OFAC steps up warnings on dealing with North Korea

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC), along with the Department of State and the US Coast Guard, has issued an advisory on deceptive shipping practices used by North Korea to evade sanctions, the techniques that can be used to avoid those practices, and the potential penalties should a ship be caught dealing with North Korea.

Swedish Club said yesterday, February 26th, that these practices could create significant sanctions risk for parties involved in the shipping industry, including insurers, flag registries, shipping companies, and financial institutions.

OFAC said that some of the tactics used by North Korea to obfuscate the identity of the vessels, the goods being shipped, and the origin or destination of cargo, included:

Physically altering vessel identification:

OFAC said that North Korean-flagged merchant vessels had physically altered their vessels to obscure their identities and attempt to pass themselves off as different vessels. These physical alterations included painting over vessel names and IMO numbers with alternate ones.

Ship-to-Ship (STS) transfers:

North Korea was said by the advisory to operates a fleet of 24 tankers capable of engaging in STS transfers of refined petroleum products and other banned goods. The names and IMO numbers of these vessels listed below were subject to change as North Korea continually sough to conceal the identity of vessels it owned and operated.

Ship NameIMO
SAM JONG 27408873
NAM SAN 88122347
SAM JONG 18405311
CHON MA SAN8660313
CHON MYONG 18712362
KUM UN SAN8720436
KUM UN SAN 38705539
PAEK MA9066978
RYE SONG GANG 17389704
MU BONG18610461
SAM MA 28106496
YU JONG 28604917
YU PHYONG 58605026
YU SON8691702
JI SONG 68898740
AN SAN 17303803
CHONG RIM 38665131
UN PHA 28966535
PO CHON8848276
SONG WON8613360
KANG DONG8977900
TONG HUNG 58151415

Falsifying cargo and vessel Documents:

North Korea had been known to falsify vessel and cargo documents to obscure the origin or destination of cargo.

Disabling or manipulating Automatic Identification System (AIS):

North Korean-flagged merchant vessels had been known to disable their AIS transponders to mask their movements. OFAC said that this tactic, whether employed by North Korean-flagged vessels or other vessels involved in trade with North Korea, could conceal the origin or destination of cargo destined for, or originating in, North Korea. North Korean-flagged merchant vessels had also been known to manipulate the data being transmitted via AIS. This could include altering vessel names, IMO numbers, MMSIs or other unique identifying information. This tactic could also be used to conceal a vessel’s next port of call or other information regarding its voyage.

Penalties for transgression:

Persons that violate US sanctions with respect to North Korea could be subject to civil monetary penalties equal to the greater of twice the value of the underlying transaction or $289,238, per each violation.

The advisory was published as the US and Asian allies prepared to expand interceptions of ships suspected of violating sanctions on North Korea. This extension could include deploying US Coast Guard forces to stop and search vessels in Asia-Pacific waters, senior US officials said last week.

While suspect ships have been intercepted before, the emerging strategy would expand the scope of such operations, although it would not go as far as imposing a naval blockade on North Korea, which Pyongyang has it would consider a an act of war.

The strategy calls for closer tracking and possible seizure of ships suspected of carrying banned weapons components and other prohibited cargo to or from North Korea, according to the officials, who were speaking to Reuters on condition of anonymity. The White House declined official comment.

China and Russia, which have blocked efforts by the US at the UN to win approval for use of force in North Korea interdiction operations, would likely oppose new actions if they saw the US as going too far or acting unilaterally.

However, the US was said to be considering the last UN Security Council resolution as opening the door to stronger action when the resolution called on states to inspect suspect ships on the high seas or in their waters. Washington was said to be drawing up rules of engagement aimed at avoiding armed confrontation at sea. Last Friday February 22nd Treasury Secretary Steve Mnuchin told reporters in Washington that the US did not rule out boarding ships for inspections, although later off-the-record briefings emphasized that any such action would be undertaken only with utmost caution. US interception of ships near Chinese waters was something likely to be avoided in favour of informing Chinese authorities of banned cargo and asking them do the inspection, one officialtold Reuters.

In December it was reported that Russian tankers had supplied fuel to North Korea at sea in a violation of sanctions. Washington also said at the time it had evidence that vessels from several countries, including China, had engaged in shipping oil products and coal. China denied the accusation.

The involvement of the US Coastguard in issuing the advisory, and its high profile elsewhere in the initiative, was seen as potentially significant, as USCG cutters carried less firepower and were technically engaged in law-enforcement missions. Their use might be seen as less provocative than if the same actions were taken by US warships. “Future ship deployments would depend on US foreign policy objectives and the operational availability of our assets,” said spokesman Lieutenant Commander Dave French.

The Southeast Asian countries with which the US is cooperating on the initiative are seen more as information sources than military partners. Chris Ford, assistant secretary of state for international security and non-proliferation, said that “the more partners we have, the more resources we have to dedicate to the effort,” said, but he declined to talk about discussions with specific countries.