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 Treasury Sanctions Suppliers of North Korea’s Nuclear and Weapons Proliferation Programs


6/1/2017
Action also targets North Korea’s revenue from labor, coal, and minerals
 
 
Washington – The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today designated six entities and three individuals, and identified three entities, in response to North Korea’s ongoing development of weapons of mass destruction (WMD) and continued violations of United Nations (UN) Security Council resolutions.  Also today, the State Department updated the aliases for two previously designated entities.  Today’s actions target North Korea’s military, nuclear, and WMD programs, its revenue from labor, coal, and minerals, as well as its overseas financial operations.  As a result of today’s actions, any property or interests in property of the designated persons in the possession or control of U.S. persons or within the United States must be blocked, and U.S. persons are generally prohibited from doing business with them.
 
“The United States will continue to target individuals and entities responsible for financing and supporting North Korea’s nuclear weapons and ballistic missile programs, and will continue to increase pressure on this hostile regime,” said John E. Smith, Director of OFAC.  “Treasury is working with our allies to counter networks that enable North Korea’s destabilizing activities, and we urge our partners to take parallel steps to cut off their funding sources.” 
 
The designations and identifications were made pursuant to Executive Order (E.O.) 13382, which targets WMD proliferators and their supporters; E.O. 13687, which targets the Government of North Korea, the Workers’ Party of Korea, and their supporters; and E.O. 13722, which targets, in part, North Korea’s revenue from coal, metal, and labor, as well as its energy and financial services industries.
 
North Korean Military, Nuclear, and WMD Programs
 
OFAC identified the State Affairs Commission (SAC), the Korean People’s Army (KPA), and the Ministry of People’s Armed Forces (MPAF) pursuant to E.O. 13722 as agencies, instrumentalities, or controlled entities of the Government of North Korea.  The SAC, a new supreme policy guidance organ established under a revised constitution in 2016, replaced the previously designated National Defense Commission.  The SAC is chaired by Kim Jong Un.  The KPA is the armed forces of North Korea and is also controlled by the SAC and Kim Jong Un.  The MPAF has administrative authority over the KPA and administers the KPA’s diplomacy, logistics, finances, and external affairs. 
 
In a related action, the State Department updated the alias for the UN- and U.S.-designated Korea Tangun Trading Corporation (Tangun) with Korea Kuryonggang Trading Corporation, and the alias for the UN- and U.S.-designated Namchongang Trading Corporation (NCG) with Korea Taeryonggang Trading Corporation.  Tangun is subordinate to the Second Academy of Natural Sciences and was designated in 2009 for its involvement in North Korea’s WMD and missile programs.  NCG is subordinate to the General Bureau of Atomic Energy and is involved in nuclear-related procurement.  Tangun, NCG, the Second Academy of Natural Sciences, and the General Bureau of Atomic Energy were all previously designated pursuant to E.O. 13382.
 
OFAC designated Moscow-based Ardis-Bearings LLC and its director, Igor Aleksandrovich Michurin, pursuant to E.O. 13382 for their support to Tangun.  Ardis-Bearings LLC is a company that provides supplies to Tangun, and Michurin is a frequent business partner of Tangun officials in Moscow.
 
OFAC also designated Kim Su-Kwang, an official of the Reconnaissance General Bureau (RGB), North Korea’s primary intelligence organization, pursuant to E.O. 13687.  Kim Su-Kwang is reported to have operated under cover for the RGB at a UN organization in Europe.
 
Information Technology (IT) Labor Revenue
 
OFAC designated the Korea Computer Center (KCC), a state-run IT research and development center.  The KCC generates money for the North Korean regime through software development and programming, including North Korea’s “Red Star” operating system.  The KCC is reported to have overseas locations in Germany, China, Syria, India, and the Middle East.  As of 2014, KCC allegedly earned foreign currency for the UN- and U.S.-designated Munitions Industry Department, which is responsible for overseeing North Korea’s ballistic missiles. 
 
Coal, Petroleum, and Mineral Trade
 
OFAC designated the Independent Petroleum Company (IPC) pursuant to E.O. 13722.  IPC is a Russian company that has signed a contract to provide oil to North Korea and reportedly has shipped over $1 million worth of petroleum products to North Korea.  IPC also may have been involved in circumventing North Korean sanctions.  OFAC also designated one of IPC’s subsidiaries, AO NNK-Primornefteproduct.
 
OFAC designated Songi Trading Company, which is subordinate to the KPA and involved in exporting North Korean coal.
 
OFAC designated the Korea Zinc Industrial Group, the major North Korean zinc company.  It has sold, supplied, or transferred zinc from North Korea.  It has been reported that the export of minerals, like zinc, has been a vital source of revenue for Pyongyang.
 
Financial Representative
 
OFAC designated Ri Song-hyok pursuant to E.O. 13722.  Ri Song-hyok is a Beijing-based official for U.S.-designated Koryo Bank and Koryo Credit Development Bank.  He has reportedly established several front companies in order to procure items and conduct financial transactions on behalf of North Korea.  Koryo Bank and Koryo Credit Development Bank were previously designated pursuant to E.O. 13722 for operating in the financial services industry in the North Korea economy.
 
 
 
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