North eludes sanctions with China’s help

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North eludes sanctions with China’s help

North Korea is “flouting” UN sanctions by trading in prohibited goods with evasion techniques that are increasing in scale, scope and sophistication. Its main gatekeeper: China.

This conclusion was drawn in the “2017 Final Report of the Panel of Experts of the 1718 Sanctions Committee on North Korea,” a 326-page analysis by the Security Council Committee Established Pursuant to Resolution 1718 (2009), a subsidiary organ in the UN Security Council.

The committee submitted the report to the UN Security Council’s president on Feb. 17 and publicly released it online last week. The panel said it investigated new interdictions, one of which highlighted North Korea’s ability to manufacture and trade in sophisticated and lucrative military technologies using overseas network. Other cases showed the country’s use of concealment techniques, as well as an emerging nexus between entities trading in arms and minerals.

Designated entities and banks have continued to operate in the sanctioned environment by using agents who are highly experienced and well trained in moving money, people and goods, including arms and related material, across borders, according to the report. These agents use non-North Koreans as facilitators and rely on numerous front companies, mainly Chinese. Diplomats, missions and trade representatives from the Pyongyang regime were said to be systematically playing key roles in prohibited sales, procurement, finance and logistics.

Behind these illicit activities is the North’s continued access to the international banking system, said the panel, adding that its ability to conceal financial activity by using foreign nationals and entities allows them to continue to transact through top global financial centers.

North Korean vessels listed in Resolution 2270 were still gaining access to foreign ports through various tactics, including identity fraud.

According to several sources in the Chinese commercial coal and iron market, the panel said Beijing Chengxing has been listed as a supplier of North Korean anthracite, iron ore and other minerals. Guangcaiweixing Trading is also listed as a supplier of the regime’s anthracite and minerals.

The panel also found China linked with the North Korean vessel Jie Shun, which contained 30,000 PG-7 rocket propelled grenades and related subcomponents. The cargo, commanded by a North Korean captain, was en route from North Korea towards the Suez Canal, when it was intercepted by Egyptian authorities Aug. 11, 2016, the largest interdicted ammunition consignment in the history of sanctions against Pyongyang.

China is also deeply involved in North Korea’s access to international banking. The panel said it obtained information showing that two North Korean banks designated in Resolution 2321 (2016) - Daedong Credit Bank and Korea Daesong Bank - are both operating on Chinese territory, through representative offices in Dalian, Dandong and Shenyang.

In violation of Resolution 2270, which mandates UN member states to close existing representative offices, subsidiaries or banking accounts in North Korea by June 2, 2016, North Korea’s International Bank of Martial Arts in Pyongyang has served foreign clients with renminbi savings, loan and transfer services; has undertaken transactions in China; and has issued guidelines in Chinese and English to foreign clients on how to transfer renminbi from China. North Korea’s front companies used an extensive network of individuals, companies and offshore bank accounts in China, Indonesia, Malaysia, Singapore and the Middle East, to procure and market arms and related material, the panel added.

On China’s link with the North’s nuclear and ballistic missile program, the panel said at least four universities in China and two in Russia had “bilateral agreements” with the North’s Kim Il Sung University, the Kim Chaek University of Technology, the Pyongsong College of Science and the National Defense University, the main institutions feeding North Korea’s missile program. The panel asked the institutes whether their agreement violates paragraph 17 of Resolution 2270, which states that all member states shall prevent specialized teaching or training of North Korean nationals of disciplines which could contribute to the North’s development of nuclear weapon delivery systems. The Chinese universities did not respond.

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