OFAC targets Zhao Wei Transnational Criminal Organisation

OFAC3OFAC has designated the Zhao Wei Transnational Criminal Organisation pursuant to Executive Order 13581. Based in the Golden Triangle Special Economic Zone of Laos, the organisation is alleged to have exploited that region by “engaging in drug trafficking, human trafficking, money laundering, bribery, and wildlife trafficking”.

In conjunction, OFAC has also designated a network of 4 individuals and 3 entities across 3 jurisdictions (Laos, Thailand and China), for “materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to or in support of, the Zhao Wei TCO, or for being owned or controlled by persons designated as part of this action”. Furthermore, the Kings Romans Casino (Laos) is alleged to be the main facilitator of the illicit activity in question. Links here for OFAC Notice and US Treasury press release.

Further OFAC designations to N Korea sanctions list

OFAC2.jpgOFAC has designated 16 people, 9 entities and 6 North Korean vessels in response to “North Korea’s ongoing development of weapons of mass destruction (WMD) and continued violations of United Nations Security Council Resolutions” (asset freezes imposed).

Of the 16-designated people, 1 is alleged to be an official of the Workers’ Party of Korea, 10 are alleged to be representatives of the Korea Ryonbong General Corporation, which was previously designated by the UN and the US (note: 8 of the 10 Ryonbong representatives are stated as being located in Chinese offices near the China-North Korean border), and the remaining 5 people are alleged to be linked to North Korean financial networks (said to be North Korean financial representatives located in China or Russia).

Of the 9 entities designated, 5 are North Korean shipping companies (note: the 6-designated vessels were sanctioned as being property in which those companies have an interest) and 2 are Chinese companies, which were listed for having allegedly exported over $68m worth of goods to North Korea and for having imported more than $19m worth of goods from North Korea (cumulative figures). The 2 remaining entities are ‘Ministry of Crude Oil Industry’, which “handles crude oil for North Korea”, and a North Korean electronics company operating in the manufacturing industry. Links to OFAC Notice and US Treasury press release.

China to implement latest UN sanctions against N Korea

Chine-N Korea.jpgChina’s Ministry of Commerce has announced that it will be implementing the latest UN sanctions against North Korea: UNSC Resolution 2397 (2017) (for its main measures, see previous blog here).

To implement the Resolution, China will (inter alia) limit its exports of crude oil and refined petroleum products to North Korea, and impose a complete ban on exports of iron, steel and other metals (including industrial machinery and transport vehicles). Furthermore, a ban on all imports of North Korean food and agricultural products, minerals, machinery and ships has been announced.

OFAC expands N Korea SDN list with 34 designations (5 Chinese)

OFAC3.jpgOFAC has added 1 person (Chinese), 13 entities (4 Chinese and 9 North Korean), and 20 vessels (all North Korean) to its SDN list in order to “disrupt North Korea’s illicit funding of its unlawful nuclear and ballistic missile programs”.

OFAC has stated that the designations “target third-country persons with long-standing commercial ties to North Korea, as well as the transportation networks that facilitate North Korea’s revenue generation and operations”.

Eleven designations were issued pursuant to Executive Order 13810, which targets, among others, persons that operate in the North Korean transportation industry, as well as persons who have engaged in a significant importation from or exportation to North Korea. The remaining entities were sanctioned pursuant to Executive Order 13722, which targets, among others, persons involved in the exportation of workers from North Korea, including exportation to generate revenue for the Government of North Korea. See OFAC Notice here, and US Treasury press release here.

These designations come the day after President Donald Trump announced that the US would be placing North Korea back on its list of State Sponsors of Terrorism (North Korea was removed from the list in 2008).

Chinese bank cut off from US markets for illicit N Korean links

FinCEN.pngThe US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a final rule under section 311 of the USA Patriot Act which severs Bank of Dandong from the US financial system (full list here).

Despite US and UN sanctions, the Chinese bank is said to have acted “as a conduit for North Korea to access the US and international financial systems”, including the facilitation of “millions of dollars of transactions for companies involved in North Korea’s weapons of mass destruction (WMD) and ballistic missile programs”.

As a result, FinCEN’s section 311 action against the bank imposes a prohibition on US financial institutions from opening or maintaining correspondent accounts for, or on behalf of, Bank of Dandong. Click here for the FinCEN press release.

China implements UN sanctions on North Korea; Taiwan bans all trade

China has announced that it will begin to implement the most recent round of UN sanctions on North Korea (see previous blog).  In a statement, China’s ministry of Commerce said that all exports of condensates and natural gas liquids to North Korea would be banned immediately, and from 1 October exports of refined petroleum products to North Korea would also be limited.  Imports of North Korean textiles will also be banned immediately, with an exception for contracts signed before 11 September where import procedures are completed before 10 December.

Separately, Taiwan has decided to ban all trade with North Korea in order to comply with the latest UN sanctions, although it is not a member of the UN itself.

China implements some recent UN DPRK sanctions

China has begun to implement the most recent wave of UN sanctions on North Korea, imposed by a resolution passed on 6 August (see previous blog).  Yesterday, its Commerce Ministry authorised the implementation of the new prohibitions on North Korean exports of coal, iron, iron ore, lead, lead ore, and seafood. Cargo already en route to China will be cleared as usual before the deadline for implementing the new sanctions passes on 6 September.

China has yet to begin implementation of other elements of the new sanctions, which include a ban on increasing the total number of work authorisations for North Koreans without approval from the Security Council committee and a ban on the opening of new joint ventures or expansion of existing joint ventures with North Korean firms or people.

ZTE agrees $1.2bn fine for US sanctions violations

ZTE (Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd), a Chinese telecoms company, has agreed with OFAC, BIS and the DOJ in the USA to plead guilty to civil and criminal charges of violating US sanctions on Iran and North Korea, and pay a combined $1.2bn in fines ($300m of which is suspended).  It also agreed to a 7-year suspended denial of export privileges, and to dismiss 4 senior officials who were involved in the violations.

A 5-year-long investigation found that ZTE had conspired to evade US sanctions by incorporating US components into its equipment and illegally shipping it to Iran, and by making 283 shipments of telecoms equipment to North Korea.  ZTE is also said to have used “isolation companies” to conceal the use of controlled US-components, intentionally failed to mention them on customs declarations, employed people to specifically remove incriminating evidence from internal communications, and caused its lawyers to unintentionally lie to US officials.

ZTE was first penalised by US authorities in March 2016, when US companies were prohibited from selling to it without a specific licence, and non-US companies were prohibited from selling products to it which contained a significant percentage of US-made components (see previous blog).  The US Department of Commerce will recommend that the requirement for a licence to do business with ZTE be lifted if ZTE complies with the terms of its settlement agreement.