UN Report Reveals North Korea’s Sanctions Evasion

The United Nations issued its annual report Monday on North Korea, revealing numerous sanctions violations and confirming widespread suspicions that international sanctions on Pyongyang are poorly enforced. On the same day, Pyongyang launched four ballistic missiles, its second missile launch in three weeks. Taken together, the report and missile test should serve as a wakeup call to Washington: Pyongyang’s development of nuclear weapons and ballistic missiles will not be stopped until the sanctions regime against it is strengthened.

As the report notes, North Korea consistently obscures its access to the international financial system. The report highlights Pyongyang’s habitual use of front companies with no visible ties to the regime, a practice that the Treasury Department has called “a threat to the integrity of the U.S. financial system.” The report also warns that these efforts generate significant revenue for the Kim regime, most of it denominated in dollars, euros, and Chinese renminbi.

North Korea’s reliance on the international financial system is concerning, but also provides the U.S. leverage to address Pyongyang’s illicit activities. Washington must lead an effort to expose North Korean front companies, but recent actions suggest it is not focused on the issue. The number of U.S. designations on the country has nearly doubled in the last year, but 88 percent of those were persons inside the hermit kingdom. These sanctions will therefore not address the country’s international business ties, but will rather put banks at a disadvantage as long as governments are unwilling to identify these companies.

The UN report also detailed the stunning finding that the Society for Worldwide Interbank Financial Telecommunication (SWIFT) provides financial messaging services to North Korean banks, including designated ones. Given that SWIFT removed designated Iranian banks from its service in 2012, it is remarkable that it would provide North Korea a secure path into the international financial system. These activities are likely a violation of U.S. law, and the Treasury Department should immediately press SWIFT to end North Korea’s access.

Finally, Washington needs to push China to cease facilitating its neighbor’s illicit nuclear and missile activity. Beijing has long argued that it is unaware of such activities, despite significant indications to the contrary. Likewise, China’s leaders insist it has no special ability to moderate North Korea’s behavior. That is no excuse, and China’s obfuscation only confirms that it is not a partner in U.S. efforts to counter the North Korean nuclear and missile threat.

North Korea’s leader Kim Jong Un is watching the Trump administration’s response to North Korea’s provocations. Thus far, Washington is sending the wrong message.

Anthony Ruggiero is a senior fellow at the Foundation for Defense of Democracies and formerly a foreign policy fellow for Senator Marco Rubio and an official at the Departments of the Treasury and State. Follow him on Twitter @_ARuggiero.