NEW US SANCTIONS ON NORTH KOREA AND INTERNATIONAL SHIPPING

On 23rd February, The Hill reported on what President Trump announced what he and his administration are billing as the United States’ “largest ever” tranche of sanctions against North Korea, aimed at targeting North Korea’s ability to evade international sanctions and conduct illicit maritime activities that facilitate coal and fuel transports by designating 27 shipping and trade companies, 28 vessels and 1 individual.
The Hill reports that, in conjunction with the new sanctions, the US Treasury and State Departments and the US Coast Guard are issuing a global shipping advisory that warns of “very significant consequences” for helping North Korea evade sanctions and outlines some of the steps its ships take to do so, administration officials told reporters on a background call. It will describe efforts to conceal North Korea-flagged ships’ identities, such as the ships painting over their real names and disabling their automatic identification systems that are meant to be collision avoidance systems. The new sanctions target ships and businesses from all over the world, including North Korea, China, Singapore, Taiwan, Hong Kong, Marshall Islands, Tanzania and Panama.
https://www.msn.com/en-gb/news/world/trump-announces-new-north-korea-sanctions/ar-BBJuXj0?li=AAmiR2Z&ocid=spartandhp
US Treasury news release at –
https://home.treasury.gov/news/press-releases/sm0297

In addition to 16 North Korean shipping companies, OFAC designated the following international shipping companies –

  • Shandong, China-based Weihai World-Shipping Freight and Shanghai, China-based Shanghai Dongfeng Shipping Co Ltd;
  • Hong Kong-based shipping companies Liberty Shipping Co Ltd, Chang An Shipping & Technology, Hongxiang Marine Hong Kong Ltd, Shen Zhong International Shipping Ltd, and Huaxin Shipping HongKong Ltd;
  • Singapore-based Yuk Tung Energy Private Limited; and
  • Panama-based M.T. Koti Corporation.

OFAC also designated Taiwan citizen Tsang Yung Yuan, saying that Tsang has co-ordinated North Korean coal exports with a Russia-based North Korean broker, and he has a history of other sanctions evasion activities. OFAC also designated 2 entities, Taiwan-based Pro-Gain Group Corporation and Taiwan and Marshall Islands-based Kingly Won International Co., Ltd, for being owned or controlled by Tsang.
SANCTIONS RISKS RELATED TO NORTH KOREA’S SHIPPING PRACTICES.
The OFAC detailed list of new designations is at –
https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20180223.aspx
The OFAC Advisory is at –
https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Documents/dprk_vessel_advisory_02232018.pdf
It deals with deceptive shipping practices employed by North Korea, such as –

  • Physically altering vessel identification
  • Ship-to-Ship (STS) transfers
  • Falsifying cargo and vessel documents
  • Disabling the ship-tracking Automatic Identification System (AIS)
  • Manipulating AIS, which can include altering vessel names, IMO numbers, Maritime Mobile Service Identities (MMSI), or other unique identifying information. This tactic could also be used to conceal a vessel’s next port of call or other information regarding its voyage.

The Advisory provides details of some risk mitigation measures that can be adopted, such as –

  • Monitoring for AIS manipulation
  • Conducting research prior to STS transfers – vessel operators should ensure that they have verified the vessel name, IMO number, and flag prior to engaging in such a transfer, and ensure there is a legitimate business purpose for the STS transfer
  • Review all applicable shipping documentation potentially involving North Korean-flagged vessels or shipments to or from North Korea
  • Clear communication with international partners (including shippers, customers, suppliers etc)- clearly communicating US and UN sanctions obligations and discussing sanctions compliance obligations with parties to a transaction can ensure more effective compliance with relevant sanctions programmes
  • Leveraging available resources – using information available from OFAC, the UN, and the US Coast Guard etc.

LIST OF PROHIBITED VESSELS
The Advisory also provides a link to a US Coast Guard page listing vessels that are prohibited from entering the navigable waters of the US or transferring cargo in the US –
https://www.nvmc.uscg.gov/nvmc/(S(crb3dm1x0dlnr4hb5b01t0uo))/CAATSA.aspx

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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