Probing Firm-level Sanctions Evasion

The North Korean network extends into the US
June 19, 2017 12:00 PM

C4ADS has put out another fascinating report tracking individuals and firms in the North Korean sanctions evasion network. My takeaway from their report from last year was that presumably due to its size and isolation, North Korea doesn’t produce a lot of individuals with the requisite skill mix to operate overseas to carry out sanctions evasion effectively. They have a relatively thin bench, and their network does not have a lot of redundancy, so taking out a few agents could noticeably impair their network. (Note I did not say “destroy,” I wrote “impair.”) A case in point was the operative Kim Song-il, who operated multiple front businesses out of Singapore. Kim was arrested in Hawaii, convicted in Utah, and is reportedly serving his time in a federal prison in Pennsylvania.

One potential adaptation would be to build a network of Chinese individuals and businesses that would do your bidding for you. This was the lesson I took away from a subsequent report by John Park and Jim Walsh, indeed that the network of Chinese collaborators was so vast that it called into question our ability to damage the network. In some sense, the new report from C4ADS is the dialectical response to the Park-Walsh report: yes, the network appears to be vast, but once you start drilling down, it appears in significant part controlled by a limited number of Chinese individuals and entities.

If one disables some of these key nodes, one could impair the functioning of the network.

In essence, C4ADS has identified the Chinese counterparts to Kim Song-il, individuals and their associated business groups that control multiple Chinese entities in the network, the implication being, as in the case of the North Koreans, if one disables some of these key nodes, one could impair the functioning of the network. One such individual mentioned in the report, is an alleged arms smuggler named Sun Sidong. In addition to controlling assets in China and Hong Kong, Sun has registered a business and holds assets here. Given symbiotic trans-national relationships among criminal gangs, this immediately begs the question of American associates. I hope that DOJ is less supine on these matters than their counterparts at Treasury are at times.

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