Treasury Designates Violators of North Korea Sanctions

The Treasury Department today sanctioned three entities and one individual for failing to comply with UN and U.S. sanctions on North Korea. Even as diplomatic talks between Washington and Pyongyang continue, Treasury Secretary Steven Mnuchin reaffirmed that the United States will continue to enforce all sanctions in order to “shut down illicit revenue streams to North Korea.” These penalties, he added, “will remain in place until we have achieved the final, fully-verified denuclearization of North Korea.”

The new sanctions target Agrosoyuz Commercial Bank, a Russian bank, for facilitating a significant transaction for Han Jang Su, the Moscow-based chief representative of Pyongyang’s foreign exchange bank, Foreign Trade Bank (FTB). The U.S. government already sanctioned Han in 2017 and FTB in 2013 for enabling North Korean weapons proliferation financing.

Treasury today also sanctioned Ri Jong Won, FTB’s deputy representative in Moscow, who was complicit in the Agrosoyuz transaction by opening Russian bank accounts on behalf of Han. Treasury disclosed that Agrosoyuz has conducted additional transactions worth millions of dollars for numerous sanctioned North Korean banks since 2013. The other sanctioned entities were two front companies for FTB: Dandong Zongsheng Industry & Trade Co., Ltd. and Korea Ungum Corporation.

Russia has become a critical partner for North Korea in its sanctions evasion effort. For instance, since September 2017, Russia has approved over 10,000 new work visas for North Korean overseas workers in defiance of a UN Security Council ban. C4ADS, a Washington-based data analysis nonprofit, noted that several Russian companies have hired North Korean labor as far back as 2013. North Korean overseas laborers provide Pyongyang with a vital revenue stream to support its weapons program, which comes at the expense of North Korean citizens forced to work in grueling conditions.

Russia has also become an increasingly valuable asset to meet Pyongyang’s energy needs. A report from the South Korea-based Asan Institute for Policy Studies found that Russian oil companies provided up to 622,868 tons of refined oil to North Korea between 2015 and 2017. Although the UN Security Council set a 500,000-barrel cap for North Korean oil imports in December 2017, Washington found that Russia and China have continued providing North Korea with oil through 89 illegal ship-to-ship transfers between January and June of 2018. These illicit transfers allowed Pyongyang to import up to 1,367,628 barrels, which is more than twice the UN Security Council’s cap.

Today’s sanctions against Russian entities is a welcome decision. Moving forward, the United States should target Russian actors who enable North Korean forced overseas labor and illicit oil exports. The Countering of America’s Adversaries Through Sanctions Act (CAATSA) mandates sanctions on entities and individuals employing North Korean workers. The Trump administration should remind Kim Jong Un and his financial enablers that its sanctions-busting schemes will not go unpunished even as diplomacy continues.

Mathew Ha is a research associate at the Foundation for the Defense of Democracies, focused on North Korea. Follow him on Twitter @Matjunsuk.

Follow FDD on Twitter @FDD and follow FDD’s Center on Sanctions and Illicit Finance @FDD_CSIF. FDD is a Washington-based, nonpartisan research institute focusing on national security and foreign policy.