Kim returns from Russia visit; NK delegation seen with luxury goods; US/Iran prisoner exchange; OFAC sanctions Iranian UAV network
Prohibited Transactions for the week of 18 Sep 2023 (#20)
North Korea
Kim Jong-un “successfully” completed his six day visit to Russia, having left Vladivostok on Sunday 17 September. He met the previous day with Russian defense minister Sergei Shoigu and discussed “further strengthening the strategic and tactical coordination, cooperation and mutual exchange between the armed forces of the two countries.” The US stated it will keep a close eye on any potential trading activity between Moscow and Tehran.
Members of Kim’s entourage were seen carrying luxury handbags, including Dior and Gucci, as they toured various sites in Russia (see the bag being held by Kim Yo-jong on the right). The sale of the bags to North Korea would violate UN Security Council Resolution 1718, which bans the export of “luxury goods” to the DPRK. //The resolution doesn’t define what “luxury goods” means and this loophole makes enforcement difficult as countries define the term differently, and can claim the items passing through their territory does not constitute a “luxury good.”
Regional Russian officials reportedly gifted drones to Kim, which would be a sanctions violation.
Kim’s motorcade in Russia was seen being escorted by vans manufactured by Hyundai Motor, a South Korean auto giant. It is unclear if the vans were provided by Russia, or brought over by North Korea.
As opposed to previous statements which were less definitive, South Korea’s Ministry of National Defense has now acknowledged the “likelihood” of arms trade already occurring between the DPRK and Russia. A South Korean presidential official also said that Seoul has been observing military dealings between the two countries in the months leading up to the recent high level meetings.
Seoul sanctioned ten individuals and two entities tied to the DPRK’s arms dealings with Russia.
Russia recently offered food aid to North Korea, but was turned down because Pyongyang stated that the food security situation in the country was stable. //In contrast, many North Koreans appear to be speculating and hoping that the government will receive Russian wheat and provide it to the people in the near future.
Iran
Iran and the US exchanged prisoners, and Washington allowed the release of USD6 billion of Iranian funds from South Korea to Qatar. The US emphasizes that the funds can only be used for “humanitarian purposes” while the Iranian government states that the funds “will be used at the discretion of relevant Iranian authorities and based on the country’s needs and priorities.” //Will be interesting to see how the US would react if they catch Iran trying to use the funds for non-humanitarian purposes. Would Washington pressure Qatar to halt Iranian access? Apply sanctions? Even for the humanitarian goods, is there a chance these funds could pass through a Western bank at some point? Will the bank still SAR the activity because it’s indirectly tied to Iran?
The US unofficially eased sanctions pressure on Iranian oil in the run up to the prisoner exchange. Critics point out that the US government could be doing much more — such as trying to shut down Iran’s ghost fleet of ships moving oil — while officials state that they continue to impose sanctions pressure on Tehran.
OFAC sanctioned a network supporting Iran’s unmanned aerial vehicle (UAV) and military aircraft development, with entities and individuals being designated in Iran, the PRC, Russia and Türkiye. The former president of Iran, Mahmoud Ahmadinejad, was also sanctioned for his ties to Iran’s Ministry of Intelligence and Security. The US also sanctioned a number of Iranian officials for their involved in suppressing protests in Iran a year ago. OFAC also released two settlement notices with a New York bank, and Minnesota-based 3M, for violations of the Iranian Transactions and Sanctions Regulation (ITSR). The bank held CDs for over two decades for two people living in Iran, and a 3M subsidiary in Europe sold goods to an Iranian company with law enforcement ties.
Iranian president Ebrahim Raisi said the US could show it wants to return to a nuclear deal with Iran by easing sanctions. //Too many sanctions, too few sanctions? I guess it all depends on who you’re asking. Though the US did take a bunch of sanctions and enforcement actions right around when the prisoner swap was happening, are these actions ones that will bring Iran’s illicit networks to their knees? Hardly. But any sort of sanctions, even “run of the mill” designations (if that’s even a thing) clearly have an effect since Tehran is always asking for sanctions relief.
Independent Chinese oil refiners are stocking up on Iranian oil, covering gaps due to supply cuts by Saudi Arabia and Russia.
An Iranian military official stated that Iran and Russia are working on a long-term cooperation document. The agreement would have “strong military and defense dimensions.” //Will this agreement mirror the one signed between Tehran and Beijing in 2021, encompassing economic, military and security cooperation? There haven’t been many outward signs of the Iran-China agreement over the past few years, so it’s unclear how a similiar agreement with Russia would fare.
Iranian media says that the Islamic Revolution Guards Corps (IRGC) Navy seized two tankers, flying the flags of Panama and Tanzania, respectively, for smuggling oil. However, the US has said it was unaware of any tankers being seized in international waters.
An Iranian military commander stated that there is high global demand for Iranian drones.