U.S. Reinforces Pressure on Russian Companies Working with North Korea

Today, the U.S. sanctioned two Russia-based companies and six Russian-flagged vessels involved in North Korean sanctions-evasion schemes. For the third time this month, the Treasury Department targeted Pyongyang’s foreign facilitators, designating Russian targets in all three instances, as well as North Korean and Chinese entities. Treasury Secretary Steven Mnuchin warned that “consequences for violating these sanctions will remain in place until we have reached the final, fully verified denuclearization of North Korea.”

Treasury’s latest sanctions target a pair of shipping companies, Primorye Maritime Logistics Co. Ltd and Gudzon Shipping Co. LLC, which are the registered owners and managers of a merchant vessel, the Patriot, which engaged in illicit ship-to-ship transfers with North Korean vessels. UN Security Council Resolution 2375 specifically prohibited such transfers last September. Treasury also designated five other vessels linked to Gudzon. 

In early 2018, the Patriot provided over 3,500 tons of oil via two separate ship-to-ship transfers with a pair of North Korea-flagged vessels, the Chong Rim 2 and Chon Ma San, which had already been the target of punitive actions by the U.S. and UN. Treasury specifically revealed that the buyer of this oil was North Korea’s Taesong Bank, a UN- and U.S.-designated entity subordinate to the UN- and U.S.-designated Office 39 of the Workers’ Party of Korea – the entity that amasses illicit wealth for the North Korean leadership. 

Last December, Reuters reported that multiple Russian vessels engaged in ship-based transfers of oil to North Korea on at least three occasions in 2017. In January 2018, President Trump condemned Russia specifically for helping North Korea evade sanctions.

By designating Russian vessels and shipping companies in addition to the Russian port service provider designated earlier this month, Treasury has strategically targeted critical components of Pyongyang’s maritime sanctions-evasion network. Treasury’s announcements also underscore Russian involvement in every facet of sanctions evasion, despite Moscow’s recurring UN votes in favor of sanctions. 

The Trump administration should build on its recent designations by holding additional facilitators accountable for enabling North Korea’s transgressions. This should include concerted pressure on the Russian leadership, since evidence suggests that the Kremlin deliberately enables this illicit activity. 

Beyond its support for deceptive shipping practices, Russia has imported 10,000 new North Korean laborers whose wages directly finance Pyongyang’s nuclear weapons and ballistic missile programs. UNSC Resolution 2397 decided that all member states must repatriate North Korean workers “immediately but no later than 24 months” from the date its adoption in December 2017. Bringing in new workers shows contempt for this resolution, although Russia may argue that new arrivals are permissible so long as they depart before the end of the two-year window. 

The administration should now target the foreign companies still hiring these exploited North Korean laborers, in Russia and elsewhere, pursuant to the Countering of America’s Adversaries Through Sanctions Act (CAATSA). Washington must continue enforcing sanctions while pursuing nuclear diplomacy with Kim Jong Un to show that only the verified dismantling of North Korea’s weapons will relieve it from American pressure. 

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.