N. Korean Cargo Ship Seized for Money Laundering

MANHATTAN (CN) – Two months before President Donald Trump’s June 2018 summit with North Korean dictator Kim Jong Un, Indonesian maritime authorities intercepted and detained a 17,061-ton cargo ship called the M/V Wise Honest.

The vessel had been transporting 25,500 tons of coal at the time of its detention on April 1, 2018. In a practice the United Nations calls “double-flagging,” the Wise Honest was registered under the jurisdictions of Sierra Leone and Democratic People’s Republic of Korea. Its captain, a North Korean national, was promptly arrested.

The incident prompted alarm in the United States and the United Nations, which both implemented sanctions against North Korea and worked under the radar to react to the provocation.

Federal prosecutors in New York meanwhile obtained a sealed search warrant to investigate the matter one month after Trump and Kim’s debut huddle. Making its findings public for the first time today, U.S. Attorney Geoffrey Berman unsealed a federal forfeiture complaint for the vessel.

“Our office uncovered North Korea’s scheme to export tons of high-grade coal to foreign buyers by concealing the origin of their ship, the Wise Honest,” Berman said in a statement. “This scheme not only allowed North Korea to evade sanctions, but the Wise Honest was also used to import heavy machinery to North Korea, helping expand North Korea’s capabilities and continuing the cycle of sanctions evasion. With this seizure, we have significantly disrupted that cycle.”

Describing the Wise Honest as the first-ever seizure of a North Korean cargo vessel for sanctions violations, Berman said the ship is en route to American Samoa. In a telephone press conference, the prosecutor otherwise declined to specify when the United States first suspected the vessel had been violating sanctions.

Remote from the start, the possibility of a breakthrough on U.S.-North Korean peace talks has been on even shakier ground amid multiple reports of fired missiles that represent North Korea's second weapons test in less than a week.

Though the United States started speaking out on the alleged deception of Wise Honest today, the U.N. Panel of Experts detailed the scheme extensively in a report this past March.

“The panel’s investigations into coal brokering and export chains highlight the significant amounts of revenue for the Democratic People’s Republic of Koreas well as profit for commodity traders seeking commissions or arbitrage from such deals,” the 378-page report states. “The Wise Honest shipment was worth $2,990,000, according to its contract.” 

U.S. prosecutors put a similar price tag on the shipment in a press call and described the Wise Honest as North Korea’s second largest ship.

Thursday's forfeiture complaint contends that the shipments by the Korea Songi General Trading Corporation violated both domestic and international sanctions.

“The Korea Songi scheme allowed North Korean companies to export raw natural resources, notably coal, which provide a critical source of revenue for DPRK-based companies and for the North Korean government,” the complaint states. “Through shipments coordinated by Kwon, large quantities of coal were exported from North Korea, including on behalf of Korea Songi Trading Corporation, in violation of United Nations Security Council prohibitions on that exportation, and in a manner designed to avoid the imposition o: sanctions on the entities involved by the United States.”

Prosecutors claim Songi’s representative Kwon Chol Nam used the vessel to transport heavy machinery that would assist in that illicit trade.

“On or about November 1, 2016, Kwon made arrangements to use M/V Wise Honest to ship a number of items of heavy machinery, including an ‘overflow ball mill,’ ‘pendulum feeder,’ two items described as a ‘down the hole drill,’ two items described as ‘cone crusher,’ as well as 412,584 kilograms of ‘steel plate,’ among other items, from Yantai Port in Shandong, China to ‘Korea Songi General Trading Corporation’ at ‘NAMPO PORT, DPRK,’” the complaint states.

Nampo is North Korea’s principal seaport, and the items on the vessel are the type of heavy machinery used in coal mining, an economy that the regime used to finance its nuclear weapons program.

Prosecutors say Kwon knowingly made transactions in U.S. dollars in violation of sanctions.

“We will find someone who can arrange remittance in US dollars,” Kwon told one unidentified individual, as quoted in the complaint.

North Korea will have an opportunity to contest the seizure, or the ship will otherwise become the U.S. government’s property for its use or auction. As a forfeiture complaint, the sole defendant is the ship itself.

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