Hope for replacement of UN PoE slowly fading; NK workers may be forced out of PRC; Iranian bank cards work in Russian ATMs; More Iranian oil to PRC
Prohibited Transactions for the week of 8 July 2024 (#54)
This image was created in Microsoft Copilot Designer on 12 Jul 2024 using the prompt “Chinese teapot refinery with wave of oil washing over it, abstract”
North Korea
International resolve at the UN for a replacement of the UN Panel of Experts (PoE) to investigate North Korean sanctions evasion has died out as member states are unable to come to consensus on how a successor should be structured. Though nations such as South Korea, Japan, and the US are still pushing for some sort of monitoring system, there are no specifics on how it might look. //From a financial institution’s point of view, the issue of where a new monitoring organization sits (within the UN General Assembly, a grouping of Western countries, or a pre-existing international institution focused on financial crime issues such as FATF or the UNODC) is less important than the reliability of information that is released. For a bank, the value of the PoE reports were not only in providing context as to how the DPRK was evading sanctions and laundering funds, but in listing out the names, birth dates, and identification numbers of suspected sanctions evaders, as well as the company name and registration information for complicit companies and fronts that were transferring funds on behalf of the DPRK.
A US diplomat stated that Washington wants to “institutionalize” the grouping of Asia-Pacific nations — South Korea, Japan, Australia and New Zealand — that are partners to the North Atlantic Treaty Organization (NATO). //Perhaps a new iteration of the PoE could sit within this group of nations. The four countries issued a joint statement condemning the military cooperation between the DPRK and Russia.
According to covert reporting from inside North Korea, North Korean and Chinese traders operating in Dandong, PRC and Sinuiju, DPRK, are working on establishing new river-based smuggling routes //The article says “sea-based” but looking at a map, the new route appears to involve two cities on either side of the Yalu river to evade international sanctions and reduce logistics costs. Traders say that if sanctioned goods — such as minerals, electronics and luxury goods — are detected by Chinese customs officials, it will result in additional duties or fines. //The article notes that added fees are the only consequence of getting caught trying to move sanctioned goods in or out of the DPRK; the goods do not appear to be confiscated, nor are the smugglers arrested. Reporting on the border from a decade ago reflects the same dynamic of heightened customs checks, but no stoppage to the flow of goods.
The PRC reportedly demanded that North Korea repatriate all of its China-based workers. This would be a blow to the DPRK’s overseas money making operations, and may be a move by Beijing to signal its displeasure with Pyongyang’s growing relationship with Moscow. //Beijing knows hitting Pyongyang in the wallet is likely the only message the DPRK will respond to.
--
A youth organization from Russia-occupied Donbas visited the DPRK and discussed joint projects with North Korean counterparts. Observers note that any future exchanges could be used as a cover to send North Korean military personnel or laborers to occupied parts of Ukraine.
A review of thermal infrared data of the now-shuttered Kaesong Industrial Complex reveals that a number of South Korean-owned factories are in operation, being run by North Koreans without permission.
According to covert reporting from inside North Korea, a North Korea-based seafood processer — that uses equipment imported via joint venture with the PRC — started exporting fish this week to China. The Chinese side of the joint venture hopes to export this North Korean processed seafood globally, while the North Korean side would earn foreign currency.
Iran
The Central Banks of Iran and Russia signed an agreement resulting in bilateral trade exchanges between the two countries, which in part will allow both sides to trade in local currencies, as well as link Iran’s Shetab banking system with Russia’s MIR interbank system. The first phase of the linkage will result in Iranian bank cards being accepted in Russian automated teller machines (ATMs) to withdraw rubles. Following that, Russian cards will be accepted at Iranian ATMs, and finally, Iranian Shetab cards will be accepted at point-of-sale terminals in Russia.
Shana, an Iranian news site covering the country’s energy sector, republished — without confirming or denying the accuracy of the reporting — an article from S&P Global Commodity Insights that Chinese independent oil refiners (know as teapots) have increased their imports of Iranian crude by 4.3 percent in June 2024, to an eight month high of 6.1 million metric tonnes. //In the past, Shana has not had any issue with publishing boasts about the status of the Iranian oil sector (see the last issue for one example), so it’s unclear why they are suddenly being coy about PRC teapot refineries buying up more Iranian crude.
--
Uzbekistan indicated interest in Chabahar port, and the country’s ambassador to Iran suggested Iranian companies launch medicine product lines in Uzbekistan, as Tashkent imports nearly USD900 million worth of medicine annually.
India’s ambassador to Iran said that if not for sanctions against Tehran, the two countries could be doing USD16 billion worth of trade, as opposed to the USD2 billion they are currently engaged in. The ambassador stressed that the two countries should focus on non-sanctioned items, such as agriculture, pharmaceuticals, and food items.
Iran and Turkmenistan signed a contract for 10 billion cubic meters of natural gas to be delivered to Iran, which will then be shipped to Iraq. //A similar turnaround mechanism exists between Turkmenistan, Azerbaijan and Iran, as discussed in Issue #33.