them some dollars. They just don’t think they’ll get caught, probably because they usually aren’t.)

Treasury did not name the front company.

According to the Nuclear Threat institute, SSRC “collaborates heavily with Iranian and North Korean entities” on missile technology. In February 2013, the Israeli Air Force bombed a convoy loaded with anti-aircraft missiles at SSRC’s complex north of Damascus, damaging what The New York Times described as “the country’s main research center for work on biological and chemical weapons.” Further on, the Times article says, “Intelligence officials also believe that the center has links to North Korea, a source of much of Syria’s missile technology.”

Oh, and those anti-aircraft missiles were SA-17s, the same kind suspected of shooting down that Malaysian airliner today. [Update: Subsequent press reports have said that the missile used to shoot down the airliner was an SA-11.]

Earlier this year, the Times of Israel, citing Jane’s Defence Weekly, alleged that SSRC has gone into the business of manufacturing its own ballistic missiles domestically to bypass international sanctions against Syria, and that it has done so “with the assistance of countries including Iran, North Korea, and Belarus.”

The SSRC is also working on a project with North Korea to help improve its Scud D missile capabilities. North Korean officials at the Tangun corporation have already begun researching and producing components for Scud D missiles which would make it difficult for enemy targets to calculate the missiles’ flight trajectory upon atmospheric entry, Jane’s reported, thus preventing or delaying interception by anti-missile systems, including those in Israel’s possession.

Korea Tangun Trading Corporation appears on the SDN List. For more about the links between SSRC and North Korea, NK News has done some superb investigative reporting on this topic.

According to the Notice of Finding, the SSRC front company shared the same address in Tortola, British Virgin Islands with 111 other shell companies that are also subject to international sanctions. There are only 74 targets on the SDN list with Tortola addresses. Most are fronts for Cuba; a few are sanctioned for links to Hezbollah, Iran, or Zimbabwe. One, DCB Finance, is North Korean, and is a front for Daedong Credit Bank. DCB Finance and Daedong Credit Bank were sanctioned last June for proliferation-related activities.

By itself, the coincidence of address adds little to Treasury’s case, which presumably relies on financial evidence of the SSRC front company’s transactions. It does suggest that in financial terms, you will never find a more wretched hive of scum and villainy than Road Town, Tortola.

FBME had did not immediately respond to a Wall Street Journal reporter who contacted it for comment. Perhaps when he called, the reporter heard a Board of Directors cry out in terror before it was suddenly silenced.

~   ~   ~

[Update: Greetings to my visitors arriving from FBME Bank and FBME Card Services on the lovely island of Cyprus. If you want to get your side of the story out there, do feel free to send an email or drop a comment. I have to say this for FBME -- after a lot of searching, I never did find the evidence that it marketed its lax AML compliance, although the pre-paid card services it offered did not have a particularly good compliance reputation.]

Polls show Asians are increasingly fearful of China

There is much interesting news this week about how China’s bullying of its neighbors is perceived in other Asian nations, including South Korea. An AP report describes how China’s predatory hegemony in the Pacific has (as I suspected it would) alienated other Asian nations and isolated China itself.

A more interesting item, noted in The Washington Post, is a graphic of Pew Research polling data from Asian countries showing that majorities (or strong majorities) throughout the region are afraid of China’s bad touch. In all, 83% of South Koreans, 85% of Japanese, 84% of Vietnamese, and 93% of Filipinos are either “very concerned” or “somewhat concerned” that “territorial disputes between China and its neighbors will lead to a military conflict.” Most shockingly of all, 62% of Chinese agree.

Taiwan was not surveyed.

I’d be interested in knowing why Pew thinks it was able to get an accurate and honest sample of public opinion in China, and whether the result means that a pacifist streak lies latent, beneath China’s recent displays of obnoxious nationalism. You can read Pew’s full results here. Last year’s survey didn’t ask exactly the same questions, so it’s hard to make a direct year-to-year comparison, although the percentages above were generally higher than the percentages of respondents who, in the 2013 survey, said that territorial disputes with China were a “big” or “very big” problem in their country. In South Korea, the percentage rose from 77% to 83%.

America’s image abroad — sit down for this — isn’t particularly shiny, either. Most Africans love us, but Europeans hate us because of drones and Snowden, Russians hate us because of the Ukraine, and the Muslim world hates us the most of all, although the survey regrettably failed to ask whether this is because we’re stealing their rain, covered up Israel’s assassination of a disobedient JFK, created AIDS in a secret CIA laboratory, released killer mosquitoes in Pakistan, or stole their babies to harvest their organs, all of which are perfectly acceptable responses.

Meanwhile, the Asan Institute has released new survey data showing that although South Koreans have a generally favorable impression of Park Geun Hye’s recent summit with Xi Jinping, “more Koreans think Seoul needs to work harder on its security cooperation with Tokyo and Washington,” than before the summit.

In a survey conducted by the Asan Institute for Policy Studies, 59 percent of respondents picked Japan and the United States as the countries Korea needs to increase security cooperation with, up from 57.1 percent in a survey conducted in March.

In March, 29.8 percent picked China as the country to boost security cooperation with, which dropped to 26.5 percent in July. 

Likewise, 59.6 percent of respondents said that Korea has to strengthen cooperation with the U.S in July compared to 24.9 percent who thought cooperation should be boosted with China.

In March, 56.9 percent of respondents thought Korea’s should boost cooperation with Washington while 29.4 percent thought cooperation with Beijing should be strengthened. [Joongang Ilbo]

The shifts are modest, but still remarkable in light of China’s uncharacteristically skillful courting of South Korea, Japan’s recent unforced outrages against South Koreans, and the South Korean press’s coincident blindness toward China’s sexual exploitation of Korean women and its chronic priapism for inflammatory anti-Japanese stories.

Although the Korean reaction to the summit was favorable, it was less favorable than the reaction to Park’s visit to Beijing last year.

As they say, in crisis, there is opportunity. These results add further weight to my advocacy of a Pacific military alliance to contain China and preserve peace in the region now that Xi Jinping’s grabby hands have landed China on Asia’s sex offender registry and conclusively refuted the “peaceful rise” theory. China today resembles nothing so much as Japan in the 1920s.

Is Orascom facilitating crimes against humanity in North Korea?

New Focus International is reporting that North Korea has distributed cell phones to its secret police, and that the secret police are using them to hunt down potential refugees:

The distributions of cell-phones are being made as part of efforts to aid agents of the Ministry of State Security and Ministry of People’s Security in preventing people escaping the country.

As part of the process of organising an escape, North Koreans intending to flee the country often make contact through cell-phones with those who have already made it.

The surveillance authorities are acutely aware of this, and the distribution of cell-phones is seen as a direct response to counter such attempts at reaching the outside world.

In June, our sources described, ‘This kind of cell-phone use and distribution is supposed to be illegal. The authorities are very much on edge about preventing escapes and seeking out channels of communication to the outside that they are handing out cell-phones to security agents.’

When a North Korean individual is discovered to have attempted phone calls with someone over the border in China, surveillance agents in the local area communicate via cell-phone in order to move quickly to cut that channel. [New Focus International]

That North Korea’s secret police would have the best comms Pyongyang can obtain for them isn’t surprising. Nor is it surprising that the secret police would use those comms to hunt down those who would flee their Fatherland for food and freedom.

It is still legally significant that these specific facts are being reported by New Focus, because in most U.S. sanctions regulations, such as those against Iran and Cuba, facilitating censorship or human rights abuses is a basis to block the assets of any entity that knowingly involves itself in such contemptible conduct. Because our North Korea sanctions regulations are among the weakest on the books today, there is no similar provision in effect with respect to North Korea. Section 104(a) of H.R. 1771 would weld this loophole shut by imposing mandatory blocking sanctions on any company that knowingly facilitates censorship or severe human rights abuses.

[This is what North Korea does to people who help others to escape.]

It’s frustrating that New Focus doesn’t say more about what sort of cell phones the security forces are using to help us sort the cats from the mice, but it is possible to make some educated guesses.

Potential escapees, traders, smugglers, and defection brokers illegally use cell phones that operate on Chinese networks — networks that reach a few miles into North Korea. Koryolink, a subsidiary of the Egyptian conglomerate Orascom, is widely believed to be the only authorized provider of cellular communications services in North Korea. It is possible, but unlikely, that North Korea’s secret police would use any other cellular network but Koryolink to communicate. If my assumption and New Focus’s reporting are both correct, Koryolink is on notice that the Inmin Poan Bu and the Kuk-Ga Anjeon Bowibu are using its service for purposes that could one day be punishable by the blocking of assets, and by criminal and civil penalties. Even the risk of blocking sanctions would likely be a deal-breaker for Orascom’s Board of Directors. After all, Orascom is already having trouble repatriating its alleged profits from North Korea.

That means that if H.R. 1771 passes, some hard decisions will be necessary for Koryolink to have a future, just as it will be true of other investors who have overlooked ethical concerns about their investments in North Korea. First, Koryolink (or Orascom’s directors) could very quickly and publicly decide that supplying the regime’s security forces is a legal and financial risk they aren’t prepared to accept. Then, Kim Jong Un would have to decide whether he’s willing to allow his security forces to be denied Koryolink’s services so that his other minions can keep it.

The other implication of New Focus’s report would be the use of Koryolink to isolate North Koreans, roll back the gradual marketization of its economy, and restore its fractured information blockade. Many supporters of engagement with Pyongyang take a see-no-evil approach to investment, justifying their actions with arguments that those investments contribute to the greater good by reforming the bigger system. If Koryolink is an instrumental tool in Kim Jong Un’s border crackdown, it would do much to undercut that argument.

Unlike most “engagement” deals with the regime in Pyongyang, I harbor a degree of ambivalence about Koryolink. I think it’s unlikely that they have anywhere near the number of subscribers they’ve claimed, and I suspect their phones are both closely monitored and (as with all resources in North Korea) distributed to loyalists, and those who can afford to bribe their way through the usual restrictions. Still, I recognize the potential benefit in allowing North Koreans, including elite North Koreans, to have the capacity to communicate from city to city about news, prices, and ideas, or to spread the word should there be a popular disturbance or a military mutiny in one of the provinces. The likelihood that the system is heavily monitored and equipped with a kill switch greatly mitigates these potential benefits.

Ultimately, however, what I don’t know about Orascom outweighs what I do know, and the things we know the least about are its financial arrangements in North Korea and the extent of its partnership with the state’s machinery of oppression. Those, too, could be deal-breakers. Perhaps they should be.

Suzanne Scholte takes her case to Northern Virginia’s Korean-Americans

Last Saturday, Suzanne Scholte and I appeared at a panel sponsored by the Korean-American Association of the Washington Metropolitan Area and the Korean Freedom Alliance. Scholte, who is now running to represent Virginia’s 11th District in Congress, addressed the group and made an impassioned case for why Korean-Americans should lead their fellow Americans and the world in opposing North Korea’s crimes against humanity.

WKTV, northern Virginia’s Korean-language TV channel, was also there. Video of Suzanne starts at about 4 minutes in.

I’m a proud supporter of Suzanne’s candidacy. Conservative voters will not need any persuasion from me to support Suzanne, so I’ll address this brief argument to those who see themselves as liberals or moderates, and who are interested enough in human rights in North Korea to read this site. I have nothing against her opponent, Gerry Connolly, whom I’ve met and liked. I see this as a race between good and best, and all I ask is that just one of our 535 legislators care about this issue as much as Suzanne does.

Voters with an interest in women’s issues should respect Suzanne’s work on behalf of North Korean victims of sex trafficking. I don’t doubt that her advocacy has saved hundreds of them over the years she has devoted to this cause.

Suzanne’s campaign is also on Facebook and Twitter. If you feel the same way about this issue as I do, I hope you’ll friend and follow her.