On September 1, 2020, the US Department of State’s Bureau of International Security and Nonproliferation, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), and the US Department of Commerce’s Bureau of Industry and Security issued a joint advisory on North Korea’s ballistic missile procurement activities (“Advisory“). The Advisory, among other things, identifies key participants of North Korea’s ballistic missile procurement and their deceptive tactics and key items, including materials and equipment, used in the North Korean ballistic missile programs, which North Korea tries to source internationally. The Advisory also reminds both US and non-US parties, especially those in the electronics, chemical, metals, and materials industries as well as the financial, transportation, and logistics sectors, of the risk of involvement in North Korea’s ballistic missile procurements, the potential consequences of violating relevant United Nation and/or US sanctions, the need for a risk-based approach to sanction compliance, and a list of compliance resources to reference.
Key North Korean Ballistic Missile Procurement Participants and Tactics
The Advisory provides an illustrative list of key North Korean entities involved in North Korea’s ballistic missile procurement, all of which have been designated by both the United Nation and the United States:
- Korea Mining Development Trading Corporation (KOMID), aka Changgwang Sinyong Corporation, External Technology General Corporation, Korea Kumryong Trading Company, Korean Mining and Industrial Development Corporation;
- Munitions Industry Department (MID), aka Military Supplies Industry Department;
- Second Academy of Natural Sciences (SANS), aka National Defense Academy;
- Second Economic Committee (SEC);
- Korea Tangun Trading Corporation (Tangun), aka Korea Kuryonggang Trading Corporation, Ryungsong Trading Corporation, Ryungseng Trading Corporation; and
- Korea Ryonbong General Corporation (Ryonbong), aka Korea Yonbong General Corporation.
As the list is only illustrative and not exhaustive, the Advisory encourages a review of OFAC’s List of Specially Designated Nationals and Blocked Persons (“SDN List”) for a comprehensive list of sanctioned parties.
According to the Advisory, North Korea relies on foreign-sourced ballistic missile-related components that it cannot produce domestically. To obtain these components, North Korea uses an extensive overseas network of procurement agents, including officials who operate from North Korean diplomatic missions or trade offices, as well as third-country nationals and foreign companies. The Advisory provides an illustrative list of Russian and Chinese individuals and entities that assisted North Korea’s ballistic missile procurement, all of which are on the SDN List:
- Gefest-M LLC and its director, Ruben Kirakosyan;
- Dandong Rich Earth Trading Co., LTD;
- Mingzheng International Trading Limited;
- Ardis-Bearings LLC and its director, Igor Aleksandrovich Michurin;
- Beijing Chengxing Trading Co. LTD;
- Dandong Jinxiang Trade Co. LTD;
- Dandong Hongxiang Industrial Development Co. LTD and its employees Jinhua Hong, Chuanxu Luo; and
- Xiaohong Ma, and Jianshu Zhou.
The Advisory alerts that these individuals or entities might employ various deceptive tactics in their procurement activities. Specifically, procurement agents might purchase items and consolidate and repackage them for onward shipment to North Korea, concealing the true end-user from the manufacturers and distributors of the items. Moreover, procurement entities might mislabel sensitive goods in export documentation, falsely declaring specialized materials to instead general-purpose items that are widely commercially available.
Key Items Used in the North Korean Ballistic Missile Program
The Advisory states that North Korea likely imports the following items for its ballistic missile programs (for more details on such items, please refer to the Annex of the Advisory):
- Multi-axle heavy vehicles, such as 8 or 9-axle forestry vehicles, used as Transporter Erector Launchers (TELs) for ballistic missiles;
- Steels, aluminum, and specialty materials containing titanium;
- Filament winders and winding equipment;
- Carbon fiber for composite motor cases; and
- Solid propellant, including aluminum powder and ammonium perchlorate, to the scale of 100 tons over the next 10 years.
Companies selling or otherwise dealing in such items should consider conducting additional due diligence to make sure such items are not being provided for North Korea’s ballistic missile programs.