Sanctions have failed to stop North Korea’s weapons program because the regime has a “complex overseas financing and procurement system” earning hard currency from anything from cybercrime to wildlife smuggling, a report said today. Successive rounds of United Nations sanctions in response to nuclear and ballistic missile tests have sought to choke off North Korea’s external economic lifelines, but the report by Washington-based think tank C4ADS argues the measures are not efficient enough. Pyongyang, “far from being isolated, is globally active through its overseas networks,” which are helping to raise the funds and materials the country needs for its weapons programmes, the report said. Last September the North conducted its fifth nuclear test, triggering international outrage and further sanctions. The most recent round of sanctions came earlier this month in response to a string of missile tests this year. As sanctions have tightened, Pyongyang’s overseas networks have become increasingly important, with regime officials learning how to “nest” their illicit activities within apparently legitimate international trade, the report said. It argued that more targeted sanctions — if applied correctly — could help bring Kim Jong-Un’s regime back to the negotiating table. The last report released by C4ADS last year highlighted the key role played by a prominent Chinese businesswoman and her vast conglomerate, resulting in US and South Korean sanctions against the firm, Dandong Hongxiang, and specific individuals associated with it.
The companies in Pyongyang’s networks use “layers of shell and front companies” which help them obscure their true activities, the new report said. This allows regime-linked individuals repeatedly to conduct illicit behaviour abroad on North Korea’s behalf. From weapons export to imports of “both sophisticated technology and mundane items like switches and relays,” Pyongyang depends on “trusted intermediaries” to hide its involvement in overseas deals. “The repeated use of the same commercial facilitator across multiple major weapons shipments is indicative of the limited nature of North Korean overseas networks,” and highlights how vulnerable they are to targeted sanctions, it said.
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Financing similarly relies on a small number of “gateway firms” which allow the North “to access the international financial system”.”Targeted international action against entities like (Dandong Hongxiang) strike at where the North Korean overseas financing system is most vulnerable, at key ‘chokepoints,’ where licit and illicit activities converge,” the report said. Moreover, just 5,233 companies within China either import goods from or export goods to the North, compared to some 67,163 Chinese firms exporting to South Korea, the report said, making it easier to target specific firms that may be helping the country violate sanctions. “A concerted effort by the international community to target specific sanctions-violating entities is needed to curb the North Korean (Weapons of Mass Destruction) program,” the report said.