International Trade Alert

On Tuesday August 22, 2017, U.S. Department of Treasury expanded its focus on sanctionable activities relating to North Korea (EO 13772) and weapons of mass destruction (EO 13382) by adding various third-country persons and entities to the Specially Designated Nationals (SDN) list. Specifically, the most recent designations involved the following activities:

  • Purchasing vanadium ore from an entity previously designated by OFAC for its connection with the General Bureau of Atomic Energy, which is responsible for North Korea's nuclear program;
  • Procuring metals for an entity previously designated by OFAC for its connection with the Second Academy of Natural Sciences, an entity involved in North Korea's WMD and missile program;
  • Acting as a "front company" for U.S. designated Foreign Trade Bank (FTB) and conducting U.S.-dollar denominated transactions and other financial services on behalf of FTB;
  • Participating in transactions relating to sales and exports of coal and metals from North Korea;
  • Providing oil to North Korea; and,
  • Participating in transactions with Mansudae Overseas Projects Group of Companies (MOP), which was previously designated for its involvement in exportation of workers from North Korea to build statues in order to generate revenue for the North Korean government.

Significantly, most of the designated persons or entities are Chinese or Russian, and two are based in Singapore. The list of such newly designated persons and entities is found here.

The recent designations highlight the expansion of sanctions against North Korea through increasing designations of third-country nationals. This trend does not appear likely to end any time soon, given the current stand-off between the U.S. and the UN on one hand, and North Korea, on the other. Given the already expansive sanctions in place against North Korea, the U.S. is poised to rely increasingly on designating third-party nationals, particularly in China, in order to advance its foreign policy goals, much like the U.S. has with regard to Iran, particularly prior to the Joint Comprehensive Plan of Action (JCPOA)).

Accordingly, U.S. businesses and multinationals with a U.S. presence should continue to monitor the evolution of North Korean sanctions and stay abreast of new designations. This especially holds true for those businesses with a presence in third countries, like China and Russia. Likewise, non-U.S. businesses should maintain an awareness of sanctions against North Korea in order to avoid engaging in activities that may restrict their engagement with U.S. persons and entities or that could go so far as to result in designation.