November 20, 2018 | Policy Brief

Treasury’s Latest North Korea Sanctions Come Amidst Diplomatic Uncertainty

November 20, 2018 | Policy Brief

Treasury’s Latest North Korea Sanctions Come Amidst Diplomatic Uncertainty

The U.S. Treasury Department sanctioned this week a Russian-born South African national for facilitating North Korean sanctions evasion through his work with a sanctioned Russian firm. Treasury’s action arrives during an impasse in U.S.-North Korea bilateral diplomacy, with Washington and Pyongyang disagreeing over whether sanctions should be lifted before the North denuclearizes.

On Monday, Treasury designated Vladlen Amtchentsev, who serves as a director of the already-designated firm Velmur Management Pte Ltd. Treasury found that Amtchentsev directly advised Velmur on how to evade sanctions.

Velmur was one of two Russian companies that Treasury designated in August specifically for involvement in the illicit sale and transfer of oil. At the end of 2017, UN Security Council Resolutions 2375 and 2397 placed heavy restrictions on North Korean fuel imports. However, this past July, Secretary of State Mike Pompeo called out North Korea for evading these sanctions at least 89 times by means of illicit ship-to-ship transfers between January and May of 2018.

In a statement issued with Monday’s designation, Treasury Secretary Steven Mnuchin asserted, “As part of our commitment to the final, fully verified denuclearization of North Korea, Treasury will continue to enforce and implement sanctions against any actor that seeks to aid the regime’s deceptive practices.” Mnuchin’s comments dovetailed with President Donald Trump’s comments earlier this month, “We’re in no rush. We’re in no hurry. The sanctions are on.”

While calling for an immediate lifting of sanctions, Pyongyang’s actions have conveyed hostility. Last Friday, North Korea’s English-language propaganda outlet, the Korean Central News Agency (KCNA), reported that Kim Jong Un observed a test of an unspecified “ultramodern tactical weapon” at Pyongyang’s Academy of Defense Science. The announcement came less than one day after South Korea dramatically destroyed one of its own guard posts at the demilitarized zone to signal Seoul’s commitment to inter-Korean peacebuilding.

North Korea’s combination of hostility with demands for additional concessions are a hallmark of its approach to nuclear negotiations. However, the timing of these latest North Korea sanctions suggest Washington may no longer fall for North Korea’s coercive bargaining schemes.

If North Korea’s intransigence continues, Washington should continue punishing North Korea’s foreign enablers not only in Russia, but also in Pyongyang’s favored safe havens throughout China. To that end, the U.S. should implement the bipartisan U.S.-China Economic and Security Review Commission’s recommendation that the Treasury Department provide a report to Congress within 180 days that shares comprehensive information regarding China’s enforcement of North Korea sanctions. This report would also include a classified annex listing the names of potential violating companies, individuals, and banks.

The U.S. should remain adamant that it will not lift any sanctions until North Korea moves decisively toward final, fully verified denuclearization. The meeting later this week between U.S. Special Envoy for North Korea Steven Biegun and South Korea’s Special Representative for Korean Peninsula Peace and Security Lee Do-hoon provides a key opportunity for the two allies to reaffirm their shared objectives and determination to continue enforcing sanctions.

Issues:

North Korea Sanctions and Illicit Finance