8 ways North Korea evades UN sanctions
North Korean leader Kim Jong Un reacts during the long-range strategic ballistic rocket Hwasong-12 (Mars-12) test launch.
The United Nations recently passed its strongest sanctions yet against North Korea following its sixth nuclear test. But critics have expressed doubts as to whether the sanctions would stop Pyongyang from developing nuclear weapons and if the measures would be effectively enforced.
The US government and a UN experts panel have published reports on how North Korea evades sanctions to earn the hard currency it needs.
Here are eight of the methods used:
1. Swapping sex gay goods
North Korea directly exchanges its coal and other minerals for the goods it needs, such as weapons components and even luxury items. This avoids the risk of money transfers being traced.
A resolution passed by the UN Security Council last November set a cap on North Korea’s coal exports, which generate a significant share of the country’s revenue.
Another resolution passed last month banned the coal trade with North Korea, but bulk purchases of the fuel continue.
Chinese businessman Chi Yupeng allegedly used his company Dandong Zhicheng Metallic Materials to buy steel and anthracite coal from North Korea in exchange for nuclear and missile components, according to the US Treasury department.
Smugglers from other countries such as China turn off their ships’ transponders when entering North Korean waters, then take North Korean goods to another country, including Russia. They then claim the goods were made in Russia.
Chinese ships loaded with North Korean coal either stay in a Russian port for some time and then return to China, or another vessel picks up the goods and ships them, Assistant Treasury Secretary for Terrorist Financing Marshall Billingslea told a hearing of the US House Foreign Affairs Committee last week.
An employee walks between front-end loaders, which are used to move coal imported from North Korea at Dandong port in the Chinese border city of Dandong, Liaoning province, December 7, 2010. Once a main export center for agricultural goods, Dandong port, near the China-North Korea border, now serves as an import center for coal and iron ore from North Korea, local media reported.
3. Falsifying shipping registration documents
North Korea has registered an unusually large number of ships, including many foreign-owned vessels, as part of its domestic fleet. It also listed 18 of the 21 vessels in its Ocean Maritime Management Company as domestic ships, even though some enter international waters.
It allows the vessels to avoid international agency inspections.
The Ocean Maritime Management shipping company has also renamed and registered some of its vessels. False documentation was provided to eight ships, according to a UN report.
4. Overseas workers and projects help fund weapons programme
Almost 100,000 North Koreans work around the world, generating about US$500 million for Kim Jong-un’s regime, according to the US government.
The Mansudae Overseas Projects group of construction companies was named by the UN as one of the North Korean firms that raised revenue for the state.
The group carries out building projects overseas using North Korean workers. It also transfers projects and its employees to other contractors, such as the Chinese firm Qingdao Construction’s unit in Namibia in Africa, according to the US Treasury department.
A UN resolution passed in November last year called on nations to be vigilant about North Korea’s use of overseas labour.
The Mansudae Grand Monument in Pyongyang is a popular stop on many tours of North Korea.
5. Modifying equipment free of embargo for military use
North Korea displayed missiles at a huge parade held in Pyongyang in April. Video and photographs of the trucks used to transport a Pukguksong-1 missile had the “Sinotruk” logo on the fuel tank. At an earlier military parade in October two years ago in Pyongyang, Sinotruk Howo 6×6 series trucks were also seen.
Sinotruk is the listed arm of China’s largest state-owned truck manufacturer. It confirmed to a UN investigation that it had exported civilian trucks with three axles to North Korea from 2010 to 2014, but the equipment was not subject to embargo. The company also said the sales contract requested explicitly “the buyer ensure the civilian use of the trucks and comply with concerned provisions of Chinese laws and Security Council resolutions”.
6. Front companies
North Korean companies set up bank accounts for front companies overseas to place their earnings.
It reduces the risk of wire transfers to banks in Pyongyang being traced.
Glocom, a North Korean company manufacturing military communication devices, used a number of front companies in Singapore, Malaysia and Hong Kong to settle payments with clients and suppliers, according to a UN report. A single invoice was often settled through a series of small transactions, the report said.
In another case, Chinese businesswoman Ma Xiaohong was accused of using her company Dandong Hongxiang Industrial Development to help Korea Kwangson Banking Corporation settle its overseas customer accounts, according to the US Justice Department.
7. Diplomatic cover
North Korea uses its diplomats overseas to open multiple bank accounts. Sometimes they are in their own names, family members’ or front companies.
North Koreans sign up to join the army in the midst of political tension with South Korea, in this undated photo released by North Korea’s Korean Central News Agency (KCNA) in Pyongyang.
One example was Kim Chol-sam, the representative of Daedong Credit Bank in Dalian in China’s Liaoning province, the US Treasury department alleged. Kim set up at least eight accounts in mainland China and Hong Kong in his own name and for front companies which were used in millions of dollars worth of transactions, it said.
8. Arms sales
North Korea continues to sell arms and provide military training overseas, despite UN embargoes. It is particularly active in Africa and the Middle East.
A United Nations investigation said buyers included Angola, the Democratic Republic of Congo, Eritrea, Mozambique, Namibia, Syria, Uganda and Tanzania. Benin, Botswana, Mali and Zimbabwe were also investigated for their ties with North Korean companies.