U.S. Treasury Turns Up the Pressure on Foreign Facilitators of North Korea’s Illicit Shipping Sector

Yesterday, the U.S. sanctioned three non-North Korean entities and one individual “for facilitating illicit shipments on behalf of North Korea.” These latest sanctions come shortly after another Treasury action earlier this month that targeted Russian facilitators, showing Washington’s willingness to enforce UN and U.S. sanctions amidst ongoing nuclear diplomacy with Pyongyang. 

Treasury Secretary Steven Mnuchin warned North Korea’s foreign facilitators that their deceptive practices are “prohibited under U.S. law, and all facets of the shipping industry have a responsibility to abide by them or expose themselves to serious risks.” 

These latest North Korea sanctions target Chinese company Dalian Sun Moon Star International Logistics Trading Co., Ltd. and its Singaporean affiliate, SINSMS Pte Ltd. (SINSMS), for facilitating illegal shipments of alcohol, tobacco, and cigarette-related products on North Korea’s behalf using falsified documents. The Washington-based Committee for Human Rights in North Korea reported in 2014 that North Korea has a growing reliance on domestic production and trade of counterfeit cigarettes as an illicit revenue source. Treasury estimates Pyongyang’s illicit cigarette trade now yields up to $1 billion in annual revenue for regime coffers. The Kim regime in turn depends heavily on its shipping sector and the sector’s underlying facilitators to transit contraband goods. 

Treasury also sanctioned a Russian entity, Profinet Pte Ltd., and its director general, Vasili Aleskandrovich Kolchanov. Profinet is a Russian port service agency that allegedly provided services for North Korean vessels that Treasury sanctioned for conducting banned ship-to-ship transfers. Profinet specifically served vessels calling at the Russian ports of Nakhodka, Vostochny, Vladivostok, and Slavyanka. Last September, Marshall Billingslea, the assistant secretary of the Treasury for terrorist financing, highlighted how the ports of Nakhodka and Vladivostok served as waystations that North Korea exploited to disguise illegal shipments of coal to China by making them appear as Russian shipments instead. Honest port operators and service providers can provide a critical line of defense at these ports by denying services to sanctioned and other suspicious vessels. Instead, Profinet served North Korean-flagged vessels despite their awareness of sanctions. The firm’s director general even interacted directly with North Korean representatives. 

Washington should continue to hold facilitators of North Korea’s illicit shipping sector accountable for their misdeeds while informing foreign governments, ship and port operators, and shipping registries about North Korea’s deceptive practices by sharing Treasury’s Global Shipping Advisory issued earlier in February. Just last week, South Korea’s customs service reported that it caught three South Korean companies importing North Korean coal, and that North Korean-linked vessels had been mooring in South Korean ports as far back as 2014. Without enforcement, sanctions are powerless. This administration has enforced them far more effectively than its predecessor, but there is still much work to be done. 

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.