At Last, Plan B

This afternoon, the Treasury Department finally announced its long anticipated sanctions against North Korea, in the form of a sweeping new executive order. The order, pursuant to the International Emergency Economic Powers Act, authorizes the blocking of assets of “any person” providing what Treasury calls “material support” for North Korea’s WMD proliferation, money laundering, counterfeiting, trade in luxury goods, bulk cash smuggling, and pretty much everything North Korea does that violates UNSCR 1718 or 1874, or the U.S. Criminal Code.

In addition to the new order, Treasury also imposed new sanctions against several North Korean entities under the existing Executive Order 13382. Below the fold, I’ve pasted the text of the Executive Order, President Obama’s letter forwarding the EO to the Speaker of the House, two Treasury press releases, and some remarks by OFK favorite Stuart Levey, all of which I’ve archived here to aid your research and mine.

My initial reaction is that the new EO gets it just right. It’s narrowly targeted at North Korea’s illicit activities, but it’s also broad enough to cover the main ones — arms and drug trafficking, money laundering, currency and pharmaceutical counterfeiting, and the squandering of its resources on luxury goods while North Korean children starve in the streets. This is a tough-yet-refined version of the Plan B I’ve been advocating since its earliest draft in 2006.

Here is the key language:

All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person, including any overseas branch, of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in:

(i) the persons listed in the Annex to this order; and

(ii) any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:

The EO then goes on to describe a wide range of activities, assistance, and financial activities that could support North Korea’s illicit activities, including the assets of any entity held by a U.S. person, or within U.S. jurisdiction. This means that if a Chinese entity is involved in helping a blacklisted North Korean entity acquire missile components, Treasury could freeze the Chinese entity’s tainted assets based in the U.S., assets of its U.S. subsidiaries, its assets in U.S. banks, or potentially, the entity’s foreign bank’s correspondent accounts in U.S. banks. This is all we could ask, and — if applied vigorously — it will be enough to force international businesses to choose between the use of the global financial system and their business ties with North Korea. Yes, North Korea could try to conceal, blur, obfuscate, and obscure which companies are connected to its illicit activities, but Treasury’s answer to this is that its effect will be to spread suspicion to all North Korean entities, even those that claim to be legit. This could be a severe blow to North Korea’s ability to comingle illicit and legitimate finance (the essence of money laundering) and will terrify investors and cause capital flight from the Palace Economy just as the Kim Dynasty is trying to engineer a smooth succession.

For Senator Sam Brownback, it is also a rightful claim to an important legacy when he leaves the Senate to become, almost assuredly, the next Governor of Kansas. In recent months, as North Korea’s behavior changed thinking in the Obama Administration, Brownback effectively lobbied State for tougher economic sanctions, and skillfully parlayed the stayed threat of nomination holds to build friendships with State Department officials with whom he found common ground. In the absence of strong conservative thinkers on the Senate Foreign Relations Committee, Brownback filled the void, seized the opportunity to build relationships in the Treasury Department, and encouraged it to press for tougher enforcement. The question now turns to the Administration’s determination to use this tool aggressively, and follow the money to the very ash heap of the Kim Dynasty if necessary.

Who is targeted? A lot of entities that were already on Treasury’s list of specially designated nationals, but also, two key additions: Bureau 39 of the Korean Workers’ Party, and the notorious Reconnaissance Bureau, the prime suspect in the recent attempt to assassinate Hwang Jang Yop. Also sanctioned was a North Korean state enterprise responsible for making and exporting submarines and torpedoes.

For the moment, senior State Department people like Robert Einhorn seem determined to use financial pressure to force a fundamental change in North Korea’s behavior, and talk of re-engaging with North Korea all seems very theoretical and conditional. I don’t think anything short of a coup will actually cause that fundamental change, and the real test will come when State and the Administration come to grips with this. For now, this is all we could have hoped for from this Administration.

Letter from the President — Blocking Property of Certain Persons with Respect to North Korea

TEXT OF A LETTER FROM THE PRESIDENT TO THE SPEAKER OF THE HOUSE OF REPRESENTATIVES AND THE PRESIDENT OF THE SENATE

August 30, 2010

Dear Madam Speaker: (Dear Mr. President:)

Pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), I hereby report that I have issued an Executive Order (the “order”) that expands the scope of the national emergency declared in Executive Order 13466 of June 26, 2008, and takes additional steps with respect to that national emergency.

In 2008, the United States terminated the exercise of certain authorities under the Trading With the Enemy Act (TWEA) with respect to North Korea, and also declared a national emergency pursuant to IEEPA to deal with the unusual and extraordinary threat to the national security and foreign policy of the United States posed by the existence and risk of the proliferation of weapons-usable fissile material on the Korean Peninsula. Executive Order 13466 continued certain restrictions on North Korea and North Korean nationals that had been in place under TWEA.

I have determined that the Government of North Korea’s continued provocative actions, such as its unprovoked attack on and sinking of the Republic of Korea Navy ship Cheonan in March 2010, which resulted in the deaths of 46 sailors; its announced test of a nuclear device and missile launches in 2009; its violations of United Nations Security Council Resolution (UNSCR) 1718 of October 14, 2006, and UNSCR 1874 of June 12, 2009, including the procurement of luxury goods; and the illicit and deceptive economic activities through which it obtains financial and other support, including money laundering, the counterfeiting of goods and currency, bulk cash smuggling, and narcotics trafficking, destabilize the Korean peninsula and imperil U.S. Armed Forces, allies, and trading partners in the region, and warrant the imposition of additional sanctions.

The United Nations Security Council, in Resolutions 1718 and 1874, requires Member States to take certain measures to prevent, among other activities, the transfer of most arms and related materiel to or from North Korea and the transfer of luxury goods to North Korea. The United States has implemented those two UNSCRs, and the order strengthens that implementation.

The order is not targeted at the people of North Korea, nor at those who provide legitimate humanitarian relief to those people, but rather is aimed at specific activities of the Government of North Korea and others undertaken in defiance of UNSCRs 1718 and 1874. The order targets the international network that supports the Government of North Korea through arms sales and illicit economic activities, including money laundering, the counterfeiting of goods and currency, bulk cash smuggling, and narcotics trafficking.

The order leaves in place all existing sanctions imposed under Executive Order 13466, and blocks the property and interests in property of persons listed in the Annex to the order. The order also provides criteria for designations of persons determined by the Secretary of the Treasury, in consultation with the Secretary of State:

“¢ to have, directly or indirectly, imported, exported, or reexported to, into, or from North Korea any arms or related materiel;

“¢ to have, directly or indirectly, provided training, advice, or other services or assistance, or engaged in financial transactions, related to the manufacture, maintenance, or use of any arms or related materiel to be imported, exported, or reexported to, into, or from North Korea, or following their importation, exportation, or reexportation to, into, or from North Korea;

“¢ to have, directly or indirectly, imported, exported, or reexported luxury goods to or into North Korea;

“¢ to have, directly or indirectly, engaged in money laundering, the counterfeiting of goods or currency, bulk cash smuggling, narcotics trafficking, or other illicit economic activity that involves or supports the Government of North Korea or any senior official thereof;

“¢ to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the activities described in sections l(a)(ii)(A)-(D) of the order or any person whose property and interests in property are blocked pursuant to the order;

“¢ to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to the order; or

“¢ to have attempted to engage in any of the activities described in sections l(a)(ii)(A)-(F) of the order.

I have delegated to the Secretary of the Treasury the authority, in consultation with the Secretary of State, to take such actions, including the promulgation of rules and regulations, and to employ all powers granted to the President by IEEPA and the United Nations Participation Act, as may be necessary

to carry out the purposes of the order. I have also delegated to the Secretary of the Treasury, in consultation with the Secretary of State, the authority to determine that circumstances no longer warrant the blocking of the property and interests in property of a person listed in the Annex to the order, and to take necessary action to give effect to that determination.

The order was effective at 12:01 p.m., eastern daylight time on August 30, 2010. All executive agencies of the United States Government are directed to take all appropriate measures within their authority to carry out the provisions of the order.

I am enclosing a copy of the Executive Order I have issued.

BARACK OBAMA

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Executive Order from the President — Blocking Property of Certain Persons with Respect to North Korea

EXECUTIVE ORDER

BLOCKING PROPERTY OF CERTAIN PERSONS WITH RESPECT TO NORTH KOREA

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the National Emergencies Act (50 U.S.C. 1601 et seq.), section 5 of the United Nations Participation Act of 1945 (22 U.S.C. 287c) (UNPA), and section 301 of title 3, United States Code; in view of United Nations Security Council Resolution (UNSCR) 1718 of October 14, 2006, and UNSCR 1874 of June 12, 2009; and to take additional steps with respect to the situation in North Korea,

I, BARACK OBAMA, President of the United States of America, hereby expand the scope of the national emergency declared in Executive Order 13466 of June 26, 2008, finding that the continued actions and policies of the Government of North Korea, manifested most recently by its unprovoked attack that resulted in the sinking of the Republic of Korea Navy ship Cheonan and the deaths of 46 sailors in March 2010; its announced test of a nuclear device and its missile launches in 2009; its actions in violation of UNSCRs 1718 and 1874, including the procurement of luxury goods; and its illicit and deceptive activities in international markets through which it obtains financial and other support, including money laundering, the counterfeiting of goods and currency, bulk cash smuggling, and narcotics trafficking, destabilize the Korean peninsula and imperil U.S. Armed Forces, allies, and trading partners in the region, and thereby constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.

I hereby order:

Section 1. (a) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person, including any overseas branch, of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in:

(i) the persons listed in the Annex to this order; and

(ii) any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:

(A) to have, directly or indirectly, imported, exported, or reexported to, into, or from North Korea any arms or related materiel;

(B) to have, directly or indirectly, provided training, advice, or other services or assistance, or engaged in financial transactions, related to the manufacture, maintenance, or use of any arms or related materiel to be imported, exported, or reexported to, into, or from North Korea, or following their importation, exportation, or reexportation to, into, or from North Korea;

(C) to have, directly or indirectly, imported, exported, or reexported luxury goods to or into North Korea;

(D) to have, directly or indirectly, engaged in money laundering, the counterfeiting of goods or currency, bulk cash smuggling, narcotics trafficking, or other illicit economic activity that involves or supports the Government of North Korea or any senior official thereof;

(E) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the activities described in subsections (a)(ii)(A)-(D) of this section or any person whose property and interests in property are blocked pursuant to this order;

(F) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order; or

(G) to have attempted to engage in any of the activities described in subsections (a)(ii)(A)-(F) of this section.

(b) I hereby determine that, to the extent section 203(b)(2) of IEEPA (50 U.S.C. 1702(b)(2)) may apply, the making of donations of the types of articles specified in such section by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to this order would seriously impair my ability to deal with the national emergency declared in Executive Order 13466 and expanded in scope in this order, and I hereby prohibit such donations as provided by subsection (a) of this section.

(c) The prohibitions in subsection (a) of this section include, but are not limited to:

(i) the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to this order; and

(ii) the receipt of any contribution or provision of funds, goods, or services from any such person.

(d) The prohibitions in subsection (a) of this section apply except to the extent provided by statutes, or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted prior to the effective date of this order.

Sec. 2. (a) Any transaction by a United States person or within the United States that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this order is prohibited.

(b) Any conspiracy formed to violate any of the prohibitions set forth in this order is prohibited.

Sec. 3. The provisions of Executive Order 13466 remain in effect, and this order does not affect any action taken pursuant to that order.

Sec. 4. For the purposes of this order:

(a) the term “person” means an individual or entity;

(b) the term “entity” means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization;

(c) the term “United States person” means any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States;

(d) the term “North Korea” includes the territory of the Democratic People’s Republic of Korea and the Government of North Korea;

(e) the term “Government of North Korea” means the Government of the Democratic People’s Republic of Korea, its agencies, instrumentalities, and controlled entities; and

(f) the term “luxury goods” includes those items listed in 15 C.F.R. 746.4(b)(l) and Supplement No. 1 to part 746 and similar items.

Sec. 5. For those persons whose property and interests in property are blocked pursuant to this order who might have a constitutional presence in the United States, I find that because of the ability to transfer funds or other assets instantaneously, prior notice to such persons of measures to be taken pursuant to this order would render these measures ineffectual. I therefore determine that for these measures to be effective in addressing the national emergency declared in Executive Order 13466 and expanded in scope in this order, there need be no prior notice of a listing or determination made pursuant to section 1(a) of this order.

Sec. 6. The Secretary of the Treasury, in consultation with the Secretary of State, is hereby authorized to take such actions, including the promulgation of rules and regulations, and to employ all powers granted to the President by IEEPA and the UNPA, as may be necessary to carry out the purposes of this order. The Secretary of the Treasury may redelegate any of these functions to other officers and agencies of the United States Government consistent with applicable law. All agencies of the United States Government are hereby directed to take all appropriate measures within their authority to carry out the provisions of this order.

Sec. 7. The Secretary of the Treasury, in consultation with the Secretary of State, is hereby authorized to determine that circumstances no longer warrant the blocking of the property and interests in property of a person listed in the Annex to this order, and to take necessary action to give effect to that determination.

Sec. 8. This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, agents, or any other person.

Sec. 9. This order is effective at 12:01 p.m., eastern daylight time on August 30, 2010.

BARACK OBAMA

THE WHITE HOUSE,
August 30, 2010.

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August 30, 2010
TG-839

Fact Sheet: New Executive Order Targeting Proliferation and Other Illicit Activities Related to North Korea

Today President Obama issued an Executive Order freezing the assets of certain persons with respect to the Democratic People’s Republic of Korea (North Korea). This new Order expands the scope of the national emergency declared in Executive Order 13466 of June 26, 2008 and takes additional steps to address that national emergency. In the new Executive Order, the President finds that certain actions and policies of the Government of North Korea constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.

The Order targets the government of North Korea’s continued involvement in a wide range of proliferation and other illicit activities in defiance of UN Security Council Resolutions (UNSCRs) 1718 and 1874 and other illicit activities in defiance of international norms. The Order directs the Secretary of the Treasury, in consultation with the Secretary of State, to target for sanctions individuals and entities facilitating North Korean trafficking in arms and related materiel; procurement of luxury goods; and engagement in illicit economic activities, such as money laundering, the counterfeiting of goods and currency, bulk cash smuggling and narcotics trafficking. This new Executive Order supplements existing U.S. sanctions targeting proliferators of weapons of mass destruction (WMD) and those who support them, under which North Korean entities and individuals have been designated to date.

President Obama also identified the following entities and individual for sanctions by listing them on the Annex to the Order:

· The Reconnaissance General Bureau (RGB), North Korea’s premiere intelligence organization involved in North Korea’s conventional arms trade;

· RGB commander Lieutenant General Kim Yong Chol;

· Green Pine Associated Corporation, a North Korean conventional arms dealer subordinated to the control of the RGB; and

· Office 39 of the Korean Workers’ Party, which provides critical support to North Korean leadership in part through engaging in illicit economic activities and managing the leadership’s slush funds.

The U.S. government has longstanding concerns regarding North Korea’s involvement in a range of illicit activities conducted through government agencies and associated front companies. North Korea’s nuclear and missile proliferation activity and other illicit conduct violate UN Security Council Resolutions 1718 and 1874, and these activities and their other illicit conduct violate international norms and destabilize the Korean Peninsula and the entire region. In signing this Order, President Obama has frozen the property and interests in property of the three entities and one individual listed on the Annex. This Order provides the United States with new tools to disrupt illicit economic activity conducted by North Korea.

* Arms proliferation: North Korea has long been engaged in the sale of conventional arms to countries in the Middle East, Southeast Asia, and Africa. Since the 2009 adoption of UNSCR 1874, which bans all arms transfers from North Korea, authorities in Asia, Africa, and the Middle East have seized North Korean shipments suspected of carrying prohibited arms and related materiel.

* Narcotics trafficking: During the past three decades, North Korean citizens, diplomats and government officials have engaged in narcotics trafficking. Officials in Turkey, Egypt, Taiwan and Japan have linked North Korean officials to narcotics possession, distribution and smuggling.

* Counterfeiting currency: The United States continues to investigate North Korea’s manufacture and distribution of the highly deceptive counterfeit of the U.S. $100 and $50 bills, also known as the “supernote.” The United States Secret Service has made definitive connections between the supernote and the government of North Korea. Since its first detection in 1989, the Secret Service has seized approximately $63 million of supernotes globally.

* Procurement of luxury goods: UNSCR 1718 requires Member States to prohibit the direct or indirect supply, sale of transfer to North Korea of luxury goods, which North Korean leadership uses to secure the loyalty of elites and the military. In July 2009, Italian authorities prevented the sale of luxury yachts worth more than $15 million to an Austrian company because they were ultimately destined for North Korea.

* Deceptive financial practices: North Korea continues to engage in deceptive financial practices to disguise the true nature of its transactions, using government agencies and front companies to engage in WMD and missile proliferation-related and other illicit activities and to evade detection by financial institutions around the world. All of the conduct above is facilitated by the deceptive financial practices North Korea engages in to disguise the true nature of its transactions.

President Obama identified the following entities and individual for sanctions by listing them on the Annex to the Order:

The Reconnaissance General Bureau (RGB)

The Reconnaissance General Bureau is North Korea’s premiere intelligence organization, created in early 2009 by the merger of existing intelligence organizations from the Korean Workers’ Party, the Operations Department and Office 35, and the Reconnaissance Bureau of the Korean People’s Army. RGB trades in conventional arms and controls the North Korean conventional arms firm Green Pine Associated Corporation (Green Pine), which was also identified for sanctions by the President today for exporting arms or related materiel from North Korea.

The RGB is commanded by General Kim Yong Chol, who was also identified for sanctions today.

Green Pine Associated Corporation (Green Pine)

The conventional arms firm Green Pine Associated Corporation was subordinated to the control of the RGB in 2009 and has been identified for sanctions by the President for exporting arms or related material from North Korea. Green Pine specializes in the production of maritime military craft and armaments, such as submarines, military boats and missiles systems, and has exported torpedoes and technical assistance to Iranian defense-related firms.

Green Pine is responsible for approximately half of the arms and related materiel exported by North Korea and has taken over many of the activities of the Korea Mining Development Trading Corporation (KOMID), which is listed in the Annex to Executive Order 13382 of June 2005. KOMID was also designated by the UNSCR 1718 Committee to be subject to the provisions of paragraph 8(d) of UNSCR 1718.

Office 39 of the Korean Workers’ Party (Office 39)

Office 39 of the Korean Workers’ Party engages in illicit economic activity to support the North Korean government. It has branches throughout the nation that raise and manage funds and is responsible for earning foreign currency for North Korea’s Korean Workers’ Party senior leadership through illicit activities such as narcotics trafficking.

Office 39 controls a number of entities inside North Korea and abroad through which it conducts numerous illicit activities including the production, smuggling, and distribution of narcotics. Office 39 has also been involved in the attempted procurement and transfer to North Korea of luxury goods.

· Office 39 produced methamphetamine in Sangwon, South Pyongan Province and was also involved in the distribution of methamphetamine to small-scale North Korean smugglers for distribution through China and South Korea. Office 39 also operates poppy farms in North Hamkyo’ng Province and North Pyongan Province and produces opium and heroin in Hamhu’ng and Nachin.

· In 2009, Office 39 was involved in the failed attempt to purchase and export to North Korea — through China — two Italian-made luxury yachts worth more than $15 million. Halted by Italian authorities, the attempted export of the yachts destined for Kim Jong-il was in violation of United Nations sanctions against North Korea under UNSCR 1718, which specifically require Member States to prevent the supply, sale, or transfer of luxury goods to North Korea.

Office 39 previously used Banco Delta Asia to launder illicit proceeds. Banco Delta Asia was identified by the Treasury Department in September 2005 as a “primary money laundering concern” under Section 311 of the USA PATRIOT Act because it represented an unacceptable risk of money laundering and other financial crimes.

Identifying Information:

Entity: Reconnaissance General Bureau

AKA: Chongch’al Ch’ongguk

AKA: RGB

AKA: KPA Unit 586

Location: Hyongjesan-Guyok, Pyongyang, North Korea

Alt. Location: Nungrado, Pyongyang, North Korea

Individual: Kim Yong Chol

AKA: Kim Yong-Chol

AKA: Kim Young-Chol

AKA: Kim Young-Cheol

AKA: Kim Young-Chul

Location: Pyongan-Pukto, North Korea

DOB: circa 1947

Alt. DOB: circa 1946

Entity: Green Pine Associated Corporation

AKA: Chongsong Yonhap

AKA: Ch’o’ngsong Yo’nhap

Location: c/o Reconnaissance General Bureau Headquarters,

Hyongjesan-Guyok, Pyongyang, North Korea

Alt. Location: Nungrado, Pyongyang, North Korea

Entity: Office 39

AKA: Office #39

AKA: Office No. 39

AKA: Bureau 39

AKA: Central Committee

AKA: Bureau 39

AKA: Third Floor Division 39

Address: Second KWP Government Building (Korean ““ CH’O’NGSA),

Chungso’ng, Urban Town (Korean — DONG),

Chung Ward, P’yongyang, North Korea

Address: Chung-Guyok (Central District), Sosong Street,

Kyongrim-Dong, Pyongyang, North Korea

Address: Changgwang Street, Pyongyang, North Korea

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August 30, 2010
TG-840

United States Designates North Korean Entities and Individuals for Activities Related to North Korea’s Weapons of Mass Destruction Program

WASHINGTON ““ In joint actions, the U.S. Departments of Treasury and State today announced the designations of five North Korean entities and three individuals under Executive Order (E.O.) 13382 for supporting North Korea’s Weapons of Mass Destruction (WMD) program. Executive Order 13382 is an authority aimed at freezing the assets of WMD proliferators and their supporters thereby isolating them from the U.S. financial and commercial systems.

Also today, President Obama signed an Executive Order that directs the Secretary of the Treasury, in consultation with the Secretary of State, to target for sanctions individuals and entities facilitating North Korean trafficking in arms and related materiel; procurement of luxury goods; and engagement in illicit activities, including money laundering, the counterfeiting of goods and currency, bulk cash smuggling and narcotics trafficking. The new Executive Order supplements E.O 13382, under which North Korean entities have been designated to date, and is consistent with measures required in UNSCRs 1718 and 1874.

Korea Taesong Trading Company and Korea Heungjin Trading Company

Pyongyang-based entities the Korea Taesong Trading Company and Korea Heungjin Trading Company, are used by the Korea Mining Development Trading Corporation (KOMID) for trading purposes. Korea Taesong Trading Company has acted on behalf of KOMID in dealings with Syria, and Korea Heungjin Trading Company acts as the procurement arm of KOMID. Korea Heungjin Trading Company is also suspected to have been involved in supplying missile-related goods to Iran’s Shahid Hemmat Industrial Group.

KOMID is Pyongyang’s premier arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons, with offices located in multiple countries around the world with the primary goal of facilitating weapons sales and seeking new customers for its weapons. It was listed in the Annex to E.O. 13382 of June 2005 and has been sanctioned by the United States repeatedly over the last 10 years for trading in missile technology. KOMID was also designated by the UNSCR 1718 Committee to be subject to the asset freeze provisions of UNSCR 1718.

Korea Taesong Trading Company was previously sanctioned by the U.S. Department of State in 2008 under the Iran, North Korea, and Syria Nonproliferation Act (INKSNA). INKSNA provides for the imposition of measures on entities or individuals for the transfer to or acquisition from Iran, Syria, or North Korea of equipment or technology controlled under multilateral export control lists or otherwise having the potential to make a material contribution to the proliferation of WMD or cruise or ballistic missile systems.

Second Economic Committee, Munitions Industry Department and Second Academy of Natural Sciences

The Munitions Industry Department and Second Economic Committee are involved in key aspects of North Korea’s missile program. The Munitions Industry Department is responsible for overseeing the development of North Korea’s ballistic missiles, including the Taepo Dong-2.

The Second Economic Committee is responsible for overseeing the production of North Korea’s ballistic missiles. The Second Economic Committee also directs the activities of KOMID.

The Second Academy of Natural Sciences is a national-level organization responsible for research and development of North Korea’s advanced weapons systems, including missiles and probably nuclear weapons. The Second Academy of Natural Sciences uses a number of subordinate organizations to obtain technology, equipment, and information from overseas, including Tangun Trading Corporation, for use in North Korea’s missile and probably nuclear weapons programs.

Tangun Trading Corporation is subordinate to the Second Academy of Natural Sciences and is primarily responsible for the procurement of commodities and technologies to support North Korea’s defense research and development programs and procurement, including materials that are controlled under the Missile Technology Control Regime (MTCR) or the Australia Group. Tangun Trading Corporation was designated by the Department of State pursuant to E.O. 13382 in September 2009. Tangun Trading Corporation was also designated by the UNSCR 1718 Committee to be subject to the asset freeze provisions of UNSCR 1718.

Ri Je-son and Ri Hong-sop

Ri Je-son and Ri Hong-sop act for or on behalf of the General Bureau of Atomic Energy (GBAE), which is responsible for North Korea’s nuclear program and manages operations at the Yongbyon Nuclear Research Center. GBAE was designated by the United Nations in July 2009 for its involvement in North Korea’s nuclear program and subsequently sanctioned by the Department of State under E.O. 13382 in September 2009.

Ri Je-son is the Director of GBAE and is responsible for facilitating several nuclear endeavors including GBAE’s management of Yongbyon Nuclear Research Center and Namchongang Trading Corporation.

Ri Hong-sop is a councilor for GBAE. He is also the former Director of Yongbyon Nuclear Research Center. In that capacity he oversaw the three core facilities that the DPRK used to produce of weapons-grade plutonium: the Fuel Fabrication Facility, the 5MWe Experimental Reactor, and the Radiological Laboratory (Reprocessing Plant).

Ri Je-son and Ri Hong-sop were also designated by the UNSCR 1718 Committee to be subject to the asset freeze and travel ban provisions of UNSCR 1718.

Yun Ho-lin

Yun Ho-jin acts for or on behalf of Namchongang Trading Corporation (NCG), a North Korean trading company subordinate to GBAE. NCG has been involved in the procurement of Japanese- origin vacuum pumps that were identified at a North Korean nuclear facility, as well as nuclear-related procurement associated with a German individual. NCG was designated by the State Department pursuant to E.O. 13382 in June 2009.

Yun Ho-jin has acted on behalf of NCG in various capacities since the 1980s. As a senior official at NCG, he oversaw the import of items needed for North Korea’s uranium enrichment program.

Through an NCG office in China, Yun Ho-jin was also involved in purchases of sensitive material linked to the construction of a nuclear reactor in Syria.

Yun Ho-jin was also designated by the UNSCR 1718 Committee to be subject to the asset freeze and travel ban provisions of UNSCR 1718.

Identifying Information:

Entity: Korea Taesong Trading Company

Location: Pyongyang, North Korea

Entity: Korea Heungjin Trading Company

AKA: Hunjin Trading Co.

Location: Pyongyang, North Korea

Entity: Second Economic Committee

Location: Kangdong, North Korea

Entity: Munitions Industry Department

AKA: Military Supplies Industry Department

Location: Pyongyang, North Korea

Entity: Second Academy of Natural Sciences

AKA: 2nd Academy of Natural Sciences

AKA: Che 2 Chayon Kwahak-Won

AKA: Academy of Natural Sciences

AKA: Chayon Kwahak-Won

AKA: National Defense Academy

AKA: Kukpang Kwahak-Won

AKA: Second Academy of Natural Sciences Research Institute SANSRI

Location: Pyongyang, North Korea

Individual: Ri Je-Son

AKA: Ri Che-Son

DOB: 1938

Individual: Ri Hong-Sop

DOB: 1940

Individual: Yun Ho-jin

AKA: Yun Ho-chin

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August 30, 2010
TG-841

Under Secretary Stuart Levey Remarks on New Executive Order on North Korea

As Delivered

President Obama today signed an Executive Order establishing a new sanctions program that targets a wide range of illicit activities undertaken by the Government of North Korea. The Order gives the U.S. government new authorities to go after the arms sales, luxury goods procurement, money laundering, counterfeiting of currency and other illicit financial activities that enrich the highest echelons of the North Korean government while the North Korean people suffer.

The world by now is well aware of the North Korean government’s record of illicit activity and its belligerent behavior. Today the President decided that North Korea’s continued provocative actions, such as its unprovoked attack on the South Korean naval ship Cheonan in March of this year, which resulted in the ship’s sinking and the deaths of 46 sailors; its test of a nuclear device and its missile launches in 2009; its violations of UN Security Council Resolutions 1718 and 1874; and its illicit and deceptive practices in international markets justify additional sanctions.

The destructive course that the North Korean government is charting is facilitated by a lifeline of cash generated through a range of illicit activities. North Korea’s government helps maintain its authority by placating privileged elites with money and perks, such as luxury goods like jewelry, luxury cars, and yachts. Not only do these transactions contravene UNSCR 1718, they are unconscionable in light of the fact that many of North Korea’s people live in dire poverty. The North Korean government receives millions of dollars every year from arms sales also outlawed by UN Security Council Resolutions. North Korea has been caught several times making these illicit arms sales, including to Iran and Syria. The North Korean government also benefits from illicit activities, such as drug trafficking, counterfeiting U.S. currency, and selling counterfeit cigarettes. All of this activity makes up a crucial portion of the North Korean government’s revenues.

These activities are carried out by a global financial network that generates this income and procures the luxury goods for the government of North Korea. That network is addressed directly by the President’s actions today. The President has identified for sanctions a key piece of this network, Office 39, a secretive branch of the North Korean government that manages slush funds and raises money for the leadership, including by trafficking drugs.

Also targeted for sanctions today by the President are key elements of North Korea’s infrastructure for importing and exporting conventional arms: Green Pine Associated Corporation, and its parent, the Reconnaissance General Bureau, and the Bureau’s commander, Lt. Gen. Kim Yong Chol. Green Pine is responsible for approximately half of the arms and related materiel North Korea exports, and has taken over many of the activities of another North Korean entity, KOMID, which was sanctioned by the U.S. for its involvement in proliferation-related activities in 2005 and listed for sanctions by the United Nations in 2009.

These measures are not directed at the people of North Korea, who, as Secretary Clinton has said, have suffered too long due to the misguided priorities of their government. Instead, the financial measures the President took today, as well as additional actions we will take in the weeks and months to come, are aimed at disrupting North Korea’s efforts to engage in illicit activities and its ability to surreptitiously move its money by deceiving banks and smuggling cash worldwide.

The activities we are targeting in this new sanctions program are violations of UN Security Council Resolutions or other international norms. By naming the individuals and entities involved in these activities, we will be excluding them from any access to the US financial system and, at the same time, we will be assisting responsible businesses and financial institutions around the world that are trying to protect themselves from illicit North Korean activities. We will continue to take such actions and also to share relevant information with the private sector and regulators around the world. As we have seen when we have taken similar actions in the past, financial measures such as these that focus on illicit conduct are highly effective in garnering the support of the private sector, which is already quite wary of North Korean-related business and the reputational and other risks it poses.

We are also announcing actions today under already-existing authorities to further target North Korea’s proliferation activities. The State Department and Treasury Department have identified five entities and three individuals for sanctions under Executive Order 13382, our proliferation Executive Order. These entities include two trading firms – Korea Taesong Trading Co. and Korea Heunjin Trading Co. – that act on behalf of North Korean arms dealer KOMID in deals involving Iran and Syria.

Special Advisor for Nonproliferation and Arms Control, Bob Einhorn, is here as well, and he will make some comments and explain in further detail, if he wishes, the actions taken by the State Department today.

The overall effect of the actions we are taking and the new program announcing by the President today is that North Korea’s illicit activities will face even greater scrutiny by banks and firms worldwide. North Korea’s leadership must choose the path it wishes to take: whether it will end its isolation by living up to its international obligations and responsibilities or pursue a path that will subject it to ever-increasing pressure.

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7 Comments

  1. Nice. I hope they implement this effectively and give it a chance to work.

    I note in your Plan B link that Obama is now using against North Korea the things you wrote in April 2009 that “Obama won’t use against North Korea.” 🙂




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  2. Rest assured, I’m just poking a little fun about that. I’ve certainly found myself pleasantly surprised that some leader I didn’t support came up with an effective plan or course of action that I had never expected from them. Bush43’s framework for dealing with illegal immigration — derided by his own party and ignored by much of the opposition because it came from Bush43 — comes to mind.

    It’s just that it was amusing to see an article hailing Obama’s actions that included a link to an article whose very title was about things he would never do.

    Though I think Obama may need to keep some things in his bag of sticks (e.g., the threat of putting the DPRK back on the list of terror sponsors) for use as a punishment or incentive, I’m glad that when it comes to something like this you think he’s doing the right thing.




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  3. a lot of naysayers out there in the press saying nothing will truly work w/o china’s full participation. bit I think if the global monetary system treats these entities that support kji like the way it treated banco delta in ’05, as in won’t touch anything that goes in or comes out of a kji related bank with a 10 foot pole, it could bring havoc to china banks.

    this is a good article I’ve found:

    http://www.csmonitor.com/Commentary/the-monitors-view/2010/0831/Obama-sanctions-on-North-Korea-are-also-aimed-at-China




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