The Institute for Science and International Security also produced this interesting paper in September 2017.  It states that apart from Saudi Arabia, which the Institute views as currently the largest proliferation risk in the Middle East, 3 key neighbours of Iran also warrant intensive study as to their nuclear capabilities and plans, safeguards and obstacles to proliferation, and future proliferation risks.  None of these are countries which most people would immediately highlight as obvious proliferation risks – but given the general levels of instability, if not outright conflict, across the larger Middle East region, any or all states in the region might be considered a risk.


The Peterson Institute for International Economics (a US-based non-partisan think tank) on 14th December published an article lauding 2 recent reports from C4DS (“The Forex Effect” – see earlier blog post) and the Institute for Science and International Security for high-quality open-source reporting on North Korean trade and investment.

The latter report is said to be apart of a larger project called the Peddling Peril Index (PPI), which ranks 200 countries, territories, and entities “according to their capabilities and demonstrated success in implementing strategic export controls.”   The index comes replete with a color-coded ranking of countries on the quality of their export control regimes and the likelihood of corruption. The report identifies no fewer than 49 countries involved in sanctions violations and of 4 types –

  • military-related (13):

Angola, Cuba, DR Congo, Egypt, Eritrea, Iran, Mozambique, Myanmar, Namibia, Sri Lanka, Syria, Uganda, and Tanzania.

  • non-military related that involved facilitating front companies, financial transactions, and other business activities (18):

Angola, Brazil, Bulgaria, China, Egypt, Ethiopia, Germany, India, Iran, Malaysia, Namibia, Poland, Romania, Russia, Singapore, Sri Lanka, Sudan, Syria, and UAE.

  • import of sanctioned goods (19):

Barbados, China, Costa Rica, Egypt, El Salvador, France, Germany, India, Indonesia, Iran, Ireland, Malaysia, Mexico, Pakistan, Philippines, Sri Lanka, Syria, and Vietnam.

  • reflagging of ships and shipping-related violations (20): Brazil, Cambodia, China, Egypt, Fiji, Greece, Japan, Kiribati, Malaysia, Marshall Islands, Mongolia, Palau, Panama, Peru, Russia, Sierra Leone, Singapore, Tanzania, Thailand, and Togo.

The main point of the brief is to show the accuracy of the PPI in predicting such violations. But the list actually contains a lot of surprises: Sri Lanka, Germany, France, Brazil, Mexico, Peru, Barbados; and the article calls for further enforcement work, such as by FATF.  As one might expect, the results of the study suggest that North Korea has often targeted countries with weak or non-existent export and proliferation financing controls and those that suffer on average from more corruption than other countries.

The Institute for Science and International Security study is at –



On 22nd November the House of Commons EU Scrutiny Committee considered the 4th and 5th EU money laundering Directives.  It noted that major areas of disagreement between the European Council and the EU Parliament were access to the register of trusts, the threshold of “beneficial ownership” of an entity and the supervision of “obliged entities”.  Establishing a “proportionate level of access” to the register of trusts was said to be one of the UK’s priorities for the negotiations, without specifying what that means.  It was also said to be unclear if the EU Parliament’s amendments to minimum AML standards in any country seeking a trade agreement with the EU on financial services would also have to be applied in the UK’s Overseas Territories and Crown Dependencies, if the Government were to seek such an agreement post-Brexit – with the partial exception of Gibraltar, EU AML law does not apply in those territories at present.  It was noted that discussions in the EU mechanisms are scheduled to continue in December 2017, and given the remaining divergences between the Parliament and the Council, it is likely the Directive will not be adopted until 2018.


In considering amendments to the current cash controls undertaken by HMRC, the House of Commons EU Scrutiny Committee posed the question of what will happen after (if?) the UK leaves the EU.  Currently, declarations are required where €10,000 or more is sent or taken to or from a place outside the EU (which includes to or from the Crown Dependencies).  The immediate impact of the UK’s withdrawal from the EU, the Committee notes, will be that the remaining Member States will have to apply the Cash Control Regulation to movements of cash into the EU from the UK and vice versa, unless an agreement to the contrary is concluded before March 2019.


Transparency International has this device to illustrate the overall level of AML/CFT compliance worldwide.  Ratings reflect the extent to which a country’s measures to stop money laundering are considered effective by FATF.  The assessment is conducted on the basis of 11 Immediate Outcomes, which represent key goals that an effective AML/CFT system should achieve.  The Effective-O-Meter and effectiveness map draw on country effectiveness ratings these “immediate outcomes” available from FATF.  To date 43 countries have been assessed, and only 7 have scored above 50% (USA, Spain, Italy, Switzerland, Australia, Portugal and Sweden), but it points out that even these relative high-scorers are below the 70% mark.

Hence it is unsurprising that the global rating is currently set at just 32%.



On 13th December, OFAC added 2 persons linked to the Lord’s Resistance Army to those persons designated for the purposes of its CAR sanctions regime, Okot Lukwang and Musa Hatari.  Both facilitated the transfer of ivory, weapons, and money in support of the LRA. All property and interests in property of those designated today subject to US jurisdiction are blocked, and US persons are generally prohibited from engaging in transactions with them.  OFAC originally designated the LRA and the group’s leader Joseph Kony in 2016.



The War on the Rocks website recently took a studied look at the number of terrorist attacks before and after 9/11, both inside and outside warzones. The thought-provoking study paired the Global Terrorism Database from the University of Maryland with civil war and insurgency data from the Uppsala Conflict Data Program in 194 countries. Spanning the years 1989 to 2014 allowed it to directly compare terrorist attacks in the early post-Cold War era with those since 2001.
before after 1911
It reports that the graphic indicates that global terrorist attacks rose dramatically after 2004: there were just over 1,000 in 2004, but almost 17,000 in 2014. The numbers from 2015 and 2016 (not shown) have remained remarkably high, but below the 2014 peak. The upward pattern holds even when removing attacks in Iraq and Afghanistan. However, it notes that more than 70% of the attacks in the past 10 years transpired in just 2 regions, both of which have seen extensive insurgency and civil conflict during that time: North Africa/Middle East and South-Central Asia. The article then posed the question, what do the numbers of attacks look like outside of places beset with civil strife?
conflict v nonconflict
The article highlights conclusions made from the data, including the apparent oddity that perhaps counterintuitively, the graphic also indicates that for a period in the mid-1990s, terrorist attacks in countries not experiencing civil wars exceeded attacks in war-torn states.
The article draws a number of significant conclusions – firstly, it is possible that post-9/11 counter-terrorism efforts have contributed to reducing incidents of non-insurgency terror (plus providing “easier” and more tempting targets in war zones, namely US and other soldiers in Afghanistan etc). Secondly, the decline in terrorism it describes could be reversed in the next several years (for example, if returning fighters caused mayhem).
Finally, and perhaps more importantly in a Trump era, the evidence raises difficult questions about the efficacy of the US approach to the war on terror in the future. Is it willing to maintain a sustained presence in Afghanistan, the Middle East, and parts of Africa to confront a problem that is increasingly regional and local?
The article makes some further observations (including civil wars are not normally the result of terrorism, but that terrorists exploit the conflict) and recommendations for US policy.



The Wall Street Journal reports on a report from C4DS – see link below – highlighting that researchers in the US and South Korea have identified a number of business transactions that they say show North Korea’s international finance web is more sophisticated than what was widely known previously.

As an example, the report cites a transaction in which a military equipment supplier run by North Korea’s intelligence agency used a front company in Hong Kong to purchase components from an East Asian electronics reseller.  The payment was cleared through a correspondent account at the Bank of America, according to the report.


The Report itself says that it has found that the financial structure used by the North Koreans networks, surrounding North Korea’s major foreign exchange banks, which is tasked with the management of hard currency, have found themselves serving as a financial lifeline for the regime, but are reliant on a system that North Korea cannot control and is therefore vulnerable to systemic disruption.  The report says it is –

  • is Cash Dependent, the report explores how maintaining a positive flow of hard currency has become an imperative for regime survival and how the regime has gone to great lengths, often by illicit means, to ensure ongoing access to it;
  • is institutionally bottlenecked, the regime, hoping to maintain oversight and security, with limited methods for storing and transacting in foreign currency internationally. The report analyses how North Korea’s policies led the regime to offshore critical portions of its financial system; and
  • Is exposed to disruption, the report looks at how North Korean assets, nested within businesses overseas, are inherently vulnerable. It further explores the potential for international law enforcement action to dismantle critical nodes of the system.

DPRK chain