North Korea (DPRK) Sanctions

Department of Justice

Office of Public Affairs


FOR IMMEDIATE RELEASE

Thursday, May 9, 2019

North Korean Cargo Vessel Connected to Sanctions Violations Seized by U.S. Government

Assistant Attorney General for National Security John C. Demers, U.S. Attorney Geoffrey S. Berman for the Southern District of New York, Assistant Director John Brown of the FBI’s Counterintelligence Division and Assistant Director William F. Sweeney Jr. of the FBI’s New York Field Office announced today the filing of a civil forfeiture complaint against M/V Wise Honest (the “Wise Honest”), a 17,061-ton, single-hull bulk carrier ship registered in the Democratic People’s Republic of Korea (“DPRK” or “North Korea”).  The Wise Honest, one of North Korea’s largest bulk carriers, was used to illicitly ship coal from North Korea and to deliver heavy machinery to the DPRK.  Payments for maintenance, equipment, and improvements of the Wise Honest were made in U.S. dollars through unwitting U.S. banks.  This conduct violates longstanding U.S. law and United Nations Security Council resolutions. 

“This sanctions-busting ship is now out of service,” said Assistant Attorney General Demers.  “North Korea, and the companies that help it evade U.S. and U.N. sanctions, should know that we will use all tools at our disposal — including a civil forfeiture action such as this one or criminal charges — to enforce the sanctions enacted by the U.S. and the global community.  We are deeply committed to the role the Justice Department plays in applying maximum pressure to the North Korean regime to cease its belligerence.”

“Today’s civil action is the first-ever seizure of a North Korean cargo vessel for violating international sanctions,” said U.S. Attorney Berman.  “Our Office uncovered North Korea’s scheme to export tons of high-grade coal to foreign buyers by concealing the origin of their ship, the Wise Honest.  This scheme not only allowed North Korea to evade sanctions, but the Wise Honest was also used to import heavy machinery to North Korea, helping expand North Korea’s capabilities and continuing the cycle of sanctions evasion.  With this seizure, we have significantly disrupted that cycle.  We are willing and able to deploy the full array of law enforcement tools to detect, deter, and prosecute North Korea’s deceptive attempts to evade sanctions.”

“Although barred from doing business in this country, North Korea continues to violate U.S. and international sanctions while simultaneously taking advantage of unwitting U.S. companies,” said Assistant Director Brown.  “The FBI is committed to ensuring that North Korea be held responsible for their blatant disregard for U.S. law.  I am proud of the work done by the many men and women of the FBI who pursued this case.”

“Working with our law enforcement and intelligence partners around the world gives the FBI the ability to interdict illicit activity globally,” said Assistant Director in Charge Sweeney.  “Our counterintelligence efforts are squarely focused on protecting the American people. This seizure should serve as a clear signal that we will not allow foreign adversaries to use our financial systems to fund weapons programs which will be used to threaten our nation.”

According to the documents filed today in Manhattan federal court:

Pursuant to the International Emergency Economic Powers Act and the North Korea Sanctions and Policy Enhancement Act of 2016, North Korea and other individuals or entities that the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) has determined are involved in the facilitation of proliferation of weapons of mass destruction are prohibited from engaging in transactions with U.S. persons, involving U.S.-origin goods, or using the U.S. financial system.  The United Nations Security Council has similarly prohibited the provision of goods, technology, and services to North Korea, including the sale, supply, or transfer of coal.

From at least November 2016 through April 2018, the Wise Honest was used by Korea Songi Shipping Company, an affiliate of Korea Songi General Trading Corporation (a.k.a. “Songi Trading Company”), to export coal from North Korea to foreign purchasers and import machinery to North Korea (the “Korea Songi Scheme”).  On June 1, 2017, OFAC designated Songi Trading Company pursuant to Executive Order 13722 for its involvement in the sale, supply, or transfer of coal from North Korea.  OFAC also determined that Songi Trading Company was a subordinate of the Korean People’s Army.

On or about March 14, 2018, the Wise Honest was loaded with coal in Nampo, North Korea.  On or about April 2, 2018, foreign maritime authorities intercepted and detained the Wise Honest.  Maritime regulations require vessels like the Wise Honest engaged in international voyages to operate an automatic identification system (“AIS”) capable of providing information about the vessel to other ships and coastal authorities.  However, despite its March 2018 voyage from North Korea, the Wise Honest had not broadcast an AIS signal since August 4, 2017. 

Participants in the Korea Songi Scheme attempted to conceal the Wise Honest’s DPRK affiliation by falsely listing different countries for the Wise Honest’s nationality and the origin of the illicit coal in shipping documentation.

In connection with the Korea Songi Scheme, Kwon Chol Nam, one of Korea Songi Shipping Company’s representatives, paid for numerous improvements, equipment purchases, and service expenditures for the Wise Honest in U.S. dollars through unwitting U.S. financial institutions.  Such transfers constitute a provision of services by U.S. banks to both the sender and recipient of the funds, and longstanding U.S. law prohibits banks from providing such services to North Korean parties.  Payments totaling more than $750,000 were transmitted through accounts at a U.S. financial institution in connection with the March 2018 shipment of coal on board the Wise Honest. 

The Wise Honest is currently in the custody of the United States, having previously been seized pursuant to a warrant issued in the Southern District of New York.

Mr. Demers and Mr. Berman praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division, and thanked the Department of Justice’s Money Laundering and Asset Recovery Section and Office of International Affairs; the United States Coast Guard; and the Department of State for their assistance.

The case is being handled by Assistant U.S. Attorneys David W. Denton, Jr. and Benet J. Kearney of the U.S. Attorney’s Office for Southern District of New York, and Trial Attorney Christian Ford of the National Security Division’s Counterintelligence and Export Control Section. 

Links:

Department of Justice Press Release

Wise Honest Complaint

On Thursday, OFAC added the following 3 persons to its Democratic Republic of the Congo sanctions:

BASENGEZI, Marcellin (a.k.a. BASENGEZI, Marcellin Mukolo; a.k.a. MAKOLO, Marcelin Basengezi; a.k.a. MUKOLO, Basengezi Marcellin), Appartement 29 Cite Du Fleuve, Cite Du Fleuve, Kingabwa Limete, Kinshasa, Congo, Democratic Republic of the; DOB 30 Nov 1985; POB Kaziba, Congo, Democratic Republic of the; Gender Male; Passport OP0155187 (Congo, Democratic Republic of the) issued 24 Jan 2016 expires 19 Jan 2021 (individual) [DRCONGO]. 

KATINTIMA, Norbert Basengezi (a.k.a. KATINTIMA, Norbert Bashengezi), 15 Joli Parc, Ma Campagne, Kinshasa 00243, Congo, Democratic Republic of the; DOB 10 Jan 1958; POB Kashiramo-Kaziba, South Kivu, Congo, Democratic Republic of the; alt. POB Rwanda; nationality Congo, Democratic Republic of the; alt. nationality Rwanda; Gender Male; Vice-President of the Independent National Electoral Commission (individual) [DRCONGO].

NANGAA, Corneille Yobeluo (a.k.a. YOBELUO, Corneille Nangaa), 36 Q Solongo Blvd, Biangala, Lemba, Kinshasa, Congo, Democratic Republic of the; DOB 09 Jul 1970; POB Bagboya, Congo, Democratic Republic of the; Gender Male; Passport DP0003850 (Congo, Democratic Republic of the) issued 20 Nov 2017 expires 19 Nov 2022; alt. Passport DP0000149 (Congo, Democratic Republic of the) issued 12 Jan 2016 expires 11 Jan 2021 (individual) [DRCONGO].

And the following 2 entities to its North Korean sanctions:

DALIAN HAIBO INTERNATIONAL FREIGHT CO. LTD., 1103 A, Fortune Plaza No. 20, Harbour Street, Zhongshan District, Dalian, China; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210 [DPRK3].

LIAONING DANXING INTERNATIONAL FORWARDING CO. LTD. (Chinese Simplified: 辽宁丹兴国际货运有限公司), Room D1302, Langham Place, East Harbour, No. 11 Zhubao Street, Ganglong Road, Dalian, China; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210; Registration Number 91210200242663544B [DPRK4].

And updated the ISIL listing under its counter terrorism sanctions program:

ISLAMIC STATE OF IRAQ AND THE LEVANT (a.k.a. AD-DAWLA AL-ISLAMIYYA FI AL-‘IRAQ WA-SH-SHAM; a.k.a. AL-FURQAN ESTABLISHMENT FOR MEDIA PRODUCTION; a.k.a. AL-QAIDA GROUP OF JIHAD IN IRAQ; a.k.a. AL-QAIDA GROUP OF JIHAD IN THE LAND OF THE TWO RIVERS; a.k.a. AL-QAIDA IN IRAQ; a.k.a. AL-QAIDA IN MESOPOTAMIA; a.k.a. AL-QAIDA IN THE LAND OF THE TWO RIVERS; a.k.a. AL-QAIDA OF JIHAD IN IRAQ; a.k.a. AL-QAIDA OF JIHAD ORGANIZATION IN THE LAND OF THE TWO RIVERS; a.k.a. AL-QAIDA OF THE JIHAD IN THE LAND OF THE TWO RIVERS; a.k.a. AL-TAWHID; a.k.a. AL-ZARQAWI NETWORK; a.k.a. DAESH; a.k.a. DAWLA AL ISLAMIYA; a.k.a. ISIL; a.k.a. ISIS; a.k.a. ISLAMIC STATE; a.k.a. ISLAMIC STATE OF IRAQ; a.k.a. ISLAMIC STATE OF IRAQ AND AL-SHAM; a.k.a. ISLAMIC STATE OF IRAQ AND SYRIA; a.k.a. JAM’AT AL TAWHID WA’AL-JIHAD; a.k.a. TANZEEM QA’IDAT AL JIHAD/BILAD AL RAAFIDAINI; a.k.a. TANZIM QA’IDAT AL-JIHAD FI BILAD AL-RAFIDAYN; a.k.a. THE MONOTHEISM AND JIHAD GROUP; a.k.a. THE ORGANIZATION BASE OF JIHAD/COUNTRY OF THE TWO RIVERS; a.k.a. THE ORGANIZATION BASE OF JIHAD/MESOPOTAMIA; a.k.a. THE ORGANIZATION OF AL-JIHAD’S BASE IN IRAQ; a.k.a. THE ORGANIZATION OF AL-JIHAD’S BASE IN THE LAND OF THE TWO RIVERS; a.k.a. THE ORGANIZATION OF AL-JIHAD’S BASE OF OPERATIONS IN IRAQ; a.k.a. THE ORGANIZATION OF AL-JIHAD’S BASE OF OPERATIONS IN THE LAND OF THE TWO RIVERS; a.k.a. THE ORGANIZATION OF JIHAD’S BASE IN THE COUNTRY OF THE TWO RIVERS) [FTO] [SDGT]. -to- ISLAMIC STATE OF IRAQ AND THE LEVANT (a.k.a. AD-DAWLA AL-ISLAMIYYA FI AL-‘IRAQ WA-SH-SHAM; a.k.a. AL HAYAT MEDIA CENTER; a.k.a. AL-FURQAN ESTABLISHMENT FOR MEDIA PRODUCTION; a.k.a. AL-HAYAT MEDIA CENTER; a.k.a. AL-QAIDA GROUP OF JIHAD IN IRAQ; a.k.a. AL-QAIDA GROUP OF JIHAD IN THE LAND OF THE TWO RIVERS; a.k.a. AL-QAIDA IN IRAQ; a.k.a. AL-QAIDA IN MESOPOTAMIA; a.k.a. AL-QAIDA IN THE LAND OF THE TWO RIVERS; a.k.a. AL-QAIDA OF JIHAD IN IRAQ; a.k.a. AL-QAIDA OF JIHAD ORGANIZATION IN THE LAND OF THE TWO RIVERS; a.k.a. AL-QAIDA OF THE JIHAD IN THE LAND OF THE TWO RIVERS; a.k.a. AL-TAWHID; a.k.a. AL-ZARQAWI NETWORK; a.k.a. AMAQ NEWS AGENCY; a.k.a. DAESH; a.k.a. DAWLA AL ISLAMIYA; a.k.a. ISIL; a.k.a. ISIS; a.k.a. ISLAMIC STATE; a.k.a. ISLAMIC STATE OF IRAQ; a.k.a. ISLAMIC STATE OF IRAQ AND AL-SHAM; a.k.a. ISLAMIC STATE OF IRAQ AND SYRIA; a.k.a. JAM’AT AL TAWHID WA’AL-JIHAD; a.k.a. TANZEEM QA’IDAT AL JIHAD/BILAD AL RAAFIDAINI; a.k.a. TANZIM QA’IDAT AL-JIHAD FI BILAD AL-RAFIDAYN; a.k.a. THE MONOTHEISM AND JIHAD GROUP; a.k.a. THE ORGANIZATION BASE OF JIHAD/COUNTRY OF THE TWO RIVERS; a.k.a. THE ORGANIZATION BASE OF JIHAD/MESOPOTAMIA; a.k.a. THE ORGANIZATION OF AL-JIHAD’S BASE IN IRAQ; a.k.a. THE ORGANIZATION OF AL-JIHAD’S BASE IN THE LAND OF THE TWO RIVERS; a.k.a. THE ORGANIZATION OF AL-JIHAD’S BASE OF OPERATIONS IN IRAQ; a.k.a. THE ORGANIZATION OF AL-JIHAD’S BASE OF OPERATIONS IN THE LAND OF THE TWO RIVERS; a.k.a. THE ORGANIZATION OF JIHAD’S BASE IN THE COUNTRY OF THE TWO RIVERS; a.k.a. “AL HAYAT”) [FTO] [SDGT].

Additionally, the Coast Guard, Treasury and State Departments issued an updated, 19-page guidance document on “North Korea’s Illicit Shipping Practices”.

The Treasury Department issued two press releases – one for the Congolese designations:

Treasury Sanctions Congolese Officials Responsible for Undermining DRC Elections

WASHINGTON – Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned three senior Democratic Republic of the Congo (DRC) officials pursuant to Executive Order (E.O.) 13413, as amended by E.O. 13671, which authorizes sanctions in light of actions or policies that undermine democratic processes or institutions in the DRC.

“This action follows persistent corruption by senior officials within the DRC’s National Independent Electoral Commission (CENI) and the former Kabila Government to obstruct and delay preparations for credible and inclusive elections,” said Sigal Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence. “We stand with the Congolese people who went to the polls on December 30 but remain concerned about a flawed electoral process in which, following the presidential election, CENI continued to obstruct the democratic process and failed to ensure the vote reflected the will of the Congolese people.  The United States will continue to assist those who seek to root out credible allegations of corruption but will not hesitate to leverage our authorities to impose tangible and significant consequences on malign actors in the DRC and around the world that undermine the democratic process and traffic in corruption.” 

Specifically, OFAC designated three senior CENI officials: Corneille Yobeluo Nangaa (Nangaa), CENI President; Norbert Basengezi Katintima (Katintima), CENI Vice-President; and Katintima’s son, Marcellin Basengezi Mukolo (Basengezi), a high-level CENI advisor.  As a result of today’s actions, all of the designated persons’ assets within U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.

CORNEILLE YOBELUO NANGAA, PRESIDENT OF THE NATIONAL INDEPENDENT ELECTORAL COMMISSION (CENI)

Nangaa was nominated and sworn in as the President of CENI in November 2015.  CENI is tasked with executing elections in the DRC, and under Nangaa’s leadership, elections originally scheduled for December 2016 were postponed to December 2018.  In postponing the 2016 elections, CENI cited a lack of funding and delays in voter registration.  In his capacity as CENI President, Nangaa, and other CENI officials under his direction, embezzled and misappropriated CENI operational funds and undertook actions that slowed voter registration, facilitating election delays.

Nangaa oversaw CENI officials using several shell companies to embezzle CENI operational funds for their own personal and political gain.  Nangaa and other CENI officials enriched themselves through the purchase and sale of gasoline for profit at the expense of CENI, which delayed registration in Kasai, an opposition stronghold, and meant that many voters were unable to register.  In acquiring fuel to power generators for CENI offices, Nangaa negotiated a discounted rate and retained the difference from the budgeted amount to divide among senior CENI employees. Nangaa subsequently instructed CENI officials to fabricate receipts to account for the spending gap.

Under Nangaa’s leadership, CENI officials inflated by as much as $100 million the costs for the electronic voting machine contract with the intent to use surplus funds for personal enrichment, bribes, and campaign costs to fund the election campaign of Kabila’s candidate.  Nangaa, with other CENI officials, awarded an election-related contract and doubled the award amount on the understanding that the winning company would award the extra funds to a DRC company controlled by CENI leadership.  Nangaa approved the withdrawal of CENI operation funds for non-authorized budget items for personal use by DRC government employees.  Nangaa ordered CENI employees to fabricate expense receipts to cover spending gaps resulting from CENI funds being used for personal gain.  Nangaa delivered bribes to Constitutional Court justices to uphold a decision by the CENI to delay DRC’s 2016 elections. 

NORBERT BASENGEZI KATINTIMA, CENI VICE PRESIDENT

Katintima was nominated and sworn in as the Vice President of CENI in November 2015.  CENI is tasked with executing elections in the DRC, and under Katintima’s leadership, elections originally scheduled for December 2016 were postponed to December 2018.  In postponing the 2016 elections, CENI cited a lack of funding and delays in voter registration.  In his capacity as CENI Vice President, Katintima and other CENI officials under his direction, embezzled and misappropriated CENI operational funds, facilitating election delays.

Katintima oversaw CENI officials using several shell companies to embezzle CENI operational funds for their own personal and political gain.  Katintima withdrew and provided at least $80,000 from CENI operational funds to his personally-owned hospital, which provided medical care to all CENI employees.  The Supreme Audit Institution had sent unidentified investigators to CENI to conduct an audit of its financial activities.  However, CENI officials, including Katintima, agreed to bribe the investigators to conduct an inaccurate audit.  Katintima delivered bribes to Constitutional Court justices to uphold a decision by the CENI to delay DRC’s 2016 elections.

MARCELLIN MUKOLO BASENGEZI, CENI ADVISOR

Marcellin Basengezi is a CENI advisor and the son of Vice President Katintima.  Basengezi has embezzled and misappropriated state assets from CENI and has undertaken actions that slowed registration, which facilitated election delays.

Basengezi and other CENI advisors were in charge of assigning CENI contracts, enabling them to award contracts to their own shell companies for personal profit and to circumvent official procurement procedures.  Basengezi inflated costs for an election-related contract with the intent to use surplus funds for personal enrichment, bribes, and campaign costs to fund the election campaign of Kabila’s successor.  Basengezi awarded a separate election-related contract and doubled the award amount on the understanding that the winning company would award the extra funds to a DRC company controlled by CENI leadership.  Basengezi and other CENI official have purchased and sold gasoline for profit at the expense of CENI, including selling fuel prepositioned for voter registration.  The interest in self-enrichment of Basengezi and others delayed voter registration in Kasai, an opposition stronghold, and meant that many voters were unable to register. 

and one for the North Korean updates:

Treasury Designates Two Shipping Companies for Attempted Evasion of North Korea Sanctions 

U.S. Government Updates North Korea Shipping Advisory

WASHINGTON – The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today announced the designation of two shipping companies that have helped North Korea evade sanctions.  Today’s action highlights the deceptive methods that the North Korean regime uses to circumvent international and U.S. sanctions, as well as the U.S. Government’s commitment to implement existing UN Security Council (UNSC) resolutions.  Both companies are based in China.  In a related action, OFAC, along with the U.S. Department of State and the U.S. Coast Guard, is updating the North Korea shipping advisory and adding dozens of vessels that are believed to have engaged in ship-to-ship (STS) transfers with North Korean tankers or exported North Korean coal.

“The United States and our like-minded partners remain committed to achieving the final, fully verified denuclearization of North Korea and believe that the full implementation of North Korea-related UN Security Council resolutions is crucial to a successful outcome,” said Treasury Secretary Steven T. Mnuchin. “Treasury will continue to enforce our sanctions, and we are making it explicitly clear that shipping companies employing deceptive tactics to mask illicit trade with North Korea expose themselves to great risk.”

OFAC designated Dalian Haibo International Freight Co. Ltd. (Dalian Haibo) pursuant to Executive Order (E.O.) 13722 for providing goods and services to or in support of the U.S.-designated Paeksol Trading Corporation (Paeksol).  Paeksol is also subordinate to the UN- and U.S.-designated Reconnaissance General Bureau (RGB).  OFAC previously designated Paeksol for having sold, supplied, transferred, or purchased metal or coal from North Korea, where the revenue may have benefited the Government of North Korea or the Workers’ Party of Korea.  In early 2018, Dalian Haibo shipped cargo from Dalian, China to Paeksol in Nampo, North Korea, aboard DPRK-flagged vessels.

OFAC also designated Liaoning Danxing International Forwarding Co. Ltd. (Liaoning Danxing) pursuant to E.O. 13810 for operating in the transportation industry in North Korea.  Liaoning Danxing routinely used deceptive practices that enabled EU-based North Korean procurement officials to operate and purchase goods for the DPRK regime. 

This shipping advisory updates the February 23, 2018 advisory with new information about North Korea’s deceptive shipping practices, additional guidance on how to mitigate the risk of involvement in these practices, a new graphic depicting certain ports of call, and three new annexes, (1) guidance for member states and industry to avoid illicit North Korean maritime trade, (2) dozens of vessels that are believed to have engaged in ship-to-ship transfers with North Korean Tankers, and (3) dozens of vessels that may have exported North Korean coal since August 5, 2017.  As further detailed in the advisory, North Korea employs deceptive shipping practices such as disabling or manipulating automated identification systems, physically altering vessels, conducting (STS transfers, and falsifying cargo documentation.  Since initial publication in February 2018, North Korea has altered the geographic location of STS transfers and has resumed exports of coal in the Gulf of Tonkin.   

The following map shows the area where STS transfers of refined petroleum commonly occur:

North Korea Ship-to-Ship Transfer Areas

The following graphic shows ports of call before and after STS transfers of refined petroleum:

Ports Visited Before and After Ship-To-Ship Transfers

As a result of today’s action, any property or interests in property of the designated persons in the possession or control of U.S. persons or within or transiting the United States is blocked, and U.S. persons generally are prohibited from dealing with the designated persons. 

And the State Department issued one for the ISIL listing update:

Amendments to the Terrorist Designations of the Islamic State of Iraq and Syria

Media Note

Office of the Spokesperson

Washington, DC

March 21, 2019


The Department of State has amended the terrorist designations of the Islamic State of Iraq and Syria (ISIS) to include Amaq News Agency, Al Hayat Media Center, and other aliases. These aliases have been added to ISIS’s designation as a Foreign Terrorist Organization (FTO) under Section 219 of the Immigration and Nationality Act, and as a Specially Designated Global Terrorist (SDGT) under Executive Order 13224. Additionally the Department of State has reviewed and maintained the FTO designation of ISIS.

Amaq News Agency and Al Hayat Media Center are two media wings of ISIS. Amaq News Agency is part of the terrorist organization’s propaganda apparatus, and is used for claiming responsibility for ISIS or ISIS-inspired attacks, spreading terrorist messages online, and recruitment. Al Hayat Media Center is ISIS’s multilingual media outlet and is also used for recruitment purposes.

Today’s actions notify the U.S. public and the international community that Amaq News Agency and Al Hayat Media Center are aliases of ISIS. Terrorism designations expose and isolate organizations and individuals, and deny them access to the U.S. financial system. Moreover, designations can assist the law enforcement activities of the United States and other governments.

Links:

OFAC Notice

Updated DPRK Shipping Advisory

Treasury Press Releases: DRC, North Korea

State Department Press Release

Settlement Agreement between the U.S. Department of the Treasury’s Office of Foreign Assets Control and e.l.f. Cosmetics, Inc.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today announced a settlement of $996,080 with e.l.f. Cosmetics, Inc. (“ELF”) of Oakland, California.  ELF has agreed to settle its potential civil liability for 156 apparent violations of the North Korea Sanctions Regulations, 31 C.F.R. part 510 (NKSR).  The apparent violations involved the importation of false eyelash kits from two suppliers located in the People’s Republic of China that contained materials sourced by these suppliers from the Democratic People’s Republic of Korea.  OFAC determined that ELF voluntarily self-disclosed the apparent violations and that the apparent violations constitute a non-egregious case.

From the enforcement information – what happened:

e.l.f. Cosmetics, Inc. Settles Potential Civil Liability for Apparent Violations of the North Korea Sanctions Regulations. e.l.f. Cosmetics, Inc. (“ELF”), a cosmetics company headquartered in Oakland, California, has agreed to pay $996,080 to settle its potential civil liability for 156 apparent violations of the North Korea Sanctions Regulations, 31 C.F.R. part 510 (NKSR). Specifically, ELF appears to have violated § 510.201(c)1 of the NKSR by importing 156 shipments of false eyelash kits from two suppliers located in the People’s Republic of China that contained materials sourced by these suppliers from the Democratic People’s Republic of Korea (DPRK). ELF imported the false eyelash kits from on or about April 1, 2012 to on or about January 28, 2017. The total value of the shipments equaled $4,427,019.26.

Throughout the time period in which the apparent violations occurred, ELF’s OFAC compliance program was either non-existent or inadequate. The company’s production review efforts focused on quality assurance issues pertaining to the production process, raw materials, and end- products of the goods it purchased and/or imported. Until January 2017, ELF’s compliance program and its supplier audits failed to discover that approximately 80 percent of the false eyelash kits supplied by two of ELF’s China-based suppliers contained materials from the DPRK.

And the math:

OFAC determined that ELF voluntarily self-disclosed the apparent violations to OFAC, and that the apparent violations constitute a non-egregious case. The statutory maximum civil monetary penalty amount for the apparent violations was $40,833,633, and the base civil monetary penalty amount for the apparent violations was $2,213,510.

The settlement amount reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A.

OFAC found the following to be aggravating factors in this case:

  1. the apparent violations may have resulted in U.S.-origin funds coming under the control of the DPRK government, in direct conflict with the program objectives of the NKSR;
  2. ELF is a large and commercially sophisticated company that engages in a substantial volume of international trade; and
  3. ELF’s OFAC compliance program was either non-existent or inadequate throughout the time period in which the apparent violations occurred, and appears not to have exercised sufficient supply chain due diligence while sourcing products from a region that poses a high risk to the effectiveness of the NKSR.

OFAC found the following to be mitigating factors in this case:

  1. ELF’s personnel do not appear to have had actual knowledge of the conduct that led to the apparent violations in this investigation;
  2. ELF has not received a Penalty Notice or Finding of Violation from OFAC in the five years preceding the earliest date of the transactions giving rise to the apparent violations;
  3. the apparent violations do not appear to constitute a significant part of ELF’s business activities; and
  4. ELF cooperated with OFAC by immediately disclosing the apparent violations, signing a tolling agreement, and submitting a complete and satisfactory response to OFAC’s request for additional information.

and the mitigations:

ELF stated the company has terminated the conduct which led to the apparent violations and has taken the following steps to minimize the risk of recurrence of similar conduct in the future:

  • Implemented supply chain audits that verify the country of origin of goods and services used in ELF’s products;
  • Adopted new procedures to require suppliers to sign certificates of compliance stating that they will comply with all U.S. export controls and trade sanctions;
  • Conducted an enhanced supplier audit that included verification of payment information related to production materials and the review of supplier bank statements;
  • Engaged outside counsel to provide additional training for key employees in the United States and in China regarding U.S. sanctions regulations and other relevant U.S. laws and regulations; and
  • Held mandatory training on U.S. sanctions regulations for employees and suppliers in China and implemented additional mandatory trainings for new employees, as well as, regular refresher training for current employees and suppliers based in China.

and the lesson OFAC wants us all to learn:

This enforcement action highlights the risks for companies that do not conduct full-spectrum supply chain due diligence when sourcing products from overseas, particularly in a region in which the DPRK, as well as other comprehensively sanctioned countries or regions, is known to export goods. OFAC encourages companies to develop, implement, and maintain a risk-based approach to sanctions compliance and to implement processes and procedures to identify and mitigate areas of risks. Such steps could include, but are not limited to, implementing supply chain audits with country-of-origin verification; conducting mandatory OFAC sanctions training for suppliers; and routinely and frequently performing audits of suppliers.

Links:

OFAC Notice

OFAC Enforcement Information

GOV.UK sent out a new email (OFSI has not) – now that the DPRK sanctions page is fixed. So, Council Implementing Regulation (EU) 2019/93 was implemented yesterday, resulting in the delisting of the following persons:

1. CHU, Kyu-Chang

DOB: 25/11/1928. POB: South Hamgyo’ng Province, DPRK a.k.a: (1) JU, Kyu, Chang (2) JU, Kyu-Chang Position: Member of the National Defence

Commission Other Information: Annex XV EU Listing, not UN. Former Member of the National Defence Commission. Former Director of the Department of Munitions of the Central Committee of the Korean Workers’ Party. Responsible for supporting or promoting the DPRK’s nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. Listed on: 30/12/2009 Last Updated: 15/09/2017 23/01/2019 Group ID: 11029.

2. KIM, Yong-Chun

DOB: 04/03/1935. a.k.a: (1) KIM, Yong, Chun (2) YOUNG-CHUN Passport Details: 554410660 Position: Korean People’s Army Marshal Other Information: Annex XV. EU listing. Not UN. Former Deputy Chairman of the National Defence Commission. Minister for the People’s Armed Forces. Special adviser to Kim Jong Il on nuclear strategy Listed on: 30/12/2009 Last Updated: 15/09/2017 23/01/2019 Group ID: 11033.

Links:

OFSI Notice

Council Implementing Regulation (EU) 2019/93

Well, kind of… both the emails from GOV.UK and OFSI both linked to an old PDF. The email from OFSI says that Kyu-Chang CHU and Yong-Chun KIM have been delisted. Once the right PDF shows up, we will post the full details, including the EU Regulation that was passed for this (it was 2019/93, I assume it’s a Council – rather than Commission – Implementing Regulation)

UNCLASSIFIED

Good afternoon

On 8 December 2018 the Government amended the Charter of the United Nations (Sanctions – Democratic People’s Republic of Korea) Regulations 2008 to give effect to certain United Nations Security Council (UNSC) resolutions relating to North Korea. The amendments impose additional restrictions regarding vessels.

The Charter of the United Nations (Democratic People’s Republic of Korea) Amendment (Shipping) Regulations 2018 give authority to the Minister for Foreign Affairs to make a notifiable instrument requiring that a vessel be prohibited from being registered in, or if already registered removed from, Australia’s shipping registers where this is required by UNSC resolutions. They also introduce prohibitions on the provision of classification services, insurance services and reinsurance services to DPRK-related vessels whose registration has been cancelled.

Details of Australia’s sanctions with respect to the Democratic People’s Republic of Korea (North Korea) can be found at:

https://dfat.gov.au/international-relations/security/sanctions/sanctions-regimes/north-korea/Pages/default.aspx

Regards

Sanctions Section

_______________________________
Sanctions, Treaties and Transnational Crime Legal Branch
Legal Division

Department of Foreign Affairs and Trade 
www.dfat.gov.au / DFAT Sanctions website / DFAT Consolidated List

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On Monday, OFAC added the following three persons:

CHOE, Ryong Hae (a.k.a. CH’OE, Ryong-hae); DOB 15 Jan 1950; Gender Male; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210; Director of the Workers’ Party of Korea Organization and Guidance Department (individual) [DPRK2].

JONG, Kyong Thaek (a.k.a. CHO’NG, Kyo’ng-t’aek), Pyongyang, Korea, North; DOB 01 Jan 1961 to 31 Dec 1963; Gender Male; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210; Minister of State Security (individual) [DPRK2].

PAK, Kwang Ho (a.k.a. PAK, Kwang-ho); DOB 01 Jan 1946 to 31 Dec 1948; Gender Male; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210; Director of the Propaganda and Agitation Department (individual) [DPRK2].

to the SDN List under the North Korea sanctions program.

They also added a reminder about the updating of the HTTPS security certificate.

And Treasury issued a press release:

Treasury Sanctions North Korean Officials and Entities in Response to the Regime’s Serious Human Rights Abuses and Censorship

WASHINGTON – The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today designated three individuals in response to the North Korean regime’s ongoing and serious human rights abuses and censorship.  Treasury is taking this action in conjunction with the State Department’s “Report on Serious Human Rights Abuses and Censorship in North Korea,” which is being submitted in accordance with the North Korea Sanctions and Policy Enhancement Act of 2016 (NKSPEA).

“Treasury is sanctioning senior North Korean officials who direct departments that perpetrate the regime’s brutal state-sponsored censorship activities, human rights violations and abuses, and other abuses in order to suppress and control the population.  These sanctions demonstrate the United States’ ongoing support for freedom of expression, and opposition to endemic censorship and human rights abuses,” said Treasury Secretary Steven T. Mnuchin.  “The United States has consistently condemned the North Korean regime for its flagrant and egregious abuses of human rights and fundamental freedoms, and this Administration will continue to take action against human rights abusers around the globe.”

Today’s actions shine a spotlight on North Korea’s reprehensible treatment of those in North Korea, and serve as a reminder of North Korea’s brutal treatment of U.S. citizen Otto Warmbier, who passed away 18 months ago.  Otto would have turned 24 years old on December 12, and his parents Fred and Cindy Warmbier and the rest of his family continue to mourn for him.  President Trump pledged in his 2018 State of the Union address that the United States will “honor Otto’s memory with American resolve.”  Today’s actions are part of this Administration’s continued efforts to highlight North Korea’s abysmal human rights record, and to speak out for those who cannot speak for themselves.

Today’s designations were issued pursuant to Executive Order 13687, which targets, among others, officials of the Government of North Korea and the Workers’ Party of Korea (WPK), and are consistent with the provisions of NKSPEA.  Individuals designated today are senior officials of previously sanctioned government bodies, including the Ministry of State Security (MSS), the Ministry of Public Security, WPK Organization and Guidance Department (OGD), and the WPK Propaganda and Agitation Department (PAD).

OFAC designated Jong Kyong Thaek, the Minister of State Security, pursuant to E.O. 13687 for being an official of the Government of North Korea and of the WPK.  According to the Department of State report, Jong Kyong Thaek plays a role in directing the censorship activities and abuses perpetrated by the MSS.  The MSS was designated previously pursuant to E.O. 13722 for having engaged in, facilitated, or been responsible for an abuse or violation of human rights by the Government of North Korea or the WPK.

OFAC designated Choe Ryong Hae, the Director of the OGD, pursuant to E.O. 13687 for being an official of the WPK.  Choe Ryong Hae is reportedly seen as the “Number Two” official with control over the party, government, and military.  The OGD is a powerful body of the North Korean regime, is instrumental in implementing censorship policies, and purports to control the political affairs of all North Koreans.  The OGD also assumes oversight responsibilities over organizations undergoing party audits to inspect for ideological discipline.  When a party official deviates from the official message in public remarks, the OGD reportedly will dispatch an official to monitor a self-criticism session.  Choe Ryong Hae is also a member of several powerful WPK committees, including Vice Chairman of the Executive Policy Bureau of the WPK Central Committee.

OFAC also designated Pak Kwang Ho, the Director of the PAD, pursuant to E.O. 13687 for being an official of the WPK.  According to the Department of State report, in his capacity as the Director of the PAD, Pak Kwang Ho is responsible for maintaining ideological purity and managing the general censorship functions of the PAD, furthering the suppression of freedom of speech, expression, and censorship.  The PAD is said to maintain oppressive information control and is responsible for indoctrinating the people.

Today’s Department of State report highlights the role of three groups responsible for implementing strict censorship and restricting access to foreign media.  These groups are composed of personnel from the Government of North Korea and the WPK, whose property and interests in property were blocked in 2016.  These groups — which go by various numbered identifications such as Group 109, Group 118, and Group 114 — reportedly conduct warrantless searches for unapproved foreign media or content, inspect and confiscate computer content, including external storage devices, and even kidnap defectors or foreign citizens who support human rights in North Korea.

Human rights abuses undermine the values that form an essential foundation of stable, secure, and functioning societies; have devastating impacts on individuals; weaken democratic institutions; degrade the rule of law; perpetuate violent conflicts; facilitate the activities of dangerous persons; and undermine economic markets.  The United States seeks to impose tangible and significant consequences on those who commit serious human rights abuse, as well as to protect the financial system of the United States from abuse by these same persons.

In total, since January of 2017, Treasury has taken action against over 500 individuals and entities engaged in activities related to, or directly involving, human rights abuse, including actions like today under the North Korea program and other programs such as Global Magnitsky, Syria, South Sudan, the Democratic Republic of the Congo, Venezuela, Russia, Iran, and other sanctions programs.  Treasury has also published advisories to U.S. financial institutions on human rights abuses enabled by corrupt senior foreign political figures and their financial facilitators that can be found here, as well as advisories related to some of the programs listed above, which can be found here. 

As a result of today’s actions, any property or interests in property within (or transiting) U.S. jurisdiction of those designated by OFAC are frozen.  Additionally, transactions by U.S. persons involving the designated persons are generally prohibited.

Links:

OFAC Notice

Treasury Press Release