Christy Lee contributed to this report, which originated with VOA’s Korean Service.
WASHINGTON — Increased international cooperation is essential for curtailing the ship-to-ship transfers that Pyongyang continues to use to evade sanctions, said a former United Nations panel expert on North Korean sanctions enforcement.
“Every member state (of the United Nations) has one or two pieces of the puzzle,” said Neil Watts, a maritime expert who served as a member of the United Nations panel that monitors North Korea sanctions compliance from 2013 to 2018. “And if they all cooperate, they can put together the full picture.”
North Korea seemingly is receiving a steady supply of oil through illegal transshipments, said Watts, as indicated by fuel prices that he said have been stable for the last 18 months in North Korea.
Two essential tactics
Watts told VOA’s Korean Service Tuesday that two things are essential for going after Pyongyang’s illicit ship-to-ship transfers at sea: Identify key North Koreans driving illicit transshipping networks, and follow the money trails.
Watts said there are a handful of key North Korean individuals whom the country relies on to operate illicit networks for ship-to-ship transfers.
“It’s an activity that involves a number of characters. But you can be sure that there are only a few trusted individuals from (the) North Korean side that are making these arrangements with complicit actors.”
Then, Watts suggested following the money trail to disrupt North Korea’s networks that involve numerous front companies and banks in different countries that coordinate deceptive shipping practices to evade sanctions.
“One needs to find the money trails,” he said, “because it’s substantial amounts of money involved. They always make sure that the money is deposited beforehand. … The key is also to find which companies are involved so that you can identify the banks involved and thereby contact the banks to curtail the banks keeping the money for these North Korean entities that are used to pay for the transactions.”
Watts said this is possible only when U.N. member states investigate and share information among themselves and with the maritime and shipping industries.
“One can go a lot further in terms of cooperation between the member states and the maritime industry involving the brokers or the commodity brokers, the shipping industry,” he said.
According to Watts, North Korea operates its illegal networks across borders to make it difficult for authorities to track down foreign individuals and companies involved in ship-to-ship transfers. This setup also makes it difficult to find North Korean entities overseeing the activities designed to evade sanctions.
“The North Koreans, knowing full well that should they involve companies and entities that are in multiple jurisdictions, it makes it very hard to follow the trails back to these individuals that are driving it from the North Korean side,” he said.
Watts said North Korea uses ship-to-ship transfers as a primary method to evade sanctions and obtain fuel because it knows monitoring and interdicting illicit practices in international waters are difficult.
“International waters are often in disputed areas of jurisdiction, also, and they take advantage of that, as well,” he said.
North Korea uses several deceptive shipping practices such as removing a flag, name, and identification number of a vessel it uses. It also turns off the transponders, called an automatic identification system (AIS), that sends off its location and identification to nearby ports and ships.
“What has been done in the commercial sector is to get companies to include in contracts no switching off AIS as a clause to say that there’ll be severe penalties,” Watts said. “In the case of insurers,” he added, “they would lose the insurance.”
There is a history to North Korea’s use of illicit ship-to-ship transfers.
In 2017, the U.N. Security Council passed a resolution banning sales of Pyongyang’s key export commodities, including coal and seafood, in order to cut off its foreign sources of income — money needed to support its nuclear weapons program. In the same year, the council also prohibited North Korea from importing more than 500,000 barrels of refined petroleum per year.
More recently, on Aug. 30, the U.S. Treasury Department blacklisted two Taiwanese-based individuals and two Taiwanese-based companies, and a Hong Kong-based company, for helping North Korea evade sanctions. It also listed a tanker suspected of transferring oil to North Korean ships and in connection to all three companies and two individuals.
In its interim report released in August, the U.N. Panel of Experts said North Korea exceeded the cap on refined petroleum in the first four months of the year and continued to violate sanctions through illicit ship-to-ship transfers.
In June, the U.S. and dozens of other countries claimed North Korea violated a U.N. sanctions cap on fuel imports by using at least eight illegal ship-to-ship transfers and 72 illegal deliveries.