The Luxury Goods Ban

Understanding its promise and navigating challenges

By Kathrin Kranz


1. Introduction

Violations of the luxury goods ban periodically make headlines, as they did in February 2019, when Dutch authorities intercepted 90,000 bottles of vodka destined for the DPRK. In addition, infrastructure projects for affluent North Koreans have been completed, such as a 4D cinema and the Masikryong Ski Resort, which features European ski lifts and snowmobiles. News reports also refer to “makeup and vitamins” as luxury goods for North Koreans. Indeed, in 2018, Yoon Sang-Hyun, a South Korean lawmaker, claimed that North Korea spent at least $640 million on luxury goods imports from China in 2017. These examples can be seen in the context of wider questions that arise in the context of the luxury goods ban: what are luxury items, and how do different countries interpret “luxury goods”? Which states have been lax in delineating luxury goods from regular consumer goods? And, importantly, how can the private sector ensure compliance with the luxury goods ban, which may require being mindful of shifting interpretations and practices of various states? This report addresses these questions, and provides examples that help illuminate the complexities at play that can help guide the private sector in complying with the ban. The report also underlines the ingenuity of the luxury goods ban. By leaving undefined the meaning of luxury goods and making clear that the ban is not limited to certain items, the UN Security Council created a sanction type that frustrates the DPRK elite without negatively impacting the broader North Korean population.

2. Concept and Evolution

On October 14, 2006, the United Nations Security Council (UNSC) approved Resolution 1718, which includes a prohibition against luxury goods entering North Korea. The logic of banning luxury goods from entering the DPRK follows the concept of smart, or targeted, sanctions whose goal is to put pressure on decision-makers while protecting the population from potential detrimental effects of sanctions. Indeed, when the luxury goods ban was introduced, there was media speculation that the ban was directed at then North Korean leader Kim Jong II and his taste for luxury, with then U.S. Ambassador Jon Bolton arguing that “[t]he North Korean population’s been losing average height and weight over the years, and maybe this will be a little diet for Kim Jong II.”

The role of the luxury goods ban goes beyond DPRK leader Kim Jong II and current DPRK leader Kim Jong-Un’s taste for luxury goods. The DPRK leadership has used luxury goods to build and maintain the loyalty of elites, who are seen as critical in supporting the regime and its policies. As such, banning luxury goods from the DPRK is one strategy to undermine the viability of the North Korean regime. Moreover, the luxury goods ban is also intended to prevent the sale of luxury goods in the DPRK, which is a source of cash for the government and its nuclear weapons program.

In this context, it is important to note that the luxury goods ban, as imposed by Resolution 1718 (2006), neither provides a definition of luxury goods, nor a list of what are considered luxury goods. Instead, a letter from the Chairman of the Security Council Committee notes that “any definition of luxury goods as may be necessary for Member States to implement [relevant paragraph] would be the national responsibility of individual member states.” This arguably underlines the ingenuity of the luxury goods ban: the ban impacts the DPRK leadership and the elite’s taste for non-essential items. It does not, however, have a direct negative impact on the wider populace. As such, the ban can be broad in scope. Indeed, it can be argued that its strength is the breadth created by the non-definition of luxury goods: because actors do not have definitive guidelines on luxury goods, they need to exercise extreme caution to avoid providing North Korea with goods that could be considered “luxury”. In this way, flexibility provides the foundation for a comprehensive ban. This flexibility comes with another advantage: as the meaning of luxury goods develops over time, shifting notions can be accommodated without requiring explicit revisions from the UNSC.

Subsequent resolutions (2094, 2270, 2321) provide lists of some luxury goods, yet retain flexibility by noting that luxury goods are not limited to those listed in the Annexes of the resolutions. For items currently identified as luxury items by UNSC resolutions, refer to Table One, which also shows the development of the luxury goods ban over time.

Table One: Evolving definitions of “luxury goods”

UNSC Resolution  Prohibitions  
1718 (2006)10  Prohibition of luxury goods entering the DPRK (no definition or luxury items included) 
2094 (2013) 11  Items include, but are not limited to: 
  • Jewelry 
  • Pearls; gems; precious and semi-precious stones (including diamonds, sapphires, rubies, and emeralds)  
  • Jewelry of precious metal or of metal clad with precious metal 
  • Transportation 
  • Yachts, luxury automobiles and motor vehicles (including station wagons, and racing cars) 
2270 (2016)12 
  • Luxury watches 
  • Wrist, pocket, and other with a case of precious metal or of metal clad with precious metal 
  • Aquatic recreational vehicles 
  • Snowmobiles (valued greater than $2000) 
  • Lead crystal items 
  • Recreational sports equipment 
2321 (2016)13 
  • Rugs and tapestries (valued greater than $500) 
  • Tableware of porcelain or bone china (valued greater than $100) 

Note: The ban is not limited to the listed items. Provisions should be complied with “without prejudice to the activities of diplomatic missions in the DPRK”.14

Individual UN member states, as well as the European Union, translate the requirements of UNSC resolutions into their export regulations. In light of the non-definition of luxury goods, these export regulations are not uniform, and can reflect, among other factors, different countries’ ideas of luxury goods, industry pressures, ability to implement and enforce sanctions, and a country’s specific relationship with the DPRK. China, for example, provided goods for the Masikryong Ski Resort, and defended the export by arguing that “skiing is a popular sport for people, and ski equipment or relevant services are not included in the list of prohibited luxury goods”. This argument ignores that skiing is an activity that is accessible only to the affluent upper class, and not to the majority of North Koreans, who live in poverty. Importantly, the Chinese interpretation of the luxury goods ban also underlines imbalances in national implementation, as other countries, including European Union member states, include skiing equipment in their interpretation of the ban.

The UNSC and its organs have provided additional guidelines for the implementation of measures regarding “luxury goods” that provide context to the requirements presented in Table One and emphasize the scope of the ban. The relevant implementation notice refers to the Merriam-Webster Dictionary for a definition of “luxury” to guide member states, and calls on member states to prohibit the supply of luxury goods not covered by the annexes of relevant resolutions in a manner consistent with the objectives of all resolutions. It also advises member states “to take into account their own national characteristics as well as practices of other Member states”. As the example of Chinese ski equipment exports underlines, as well as other examples introduced below, these guidelines to date have resulted neither in uniform interpretations nor practices. They have, however, set the precedent that transfers to the DPRK, including of items not clearly delineated as “luxury” by UNSC lists (refer to Table One), can draw negative attention to companies and countries involved in their trade. Moreover, the examples underscore that some countries’ more stringent definition of luxury goods, such as the European Union’s and the United States’, can put pressure on other countries and their companies to implement a more rigid interpretation of the ban.

3. Violation Strategies and Outcomes

As laid out by the 2013 Panel of Experts report and other reporting, North Korea uses a variety of dissimulation techniques to undermine the luxury goods ban, including:

  • False shipping and customs declarations19  
  • The use of intermediaries/middlemen to make payments and organize transfers  
  • Involving DPRK embassy personnel in transactions 
  • Logistics companies listed as consignees 
  • DPRK companies located in China 
  • Companies that collaborate with the DPRK and joint ventures 
  • Taking advantage of third countries’ more lax interpretations of the luxury goods ban 

With regard to using third countries for luxury goods transfers, the Panel of Experts has noted “a trend whereby luxury items in manufacturers’ countries are transferred to third countries with different criteria for luxury goods prior to their end use in the DPRK.” Indeed, as the case studies below show, this seems to be one of the most frequently used strategies. The UN acknowledges that such movements often occur “with the manufacturers/companies having no idea about their final destination.”

While goods have emanated from a variety of countries, the country which stands out in facilitating transfers to the DPRK is China. As outlined below, Chinese companies have been implicated in assisting North Korea in a variety of ways in order to provide the DPRK with access to goods designated as luxury items by other states. The Chinese government has also argued for a more flexible interpretation of the luxury goods ban. Implicated as well in the examples below are Singapore and Ukraine. In previous years, Malaysia and Russia were named, too.

The cases below further illustrate strategies and outcomes, and provide the foundation for recommendations to avoid unintended sanctions violations. Cases also point to risks for the private sector. Such risks may include prosecution, but, more typically, involve potential embarrassment and reputational costs. This is the case because sanctions violations are reported on in the media, which highlights companies and individuals implicated in subverting sanctions.


A number of high profile violations of the luxury goods ban of motor vehicles have occurred, which are typically discovered when luxury vehicles are displayed during parades put on by the North Korean regime. Since luxury vehicles are included in the list of goods published by the UN (refer to Table One), they are clearly covered by the ban. As such, these violations can point to important patterns of North Korean strategies to circumvent the ban that do not rely on countries’ varied interpretations of the ban.

3.1.1 Rolls-Royce Limousines

The public appearance of a Rolls-Royce Phantom limousine in Pyongyang on 7 October 2018 is currently under investigation. Previously, a Rolls-Royce Ghost was seized by the Bangladesh Customs Intelligence in January 2017. The vehicle was falsely declared, and brought into the country for resale, by a DPRK diplomat who had been expelled from Bangladesh. While details of the case continue to be investigated, the strategy of bringing luxury goods into another country for resale highlights that luxury goods are used to generate income, either for personal gains or to support state-run programs, including the nuclear weapons program. Also noteworthy is the involvement of a DPRK diplomat.

3.1.2 Lexus Vehicles

Also in 2018, several Lexus luxury vehicles with DPRK license plates were seen at the inter-Korean summit. Toyota Motor Corporation argued that “[w]e can only assume that these vehicles come from back channels and are exchanged among individuals”.

3.1.3 Mercedes-Benz Limousines

In 2018, Mercedes-Benz limousines were observed without license plates during meetings in Singapore, Beijing, and Pyongyang, and were utilized by at least one DPRK official. These vehicles had previously been shipped to North Korea.

The Panel determined that a number of these vehicles originated from Europe and received armored customization in the United States. At the direction of George Ma, a Chinese businessman whose company, Seajet, functions as an agent of DPRK airline Air Koryo, they were then transported via shipping container from the United States to China. The company involved in the transport was Liaoning Danxing International Forwarding, a major Chinese logistics company which, according to the Panel of Experts report on its website described itself as a DPRK shipping agency. The US company had been instructed to name Liaoning Danxing International Forwarding as the consignee.

Previously, in 2011 and 2012, Japan also reported transfers of Mercedes-Benz vehicles to the DPRK. The strategy used was trans-shipment through and/or intermediaries based in China. Dalian Global Unity Shipping Agency managed some of these transfers, and gave specific instructions about the shipments and financial transactions.

In another case, an Austrian citizen (Josef Schwartz) purchased eight Mercedes automobiles for the DPRK, and identified and falsely declared a Chinese firm, Complant International, as the end user.

The cases of Mercedes-Benz imports to the DPRK underline the strategies of false declarations of destinations and consignees, middlemen, Chinese companies with links to North Korea, and a DPRK company located in China (Liaoning Danxing International Forwarding).


3.2.1 Vodka

In 2018, Dutch authorities intercepted a shipment of vodka suspected to be en route to North Korea. Vodka is considered a “luxury good” according to the European Union Council regulation.

The manner in which the Netherlands determined that the vodka shipment was suspicious is noteworthy. The vodka, which was shipped from Belarus, was destined for Liaoning Danxing International Forwarding (also suspected of Mercedes-Benz limousine shipments). Another company listed in the shipping documents, Transit Prime International Logistics, shared a phone number and address with Liaoning Danxing International Forwarding. Based on the Dutch authorities’ knowledge of Panel of Experts’ reporting, it recognized Liaoning Danxing International Forwarding as a company suspected of supporting the DPRK in flouting sanctions. The Netherlands also noted an inconsistency in the shipping documents, namely that Liaoning Danxing International Forwarding, as a freight forwarder, would not be the final destination for the consignment.

According to the contracts for the vodka shipments, the vodka was sold by a Belarus manufacturer to a Georgian entity named Noble House LLC. While still under investigation, this case highlights DPRK strategies to use intermediaries in order to conceal the ultimate destination of the goods in question, and misleading shipping and customs declarations (and consignees).

3.2.2 Miscellaneous Alcoholic Beverages

There are multiple additional reports of transfers of alcoholic beverages to North Korea. Several of these transfers were facilitated by Chinese company Dalian Global Unity Shipping Agency, which was also implicated in the transfer of Mercedes Benz limousines. Dalian Global Unity Shipping Agency provided instructions to vendors for evading the luxury goods ban.


Two aircraft of Western origin were observed during the Wonsan Air Show in 2016.

A P-750 XSTOL aircraft, manufactured by Pacific Aerospace Ltd of New Zealand, led to New Zealand prosecuting Pacific Aerospace Ltd for the indirect export of aircraft parts to North Korea. The P-750 XSTOL aircraft had been sold to Beijing General Aviation Company (with which Pacific Aerospace had entered into a joint venture) and delivered to China in September 2015. Ownership had then been transferred in October 2015 to a company describing itself as “Beijing Freesky Aviation Co., Ltd”.

The second aircraft, which was manufactured in Italy, was transferred to North Korea in a similar manner. Both cases underline the strategy of using a country that does not include aircraft in its definition of luxury goods (China) as well as use of a joint venture to indirectly provide the DPRK with sanctioned goods.

3.4 Masikryong Ski Resort

The luxury ski resort which opened in 2014 features equipment from various European and Canadian companies, including Prinoth and Pisten Bully snow grooming equipment, Areco snow blowers and BRP snowmobiles. Some producers of such automotive equipment had contact with individuals at the Permanent Mission of the DPRK in Geneva, Switzerland, and based on these interactions, assumed that transactions were legitimate because Switzerland had accredited these diplomats.

Cable cars, manufactured by an Austrian company and previously used in an Austrian ski resort, were sold to an Austrian secondhand dealer, Pro-Alpin. In turn, Pro-Alpin sold the cable cars to an unidentified Chinese company. The Chinese company then arranged for the equipment to be shipped to North Korea.

A Chinese company also provided ski lift equipment and relevant design services. In this context, China argued that skiing was a popular sport and as such not covered by a luxury goods ban.

The case of the Masikryong Ski Resort thus highlights different interpretations of the sanctions by China, involvement of diplomats and an embassy, and a Chinese company that acted as an intermediary.


Attempts to purchase luxury yachts reveal that North Korea uses indirect payments to acquire prohibited items. For example, in 2009, the DPRK attempted to buy two luxury yachts in Italy, with assistance from Austrian citizen Josef Schwartz. Schwartz pooled funds in his Austrian bank account, which had been wired in various amounts from a number of companies in different locales as well as from DPRK banks. Once investigated, Schwartz reassigned sales contracts to Complant International Transport (Dalian) Co., Ltd, which continued to conceal the destination of the yachts, and used a third company to wire money to the Italian shipbuilder.


In 2017, pictures of two stores operated in the DPRK (Bugsae and MINISO) surfaced that showed products from the European Union and Japan considered luxury goods according to these entities’ luxury goods lists (e.g. wine, spirits, cosmetics, and earphones). Bugsae Shop is linked to the Singapore-based OCN (Singapore) Pte Ltd, and goods were imported by another Singapore-based company, T Specialist International (Singapore) Pte Ltd. MINISO, a retail chain that advertises itself as a “Japan-based designer brand”, claimed that its items retailed in Pyongyang were not produced in Japan and that the MINISO China office was handling the brand’s overseas franchise, including the Pyongyang branch. Following UN inquiries, MINISO deleted its headquarters address in Japan on its website, and the Pyongyang store changed its retail brand name on its packaging. As the Panel of Experts report notes, such joint venture arrangements are prohibited under the sanctions. In addition, the case of Bugsae highlights the role of Singapore, which has been singled out by other reports, too.

4. Recommendations for Avoiding Luxury Ban Violations

4.1 Different definitions of “luxury goods” mean that what would be a violation of the ban if directly exported from one country may not be if acquired from another. As such, companies need to pay close attention to the person and/or company making a purchase, especially when that person and/or company are located in countries that have relaxed relations with the DPRK (China in particular, but also Singapore and Ukraine). There is a risk that goods could be transferred to the DPRK, which, in turn, can create reputational costs for originating companies.

4.2 Related to the previous point, it is important for the private sector to pay close attention to the names of purchasing entities in other countries. North Korean companies frequently use aliases. Liaoning Danxing International Forwarding, involved in several cases introduced above, seems to also use the name Transit Prime International Logistics. A basic understanding of North Korean companies and their names can be helpful in uncovering purchasers that may be associated with the DPRK.

4.3 Countries’ varying definitions of luxury goods are documented by Panel of Experts reports that can help guide companies when there are reasons to suspect a buyer in a specific country. For example, if the goods in question are prohibited by the United States for export to the DPRK, but not by a country that has cooperated with the DPRK, additional caution should be used to ensure that no inadvertent violation of the luxury goods ban occurs.

4.5 In considering exports of items that are not explicitly covered by either UN lists of goods or national implementation notices, consider both the broad definition of luxury goods put forward in the UN Implementation notice (footnote 15) as well as the DPRK’s per capita income, which in 2017 was USD 685.41 If most North Koreans cannot afford an item, it could conceivably be covered by the luxury goods ban.

4.6 The importance of critically evaluating exports of goods that are not included in national implementation lists is further underlined by previous cases. For example, in the case of a cable-car system produced by an Austrian company, Doppelmayr Seilbahnen, the European Union Council Regulation was updated to explicitly cover ski lifts subsequent to their transfer to the DPRK.42 This case thus highlights the comprehensive nature of the luxury goods ban that is arguably created, at least in part, through the non-definition of luxury goods.

4.7 In general, while the responsibility of translating the luxury ban into national regulations lies with states, companies can avoid potentially harmful reputational costs of inadvertent exports to the DPRK by familiarizing themselves with the guidelines published in Implementation Assistance Notice No. 3, and by working with their country’s Department of Commerce, which may provide additional guidance.

4.8 Linked to the previous point, consulting with governments can result in national guidelines that reduce the challenges of navigating the luxury goods ban. The export of Austrian cable-car systems to the DPRK resulted in updates to the European Union implementation of the luxury goods ban, including combined nomenclature codes that provide simplified means for exporters to check whether the export of these products and others to North Korea would violate the ban on luxury goods.43 Through cooperation with governments, the private sector can ask implementing governments for similar measures that can provide clarity and simplify the process of sanctions compliance. In addition, the UN Panel of Experts has provided information about items listed and their correspondence with Harmonized System codes.44

4.9 For companies, adopting policies and procedures that can improve their internal export control systems is another strategy for avoiding violations of the luxury ban. Several companies have reported such upgrades to the UN following involvement in transfers to the DPRK.45

About Kathrin Kranz

Kathrin Kranz holds a Ph.D. in Peace Studies and Political Science from the University of Notre Dame, and an LL.M. in Public International Law from the London School of Economics and Political Science. Her research focuses on the international arms trade, economic sanctions, and international institutions.