North Korea (DPRK) Sanctions

On Friday, OFAC designated:

KAYIHURA, Kale (a.k.a. MUHWEZI, Edward Kalekezi Kayihura); DOB 26 Dec 1955; nationality Uganda; Gender Male; Passport DA024329 (individual) [GLOMAG].

under its Global Magnitsky human rights sanctions program, and the following entities:

ANDARIEL, Korea, North; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210 [DPRK3]. 

 

BLUENOROFF (a.k.a. “APT 38”; a.k.a. “APT38”; a.k.a. “STARDUST CHOLLIMA”), Korea, North; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210 [DPRK3]. 

 

LAZARUS GROUP (a.k.a. “APPLEWORM”; a.k.a. “APT-C-26”; a.k.a. “GROUP 77”; a.k.a. “GUARDIANS OF PEACE”; a.k.a. “HIDDEN COBRA”; a.k.a. “OFFICE 91”; a.k.a. “RED DOT”; a.k.a. “TEMP.HERMIT”; a.k.a. “THE NEW ROMANTIC CYBER ARMY TEAM”; a.k.a. “WHOIS HACKING TEAM”; a.k.a. “ZINC”), Potonggang District, Pyongyang, Korea, North; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210 [DPRK3].

under its North Korean sanctions program.

Kayihura was also designated by the State Department under its Section 7031(c) powers:

The Department is publicly designating Kale Kayihura, the former Inspector General of the Uganda Police Force and its commanding officer from 2005-2018, under Section 7031(c) of the FY 2019 Department of State, Foreign Operations, and Related Programs Appropriations Act, due to his involvement in gross violations of human rights.  Specifically, the Department has credible information that Kayihura was involved in torture and/or cruel, inhuman, or degrading treatment or punishment, through command responsibility of the Flying Squad, a specialized unit of the Uganda Police Force that reported directly to Kayihura.  The Treasury Department is concurrently designating Kayihura pursuant to Executive Order (E.O.) 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act.

Section 7031(c) provides that, in cases where the Secretary of State has credible information that foreign officials have been involved in significant corruption or a gross violation of human rights, those individuals and their immediate family members are ineligible for entry into the United States.  The law also requires the Secretary of State to publicly or privately designate such officials and their immediate family members.  In addition to the public designation of Kale Kayihura, the Department is also publicly designating his spouse, Angela Umurisa Gabuka, his daughter, Tesi Uwibambe, and his son, Kale Rudahigwa.

In Executive Order 13818, the President declared a national emergency with respect to serious human rights abuses and corruption globally, which constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.  Through this E.O., the President has authorized the Secretary of the Treasury and the Secretary of State to impose economic sanctions and visa restrictions, respectively, on persons determined, among other things, to be responsible for or complicit in, or to have directly or indirectly engaged in, serious human rights abuse or corruption.

These actions against Kale Kayihura underscore our concern with human rights violations and abuses in Uganda, as well as our support for accountability for those who engage in such violations and abuses.  We call on the Ugandan government to respect human rights and fundamental freedoms, including the freedoms of expression and peaceful assembly.

To be perfectly frank, Mr. Watchlist wonders why State bothered – the Global Magnitsky program includes the travel ban that 7031(c) imposes…

Meanwhile, Treasury issued a press release about the North Korean designees:

PRESS RELEASES

Treasury Sanctions North Korean State-Sponsored Malicious Cyber Groups

WASHINGTON – Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions targeting three North Korean state-sponsored malicious cyber groups responsible for North Korea’s malicious cyber activity on critical infrastructure.  Today’s actions identify North Korean hacking groups commonly known within the global cyber security private industry as “Lazarus Group,” “Bluenoroff,” and “Andariel” as agencies, instrumentalities, or controlled entities of the Government of North Korea pursuant to Executive Order (E.O.) 13722, based on their relationship to the Reconnaissance General Bureau (RGB).  Lazarus Group, Bluenoroff, and Andariel are controlled by the U.S.- and United Nations (UN)-designated RGB, which is North Korea’s primary intelligence bureau.

“Treasury is taking action against North Korean hacking groups that have been perpetrating cyber attacks to support illicit weapon and missile programs,” said Sigal Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence.  “We will continue to enforce existing U.S. and UN sanctions against North Korea and work with the international community to improve cybersecurity of financial networks.”

MALICIOUS CYBER ACTIVITY BY LAZARUS GROUP, BLUENOROFF, AND ANDARIEL

Lazarus Group targets institutions such as government, military, financial, manufacturing, publishing, media, entertainment, and international shipping companies, as well as critical infrastructure, using tactics such as cyber espionage, data theft, monetary heists, and destructive malware operations.  Created by the North Korean Government as early as 2007, this malicious cyber group is subordinate to the 110th Research Center, 3rd Bureau of the RGB.  The 3rd Bureau is also known as the 3rd Technical Surveillance Bureau and is responsible for North Korea’s cyber operations.  In addition to the RGB’s role as the main entity responsible for North Korea’s malicious cyber activities, the RGB is also the principal North Korean intelligence agency and is involved in the trade of North Korean arms.  The RGB was designated by OFAC on January 2, 2015 pursuant to E.O. 13687 for being a controlled entity of the Government of North Korea.  The RGB was also listed in the annex to E.O. 13551 on August 30, 2010.  The UN also designated the RGB on March 2, 2016.

Lazarus Group was involved in the destructive WannaCry 2.0 ransomware attack which the United States, Australia, Canada, New Zealand and the United Kingdom publicly attributed to North Korea in December 2017.  Denmark and Japan issued supporting statements and several U.S. companies took independent actions to disrupt the North Korean cyber activity.  WannaCry affected at least 150 countries around the world and shut down approximately three hundred thousand computers.  Among the publicly identified victims was the United Kingdom’s (UK) National Health Service (NHS).  Approximately one third of the UK’s secondary care hospitals — hospitals that provide intensive care units and other emergency services — and eight percent of general medical practices in the UK were crippled by the ransomware attack, leading to the cancellation of more than 19,000 appointments and ultimately costing the NHS over $112 million, making it the biggest known ransomware outbreak in history.  Lazarus Group was also directly responsible for the well-known 2014 cyber-attacks of Sony Pictures Entertainment (SPE).

Also designated today are two sub-groups of Lazarus Group, the first of which is referred to as Bluenoroff by many private security firms.  Bluenoroff was formed by the North Korean government to earn revenue illicitly in response to increased global sanctions.  Bluenoroff conducts malicious cyber activity in the form of cyber-enabled heists against foreign financial institutions on behalf of the North Korean regime to generate revenue, in part, for its growing nuclear weapons and ballistic missile programs.  Cybersecurity firms first noticed this group as early as 2014, when North Korea’s cyber efforts began to focus on financial gain in addition to obtaining military information, destabilizing networks, or intimidating adversaries.  According to industry and press reporting, by 2018, Bluenoroff had attempted to steal over $1.1 billion dollars from financial institutions and, according to press reports, had successfully carried out such operations against banks in Bangladesh, India, Mexico, Pakistan, Philippines, South Korea, Taiwan, Turkey, Chile, and Vietnam. 

According to cyber security firms, typically through phishing and backdoor intrusions, Bluenoroff conducted successful operations targeting more than 16 organizations across 11 countries, including the SWIFT messaging system, financial institutions, and cryptocurrency exchanges.  In one of Bluenoroff’s most notorious cyber activities, the hacking group worked jointly with Lazarus Group to steal approximately $80 million dollars from the Central Bank of Bangladesh’s New York Federal Reserve account.  By leveraging malware similar to that seen in the SPE cyber attack, Bluenoroff and Lazarus Group made over 36 large fund transfer requests using stolen SWIFT credentials in an attempt to steal a total of $851 million before a typographical error alerted personnel to prevent the additional funds from being stolen.

The second Lazarus Group sub-group designated today is Andariel.  It focuses on conducting malicious cyber operations on foreign businesses, government agencies, financial services infrastructure, private corporations, and businesses, as well as the defense industry.  Cybersecurity firms first noticed Andariel around 2015, and reported that Andariel consistently executes cybercrime to generate revenue and targets South Korea’s government and infrastructure in order to collect information and to create disorder.

Specifically, Andariel was observed by cyber security firms attempting to steal bank card information by hacking into ATMs to withdraw cash or steal customer information to later sell on the black market.  Andariel is also responsible for developing and creating unique malware to hack into online poker and gambling sites to steal cash.

According to industry and press reporting, beyond its criminal efforts, Andariel continues to conduct malicious cyber activity against South Korea government personnel and the South Korean military in an effort to gather intelligence.  One case spotted in September 2016 was a cyber intrusion into the personal computer of the South Korean Defense Minister in office at that time and the Defense Ministry’s intranet in order to extract military operations intelligence.

In addition to malicious cyber activities on conventional financial institutions, foreign governments, major companies, and infrastructure, North Korea’s cyber operations also target Virtual Asset Providers and cryptocurrency exchanges to possibly assist in obfuscating revenue streams and cyber-enabled thefts that also potentially fund North Korea’s WMD and ballistic missile programs.  According to industry and press reporting, these three state-sponsored hacking groups likely stole around $571 million in cryptocurrency alone, from five exchanges in Asia between January 2017 and September 2018.

U.S. GOVERNMENT EFFORTS TO COMBAT NORTH KOREAN CYBER THREATS

Separately, the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) and U.S. Cyber Command (USCYBERCOM) have in recent months worked in tandem to disclose malware samples to the private cybersecurity industry, several of which were later attributed to North Korean cyber actors, as part of an ongoing effort to protect the U.S. financial system and other critical infrastructure as well as to have the greatest impact on improving global security.  This, along with today’s OFAC action, is an example of a government-wide approach to defending and protecting against an increasing North Korean cyber threat and is one more step in the persistent engagement vision set forth by USCYBERCOM.

As a result of today’s action, all property and interests in property of these entities, and of any entities that are owned, directly or indirectly, 50 percent or more by the designated entities, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC.  OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons.

In addition, persons that engage in certain transactions with the entities designated today may themselves be exposed to designation.  Furthermore, any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the entities designated today could be subject to U.S. correspondent account or payable-through sanctions.

Links:

OFAC Notice

Rewards for Justice notice

Treasury Press Release

On Friday, OFAC added the following persons:

CHEN, Mei Hsiang (Chinese Traditional: 陳美香) (a.k.a. CHEN, Mei-Hsiang), Taiwan; DOB 18 May 1956; nationality Taiwan; Gender Female; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210; Passport 310422295 expires 06 Jan 2025; National ID No. R222185563 (individual) [DPRK4]. 

 

HUANG, Wang Ken (Chinese Traditional: 黃旺根) (a.k.a. HUANG, Wan Ken; a.k.a. HUANG, Wang-gen; a.k.a. HUANG, Wan-Ken), Taiwan; DOB 18 Jul 1960; nationality Taiwan; Gender Male; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210 (individual) [DPRK4].

and entities:

JUI CHENG SHIPPING COMPANY LIMITED (Chinese Traditional: 瑞誠海運股份有限公司) (a.k.a. JUI CHENG SHIPPING CO LTD; a.k.a. JUI CHENG SHIPPING CO., LIMITED), Care of Jui Zong Ship Management Co Ltd, 5th Floor, 551, Jiuru 1st Road, Sanmin District, Kaohsiung 80764, Taiwan; Room B, 21/F Kaikwong Commercial Building, 332 Lockhart Road, Wan Chai, Hong Kong; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210; Commercial Registry Number 0925906 (Hong Kong); Company Number IMO 5499198 [DPRK4]. 

 

JUI PANG SHIPPING CO LTD (Chinese Traditional: 瑞邦海運股份有限公司), 5th Floor, 551, Jiuru 1st Road, Sanmin District, Kaohsiung City 80764, Taiwan; 5F-2 No 551 Jiouru 1st Road, Sanmin District, Kaohsiung, Taiwan; 4FL No. 198 Wencheng 2nd Road, Chengde Village, North District, Tainan, Taiwan; 193 San Kuan Rd, Tainan City 70247, Taiwan; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210; Company Number IMO 1865817; Business Number 16111431 (Taiwan) [DPRK4]. 

 

JUI ZONG SHIP MANAGEMENT CO LTD (Chinese Traditional: 瑞榮船舶管理有限公司) (a.k.a. JUI ZONG SHIP MANAGEMENT CO; a.k.a. JUI ZONG SHIP MANAGEMENT CO., LTD.), 5FL-2 No. 551 Jiouru 1st Road Sanmin Dist., Kaohsiung 80764, Taiwan; 5th Floor, 551, Jiuru 1st Road, Sanmin District, Kaohsiung City 80764, Taiwan; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210; Company Number IMO 5418446; Business Number 13195014 (Taiwan) [DPRK4].

and cargo vessel:

SHANG YUAN BAO Panama flag; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210; Vessel Registration Identification IMO 8126070 (vessel) [DPRK4] (Linked To: HUANG, Wang Ken; Linked To: CHEN, Mei Hsiang; Linked To: JUI CHENG SHIPPING COMPANY LIMITED; Linked To: JUI PANG SHIPPING CO LTD; Linked To: JUI ZONG SHIP MANAGEMENT CO LTD).

to the SDN List under its North Korea sanctions program.

Additionally, the Treasury Department issued the following press release:

PRESS RELEASES

Treasury Designates Shipping Network Engaged in Ship-to-Ship Transfers with North Korean Vessels

Actions Enforce Existing United Nations and U.S. Sanctions

WASHINGTON – Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced North Korea-related designations of two individuals and three entities, and further identified one vessel as blocked property, continuing the implementation and enforcement of existing sanctions.  This action highlights North Korea’s continued use of illicit ship-to-ship (STS) transfers to circumvent United Nations (UN) sanctions that restrict the import of petroleum products, as well as the U.S. Government’s commitment to implement existing UN Security Council Resolutions (UNSCRs). 

“Treasury will implement and enforce existing US and UN sanctions on individuals, entities, and vessels involved in illicit ship-to-ship transfers with North Korean flagged vessels,” said Treasury Under Secretary Sigal Mandelker.  “Shipping companies trading with North Korea are exposing themselves to significant sanctions risk, despite the deceptive practices they try to employ.”

OFAC designated Taiwan-based individuals Huang Wang Ken and Chen Mei Hsiang and the Taiwan-based entities Jui Pang Shipping Co Ltd (Jui Pang) and Jui Zong Ship Management Co Ltd (Jui Zong), as well as Hong Kong-based entity Jui Cheng Shipping Company Limited (Jui Cheng), pursuant to Executive Order (E.O.) 13810 for having engaged in at least one significant importation from or exportation to North Korea of any goods, services, or technology.

In addition, OFAC identified the vessel Shang Yuan Bao (IMO: 8126070) as blocked property in which Huang Wang Ken, Chen Mei Hsiang, Jui Pang, Jui Cheng, and Jui Zong all have an interest.  In October 2018, the UN Security Council’s 1718 Committee included the Shang Yuan Bao in a port entry ban and designated it for deflagging in response to its involvement in illicit ship-to-ship transfers with DPRK-flagged vessels.

The United States acknowledges and is grateful for Taiwan’s continued efforts to combat the DPRK’s efforts to evade sanctions and to obtain resources for its WMD and missile programs.

North Korea’s Use of Illicit Ship-to-Ship Transfers

North Korea’s continued use of illicit STS transfers to import refined petroleum is in direct violation of UNSCR 2375 and UNSCR 2397.  Through STS transfers and other illicit activities, North Korea continues to evade UN sanctions.  In addition to STS transfers, North Korea is obtaining refined petroleum through deliveries that are made directly into North Korea from non-DPRK-flagged tankers.  These deliveries also are not reported to the UN 1718 Committee by any Member State.  The cumulative effect of these deliveries is that the UN 1718 Committee’s official accounting of the DPRK’s imports vastly underrepresents the volume of refined petroleum products that actually enter the DPRK via its fleet of oil tankers and other associated vessels.  The restriction on the DPRK’s refined petroleum imports imposed by UN Security Council Resolution 2397 is a critical part of the UN sanctions regime, and the international community must implement and enforce all existing sanctions and take action against those evading these sanctions. 

Today’s designated entities participated in STS transfers, a method of transferring cargo from one ship to another while at sea rather than while located in port, to enable North Korea’s import of refined petroleum products.  This out-of-port transfer method is a deceptive practice commonly used by North Korea to enable sanctions evasion.

Use of the Shang Yuan Bao to Engage in Illicit Ship-to-Ship Transfers to Evade UN Sanctions

In 2018, the Shang Yuan Bao conducted at least two STS transfers with DPRK-flagged vessels, which both later offloaded their cargo in North Korea’s Nampo port.  Between April and May 2018, Huang Wang Ken, the CEO and largest shareholder in Jui Pang, a Taiwan marine cargo handling company, worked with several other individuals to use the Panama-flagged vessel Shang Yuan Bao to transport 1.7 million liters of petroleum products to the UN- and U.S.-designated North Korea-flagged vessel Paek Ma through an STS transfer.  Huang and his partners falsely reported that the petroleum products were destined for the Philippines.  The Shang Yuan Bao, however, transported them beyond the territorial waters of any state to carry out the STS transfer to the Paek Ma, which was identified February 23, 2018 as property in which Paekma Shipping Co — an entity whose property and interests in property were blocked pursuant to E.O. 13810 also on February 23, 2018 — has an interest.  In June 2018, the Shang Yuan Bao carried out an additional STS transfer of petroleum with another North Korea-flagged vessel, the Myong Ryu 1.

OFAC assesses that the persons who owned and controlled the Shang Yuan Bao at the time of the petroleum transfers are ultimately responsible for the petroleum products that were illicitly transferred to the North Korean vessels and ultimately delivered to North Korean territory.  This includes Chen Mei Hsiang, who is a member of the board of directors of Jui Pang as well as the director and sole owner of Jui Zong.  Chen Mei Hsiang is also married to Huang Wang Ken.

OFAC also designated Taiwan companies Jui Pang and Jui Zong, as well as Hong Kong company Jui Cheng, for engaging in a significant importation from or exportation to North Korea through their ownership and control of the Shang Yuan Bao when it engaged in these STS transfers.

As a result of today’s action, all property and interests in property of these individuals and entities that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.  OFAC’s regulations generally prohibit all dealings by U.S. persons or within the United States (including transactions transiting the United States) that involve any property or interests in property of blocked or designated persons.

In addition, persons that engage in certain transactions with the persons designated today may themselves be exposed to designation.  Furthermore, any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals designated today could be subject to U.S. correspondent account or payable-through sanctions.

Link:

OFAC Notice

Treasury Press Release

On Monday, OFAC added:

KIM, Su Il, Ho Chi Minh City, Vietnam; DOB 04 Mar 1985; Gender Male; Secondary sanctions risk: North Korea Sanctions Regulations, sections 510.201 and 510.210; Passport 108220348 (Korea, North) expires 18 May 2023; alt. Passport 745220480 (Korea, North) expires 02 Jun 2020; Munitions Industry Department Representative in Vietnam (individual) [DPRK2].

to their North Korean sanctions program.

And Treasury issued the following press release:

Treasury Designates a Vietnam-Based Representative of a WMD Entity

Sanctions designations enforcing United Nations and U.S. sanctions

WASHINGTON – Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated a North Korean individual operating from Vietnam, Kim Su Il, for his ties to the Workers’ Party of Korea (WPK).  Kim Su Il is also an employee of the Munitions Industry Department (MID); a WPK subordinate that is United Nations (UN)- and U.S.-designated for its involvement in key aspects of North Korea’s missile program, which is subject to a range of U.S. sanctions restrictions.  This action reflects continued enforcement of UN and U.S. sanctions. 

“Treasury continues to enforce existing sanctions against those who violate United Nations Security Council resolutions (UNSCRs) and evade U.S. sanctions on North Korea’s unlawful nuclear and ballistic missile programs,” said Sigal Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence.  “Kim Su Il has violated UNSCRs and supports North Korea’s weapons program.”

OFAC designated Kim Su Il, a trading company official who works on behalf of the MID in Vietnam, pursuant to E.O. 13687 for being an official of the WPK.  As of early 2019, Kim Su Il was responsible for exporting anthracite coal, titanium ore concentrate, and other North Korean domestic products; importing and exporting various other goods, including raw materials, to and from North Korea; and ship chartering.  This trade activity earned foreign currency for the North Korean regime.  Kim Su Il is also responsible for exporting Vietnamese products to China, North Korea, and other countries.  Kim Su Il was assigned to Ho Chi Minh City, Vietnam in 2016 to perform economic, trading, mining, and shipping activities associated with the MID’s business activities.

As a result of today’s action, all property and interests in property of this individual that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.  OFAC’s regulations generally prohibit all dealings by U.S. persons or within the United States (including transactions transiting the United States) that involve any property or interests in property of blocked or designated persons.

In addition, persons that engage in certain transactions with the person designated today may themselves be exposed to designation.  Furthermore, any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals designated today could be subject to U.S. correspondent account or payable-through sanctions.

Links:

OFAC Notice

Treasury Press Release

On Thursday, UK regulators implemented Council Implementing Regulation (EU) 2019/1207 by amending the following individual:

CHOL, Ri Pyong

DOB: –/–/1948. Position: First Vice Director, Munitions Industry Department Other Information: As First Vice Director of the Munitions Industry Department, holds a pivotal position within the DPRK’s ballistic missile programme. Annex XV XIII. Listed on: 16/10/2017 Last Updated: 17/10/2017 18/07/2019 Group ID: 13546.

and entity:

MARITIME ADMINISTRATIVE BUREAU

a.k.a: (1) North Korea Maritime Administration Bureau (2) Maritime Administration of DPR Korea Address: Ryonhwa,2Dong, Central District, Pyongyang, DPRK, PO Box 416. Other Information: Tel, +850-2-18111 Ex 8059. Fax, +850 23814410.email, mab@silibank.net.kp, Website, http://www.ma.gov.kp.Annex XVI. Listed on: 16/10/2017 Last Updated: 17/10/2017 18/07/2019 Group ID: 13552.

listings made under the North Korean sanctions program.

Links:

OFAC Notice

Council Implementing Regulation (EU) 2019/1207

Publication of Amended North Korea Sanctions Regulations

Links:

OFAC Notice

North Korea Sanctions Regulations

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