U.N. Panel of Experts releases new report on N. Korea sanctions enforcement

The report, which you can find here, publishes photographs and a detailed description of the weapons seized from the Chong Chon Gang.

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I had not realized how big the shipment was:

72. The Panel found that the hidden cargo (see figure XI, a complete list at annex VII and detailed analysis at annex VIII) amounted to six trailers associated with surface-to-air missile systems and 25 shipping containers loaded with two disassembled MiG-21 aircraft, 15 engines for MiG-21 aircraft, components for surface-to-air missile systems, ammunition and miscellaneous arms-related materiel. This constituted the largest amount of arms and related materiel interdicted to or from the Democratic People’s Republic of Korea since the adoption of resolution 1718 (2006).

The POE goes into great detail about the modifications to the ship, the false bills of lading, deceptive statements by both the Cuban and North Korean governments, and other deceptive practices to conceal the cargo, its ownership, and its destination. It also calls out a Vladivostok-based shipping company, Ocean Maritime Management Company, for operating the Chong Chon Gang without listing it as a part of its fleet.

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The report concludes that the incident was a violation, but suggests that in many cases, North Korea isn’t the final destination for the weapons, but a middleman that buys up old equipment, refurbishes it, and resells it. In this case, as I noted here, the Chong Chon Gang MiG engines already appeared to have been refurbished when shipped.

The POE also implicates Burma, Eritrea, Ethiopia, Tanzania, Uganda, Somalia, and of course, Iran for suspected arms deals with North Korea. This casts considerable doubt on the news item here, suggesting that North Korea exported only $11 million in arms last year.

The POE also discusses suspected violations of the luxury goods ban, including the Masikryong ski resort, a attempted yacht purchase from the UK, and Dennis Rodman’s gifts to Kim Jong Un.

Most tantalizingly, the report begins to examine North Korea’s sanctions-busting financial arrangements in greater detail. Here’s a taste.

164. Financial measures in the resolutions, along with the strengthening of standards governing international finance, have combined to change fundamentally the financial environment in which the Democratic People’s Republic of Korea operates. In particular, it has become much more difficult to make direct use of its banks to remit earnings and make payments for transactions in prohibited goods, training and technology. The long-term trajectory of changes to improve standards promoted by the Financial Action Task Force (FATF)106 promises it will face even more difficulty in future. The technical efforts of FATF, especially recent steps taken to help counter the financing of proliferation, complement Security Council actions.

165. Consequently, the Democratic People’s Republic of Korea has had to adapt, explore and perfect ways to evade detection and circumvent constraints on the financing of prohibited programmes and activities. All evasion techniques involve higher risk, extra cost and loss of timeliness. The Panel has begun to examine more deeply the institutional frameworks and operational techniques it employs. It is experienced in using foreign-based individuals, front companies and shell companies and joint ventures engaged in legitimate business to mask illicit activities associated with sourcing nuclear, ballistic missile and other weapons of mass destruction programmes. Ownership structures often are complex and opaque and take advantage of lax rules in some Member States regarding the identification of beneficial owners.

The report calls for a more in-depth investigation of North Korea’s financial activities, connections, and methods. I certainly look forward to reading it.

I think the U.N. has been trying to confuse me by being effective recently. It’s working. But then, the U.N. still can’t really enforce measures like these without the cooperation of U.S. and EU financial regulators. POE reports can, however, be highly complimentary of national enforcement authorities, including those of Treasury.

Unlike most other U.N. products, Panel of Experts reports make for interesting reading, and often contain hard-hitting findings. Here are links to previous UNPOE reports from 2010, 2012, and 2013, along with the U.N.’s list of persons designated for asset blocking. Note that the list does not match the EU list, or the U.S. Treasury list of Specially Designated Nationals. Members states (and the U.N. itself) have far to go to harmonize their enforcement efforts, but reporting on those gaps is a good beginning.

2 Responses

  1. Thanks for the quality post — is anyone aware pf an alternate link where the pdf. of the report can be obtained? The UN way of distributing big documents like this (same was true for the COI report) doesn’t make so much sense — a massive Word file that seems to crash every time printing is attempted when a slim pdf. would be much easier. Anyway, any direction or suggestion would be appreciated.