INSURERS HOLD A KEY TO NORTH KOREA SANCTIONS

The Wall Street Journal on 10th July in its Risk and Compliance Journal said that North Korea relies on vulnerabilities in the insurance sector to evade global sanctions on shipping blacklisted goods, according to a new report from RUSI, saying that insurers providing coverage can end up facilitating illicit activity for North Korea.  Much of North Korea’s shipping sector is subject to sanctions, but North Korea has used techniques so that any connection may not be immediately obvious to the insurer.

The RUSI paper was published on 9th July and seeks to establish the baseline for a discussion on proliferation finance in the (re)insurance sector and how the industry can play a vital role in contributing to the successful implementation of international sanctions and wider counter-proliferation efforts against North Korea.  The paper proposes a more proactive approach by (re)insurers to identify and exclude the underlying entities involved and their activities, as simply checking sanctions list and/or voiding existing contracts is insufficient.  Furthermore, also required is greater engagement in due diligence by the supply chain that is supported by the provision of insurance, such as the transport sector, as the work undertaken in such related sectors is not sufficiently robust to prevent proliferation-linked activities, thus providing limited comfort to the supporting (re)insurers.

https://blogs.wsj.com/riskandcompliance/2018/07/10/the-morning-risk-report-insurers-hold-a-key-to-north-korea-sanctions/

The RUSI paper is available at –

https://rusi.org/publication/occasional-papers/underwriting-proliferation-sanctions-evasion-proliferation-finance-and

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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