On Thursday March 21, 2019, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) updated the advisory document it published on February 23 regarding North Korea’s illicit shipping practices. The updated guidance provides further information about North Korea’s deceptive shipping practices aimed at evading international sanctions and provides a list of ‘red flags’ aimed at assisting in the identification of these deceptive practices. This guidance follows North Korea’s continued attempts to evade U.S. and UN sanctions and remains applicable despite President Trump’s announcement that the United States would not impose further sanctions on North Korea.
OFAC highlighted a number of tactics used by North Korea and its trade partners to obfuscate the identities of vessels and cargo as well as manipulate information about the origins and destinations of vessels. Therefore, all actors in this sector should be mindful of the following practices:
- Disabling the automatic identification system (AIS) to mask the movements of a vessel: this technique is often used to conceal the origin or destination of cargo, and is a violation of international regulations. For this reason, OFAC recommends that concerned parties (and, in particular, P&I companies) should consider including an “AIS switch-off clause” in contracts for vessels considered to be at risk.
- Physical alteration of a vessel’s identification: North Korea-flagged vessels have illegitimately painted over vessel names and International Maritime Organization (IMO) numbers to obscure their identities and pass themselves off as different vessels.
- Ship-to-ship transfers: this practice is often used to conceal the origin or destination of cargo. Currently North Korea operates a fleet of at least 28 tankers capable of engaging in ship-to-ship transfers of refined petroleum products, and at least 33 ships that are capable of transporting coal.
- Falsifying cargo and vessel documents.
- Manipulating data transmitted via AIS regarding voyage information.