Training

1.1 INTRODUCTION

In an effort to reduce and eventually end non-proliferation activities conducted by the Democratic People's Republic of Korea (DPRK), the United Nations Security Council (UNSC) has issued targeted sanctions against specific individuals and entities (designees) believed to be, or are knowingly, committing these types of violations. UN member states and those organizations that fall under their jurisdiction (e.g., businesses, government agencies, citizens, etc.) are expected to enforce the UNSC sanctions. However, information to identify and track the activities of designates is often limited or difficult to detect. To help bolster state capacity to enforce UNSC sanctions on DPRK violators, it is useful to be aware of common characteristics or activities, including criminal activities and regulatory violations, shared by these groups as an additional means to flag for these or other potential sanctions violators. This case study examines characteristics common to designated individuals and entities under the DPRK regime, and provides potential recommendations for states and other interested parties to enforce sanctions on these and other potential violators.

1.2 METHOD OVERVIEW

A review of all individuals and entities (e.g., companies, organizations, agencies, etc.) designated under the DPRK sanctions regime was conducted examining reasons for listing, violations made, supporting information if available, and any assumptions that could be made in the absence of additional information.1 Each violation was scored based on the quality of information supporting it, with higher scores given to UN and external reliable information (e.g., authoritative media reports). These data were then analyzed for patterns, such as common violations, common characteristics, strong and weak information, etc., as well as unique or potentially interesting observations. The results discussed in this case study are from those data that were considered substantial information of violations based on UNSC reports, meaning that the patterns reported here have high legitimacy.

1.3 FINDINGS

There are a number of common characteristics, both strong and weak, shared by the individuals and entities designated under DPRK sanctions. Less information is known about designated individuals than designated entities; yet, the two groups often have various formal and informal connections (e.g., employees of entities, having political oversight of certain entities, diplomatic liaisons, or through military divisions and agencies) and therefore some characteristics about entities can be extended to individuals.

1.3.1 INDIVIDUALS

The UN DPRK Panel of Experts and the Security Council have provided very little information as to why specific individuals have been targeted for sanctions, yet some characteristics are present. The most common characteristic shared by almost all individuals is that they work for a designated entity. Of the 80 designated individuals, there is no specific reason given for sanctions against 57 individuals other than they work for a designated entity. Designated individuals primarily work for banks or trading companies (46), followed by nuclear, aerospace, or weapons agencies (16), and then top tier government agencies (12, e.g., the ruling party, intelligence agency) (see Table 1). A handful of individuals represent DPRK government agencies in other countries, holding diplomatic status or are suspected intelligence operatives (4).

From the review, the types of positions held by designated individuals operating inside the DPRK are typically senior officials such as directors, presidents of companies, or government ministers. Each of these three internal DPRK areas are relatively equally sanctioned, between 12 and 14 individuals from each sector (Table 1). However, this differs substantially when examining sanctions on individuals operating outside of the DPRK. With the exception of four diplomats, 32 sanctioned individuals work for banks or trading companies. The majority of these individuals are described as overseas representatives, with a few described as Chief Representative. In order to conduct business on behalf of their employers, the designees are in violation of the travel ban.

Table 1: Type of organization that employs designees inside and outside of the DPRK

	Individual primarily working inside DPRK	Individual primarily working outside DPRK
Banks and trading companies	14	32 (1 impersonated a diplomat)
Nuclear, aerospace, or weapons agencies	14	2 (diplomats, both Syria)
Top tier government agencies	12	2 (diplomats, Egypt and Burma)

Designated individuals working outside the DPRK predominantly operate in China and Syria, and in the regions of North Africa and the Middle East (see Table 2). China makes a logical operational area for DPRK activity given its close proximity, its large, strong economy, and its relatively amicable relationship with the DPRK. All designated individuals operating in China work for trading companies or banking institutions,2 and violations by the entities include trade in proliferation goods, financing proliferation activities, and financing other sanctioned entities conducting trade in proliferation goods. Several of the designees active in China are representatives of DPRK’s Foreign Trade Bank, a state-run entity.3 The absence of representatives from the Korea Mining Development Trading Corporation (KOMID) operating in China is interesting. KOMID used to be known as one of the DPRK’s exporters/importers of conventional arms, proliferation materials related to ballistic missiles, and general contractors for civilian and military construction projects. In terms of a single organization, the majority of designees operating outside the DPRK worked for KOMID.4

Table 2: States individual designees are active in and the companies they represent

	Individuals primarily working inside DPRK	Individuals primarily working outside DPRK
Individual working in:
China		7
Syria		5 (2 are diplomats)
Sudan		3
Vietnam		3
Iran		2
Russia		2
Egypt		1 (diplomat)
Libya		1
Burma		1 (diplomat)
Malaysia		1
Cuba		1
Multiple countries		10
Individual employed by:
KOMID	3	10
Foreign Trade Bank	1	7
Tanchon Commercial Bank	5	5
Other trade or banking institutions	4	13

Instead, designees working for KOMID outside the DPRK conduct activities in less stable states including Syria, Iran, Sudan, and Burma. Syria is of particular concern in this context. These designees are chiefly sanctioned for conducting illegal trade in proliferation goods such as components for ballistic missiles (e.g., potential supplies for Syrian Scud missiles)5, while one designee is designated for conducting transactions to finance (banking) trade-in weapons6. The designees trading in illicit goods work for KOMID or are diplomats for the DPRK Ministry of State Security conducting trade on behalf of KOMID.

Beyond Syria and other states listed in Table 2, a number of other states in North Africa and the Middle East serve as important areas of activity for designated individuals. Tunisia, Libya, Saudi Arabia, the United Arab Emirates, and other states are frequent locations for individuals to transit through or conduct transactions on behalf of designated entities.7

One unique observation of interest is the use of diplomatic channels to circumvent sanctions. In the case of entity #1, KOMID sometimes sent shipping documents (that describe the contents of shipped items for transiting through borders) via diplomatic pouch to their embassies in other states. This impedes border inspections in two ways. It causes significant delays in receiving appropriate documents because diplomatic pouches cannot be opened, and it prevents border agencies from inspecting the contents of shipping containers when they arrive as the documents were sent via another route.

In order to evade sanctions, a number of listed individuals modify the spelling of their names or use aliases. 8 While it may be presumed that most or all individuals working primarily outside of the DPRK modify their names or travel documents, some modified spellings may also be due in part to translation differences between Korean characters and those of other languages.9

1.3.2 ENTITIES

In comparison to individuals, the UNSC has provided more information on the violations committed by the 75 designated DPRK entities. These entities have been listed for approximately 30 different types of violations. They range from very unique, regime-specific violations, such as using the sale of luxury goods to finance proliferation activities, to violations commonly seen across various sanctions regimes such as the sale and purchase of embargoed arms.

Similar to designated individuals, the majority of violations by designated entities relate to working with or being a part of another designated entity. This may not be surprising given that many entities have created front companies, altered the spelling of their names, or changed their operating names as a means to evade sanctions. Using an alias is the second most common illicit activity observed by entities listed by the UN. For instance, a number of designated trading and banking companies (e.g., entities 14, 15, 17, 24, 25, and others) use an alias for, are a subsidiary of, or are owned by the first designated entity, KOMID. Nonetheless, for approximately one-quarter of designated entities, the UNSC has not provided any evidence of them committing any other violation other than working with another designated entity.

For UN financial sanctions, the most common violations committed are by entities that facilitate asset freeze violations for other designated entities.10 The majority of these entities also facilitate financial transfers to facilitate embargo violations. Many of these entities have been found to use the Society for Worldwide Interbank Financial Telecommunications (SWIFT), the premier inter-bank payment facilitation network used and owned by the world’s major banks.11 Once discovered, entities either remove themselves from SWIFT or SWIFT blocks their access to the system and blocks their accounts.12

In terms of embargoes, among the approximately three-quarters of entities for which the UNSC provides substantial evidence of a violation, the majority are under sanctions for one of three violations: trading in embargoed commodities, trading or facilitating the trade of embargoed material, and being responsible for, or involved in, the development of weapons of mass destruction (WMD). Those entities trading in embargoed commodities are almost entirely shipping companies and typically use physical methods of deception, such as changing or covering the names of vessels, as a means to evade sanctions.13 The commodities most frequently mentioned as being traded are petroleum/oil and coal. These entities also tend to indicate that their shipments are bound for Vietnam or Russia, but also Singapore and China (although some ships never reached their destination). At the time of writing, entities committing commodity violations do not appear to be flagged for violating any other sanctions. Most of the ships are DPRK-flagged vessels, and those flagged under other countries primarily come from the Caribbean region, namely Panama.14

Entities under sanctions for trading or facilitating the trade of embargoed material are much more likely to be committing multiple other types of violations.15 Most of these other violations appear to include the trade of arms and proliferation materials, but a few of these entities have also been shown to be directly involved in the development of proliferation materials.16 These entities are a mixture of government, trading, and banking agencies. Lastly, those designees responsible for, or involved in, the development of WMD are almost entirely DPRK government agencies, such as the National Aerospace Development Administration or the Second Academy of Science.17