Indictments and sanctions against NK FTB employee; Sino-DPRK trade to resume soon?; Iran seizes oil tanker.
Prohibited Transactions for the week of 24 April
North Korea
Sim Hyon-Sop – a North Korean citizen who worked for the DPRK’s Foreign Trade Bank (FTB) in the UAE – is the central figure in a number of overlapping indictments and sanctions designations by the US government (and has been sanctioned by South Korea).
Sim was indicted, along with two other individuals from China and Hong Kong, for conspiring between 2018 and 2021 to launder approximately USD800,000 of funds stolen by North Korean hackers from a digital currency company in December 2017. //The company is unnamed in the indictment, but appears to be NiceHash, a Slovenian crypto platform hacked for USD75 million.
The second indictment against Sim is for engaging in a money laundering conspiracy between 2021 and early 2023 that raised money for North Korea’s ballistic missile and WMD programs. He is accused of laundering over USD24 million in funds, of which at least USD12 million was sourced from North Korean IT workers who used fake identities to get jobs at US-based companies that paid salaries in virtual currencies. //The US issued an advisory on the topic in mid-2022.
Sim was also charged by the US for purchasing approximately USD74 million of leaf tobacco between 2009 and 2019, which was used to generate an estimated USD700 million in revenue for North Korea.
//Sim’s three separate money laundering schemes shows that North Korean illicit actors – like other professionals – appear open to learning new skillsets. Sim went from buying leaf tobacco to working with over-the-counter (OTC) traders laundering stolen digital currencies to being at the receiving end of a network of North Korean-controlled digital wallets. A 2020 indictment involving Sim’s employer, the FTB, notes that the bank has approximately 300 employees working overseas, identifying branches of the bank in Austria, a number of cities in China, Kuwait, Libya, and two cities in Russia. Is Sim a typical overseas FTB employee, or an overachiever?
Sim’s leaf tobacco charges were announced alongside word that British American Tobacco (BAT) and its Singaporean subsidiary agreed to pay more than USD629 million in penalties for violating sanctions between 2007 and 2017 by pretending to spin off its North Korea sales business into a separate company, but in actuality using that company to secretly sell approximately USD415 million of tobacco products to the DPRK.
The DOJ noted it is “the largest settlement payment in the Department’s history,” while BAT stated that “its Full Year 2023 Group guidance is unaffected by this announcement.” //BAT’s 2022 pre-tax profits were approximately USD11.6 billion.
Pyongyang and Moscow “are strengthening mutual support and solidarity” in the face of “war and military threats from the outside” according to a senior North Korean diplomat.
Overland trade between China and the DPRK may resume in the next six months, as China Customs has reportedly started issuing passes to Chinese logistics companies experienced in trading with North Korea. Rumors of a potential reopening //Which means smuggling will be back in force resulted in the KPW-RMB exchange rate rising in some North Korean border towns.
Iran
The US government sanctioned the Islamic Revolutionary Guard Corps Intelligence Organization (IRGC-IO) and four of its senior officers for engaging in “hostage-taking or wrongful detention of US nationals in Iran.”
The Iranian navy seized a Marshall Islands-flagged oil tanker, owned by a China-registered company, in the Gulf of Oman. The US Navy states this is the fifth tanker “unlawfully” seized by Iran in the last two years. //Unclear if this is in retaliation for something else which has recently occurred. Will be curious to see if Beijing gets involved.
Iranian media reports that Tehran and Damascus are finalizing bilateral agreements between the two nations, which would “expand economic ties and facilitate banking and commercial transactions.” The agreements will likely be signed when Iran’s president visits Syria, possibly next week.
Iran’s ministry of foreign affairs sanctioned a number of individuals and entities from the European Union and the United Kingdom for interfering in Iran’s affairs.