By Dan De Luce and Andrea Mitchell
March 12, 2019 - North Korea is successfully evading United Nations sanctions with increasingly sophisticated methods, enabling the regime to import more oil, expand coal exports, sell weapons and hack into foreign banks, according to a report by a U.N. panel of experts.
The sanctions are designed to prevent Pyongyang from funding its nuclear weapons and ballistic missile programs and thereby pressure the regime to abandon its arsenal, but North Korea has carved out new ways to flout the U.N. sanctions, including deceiving global banks, insurers and commodity traders, said the U.N. panel's report, which was reviewed by NBC News and was expected to be published Monday afternoon.
The head of the U.N. panel of experts, Hugh Griffiths, told NBC News in an exclusive interview that he had never seen such elaborate smuggling methods in his 15 years of tracking maritime trafficking.
"They’re using more sophisticated methods. They’re becoming cleverer," Griffiths said.
The regime is also violating sanctions by selling small arms and other military hardware to Iranian-backed Houthi rebel forces in Yemen, and to fighters in Libya and Sudan, the panel report said.
According to the report, the North is also proving adept at cybertheft to secure cash, stealing hundreds of millions of dollars from foreign banks with vulnerable cybersecurity software or from cryptocurrency accounts, which are particularly difficult to track.
North Korea "continues to defy Security Council resolutions through a massive increase in illegal ship-to-ship transfers of petroleum products and coal," the report states.
"These violations render the latest United Nations sanctions ineffective by flouting the caps on the import of petroleum products and coal oil" by North Korea imposed by the U.N. Security Council in 2017. "These transfers have increased in scope, scale and sophistication," it said.
The U.N. panel's report describes a case last year in which the North Koreans allegedly engaged in identify theft on the high seas, using a blacklisted vessel as an imposter for a similar ship thousands of miles away. The Yuk Tang falsely transmitted its identity through the global electronic tracking system for ships, claiming it was a Panama-flagged vessel named Maika, says the report. The real vessel, whose international ID number was stolen, was 7,000 miles away in the Gulf of Guinea.
In one case last year, the U.N. panel’s report describes how the North Koreans engaged in identify theft on the high seas, using a blacklisted vessel as an imposter for a similar ship thousands of miles away. The Yuk Tang claimed it was a Panama-flagged vessel named Maika. The real vessel, whose international ID number was stolen, was 7,000 miles away in the Gulf of Guinea. The ship even changed the name on its stern.
The imposter then arranged for a massive transfer of 57,000 barrels of oil at sea, the single biggest illicit maritime transfer documented so far, said Griffiths.
"It fooled these global regional commodity trading companies into supplying more than 57,000 barrels in a single shipment by a ship-to-ship transfer," Griffiths told NBC News.
"It's very sophisticated and we've never seen this level of spoofing before, anywhere."
The report includes photos that show the large ship pulled alongside another vessel for the oil transfer, which had an estimated value of about $5.7 million, according to Griffiths.
North Korea was taking advantage of operating in international waters, using flags from countries like Panama, Sierra Leone or Tanzania that do not monitor vessels sailing under their flags, said Griffiths. "It’s basically anarchy out there," he said.
Similarly, global commodity traders often do not conduct thorough checks on the background of cargo ships or verify where they end up sailing once a transaction is made, he said.
Griffiths said the "commodity traders are unwitting actors, the banks are unwitting actors, the insurers are unwitting actors and that's because they are not monitoring the ships that they are either financing, insuring or that are carrying their product."
The assessment from the U.N. panel underscores the challenge facing President Donald Trump after a summit in Hanoi last month that failed to produce progress and exposed sharp differences between Washington and Pyongyang.
Trump administration officials hope the U.S. and U.N. sanctions on North Korea, some of which date back to 2006, will push Pyongyang to abandon its nuclear weapons and long-range missiles in return for a lifting of the economic pressure. But the U.N. panel's report suggested North Korea still is able to carve out holes in the sanctions to keep its economy afloat and maintain its nuclear and missile projects.
The White House and the State Department did not respond to requests for comment.
North Korea's nuclear and missile programs "remain intact," the U.N. panel said, confirming accounts by U.S. intelligence agencies and other reporting that the regime has not dismantled its nuclear or missile arsenal.
The U.N. panel's report, citing information from a U.N. member state, said North Korea's most important ballistic missile companies — blacklisted by the U.N. — "are extremely active in Iran," Griffiths said.
Griffiths said the U.N. is looking to investigate the activity of North Korean diplomats in Tehran and elsewhere in the Middle East, who often act as cash couriers for smuggling and other illicit projects.
The U.N. panel’s report identified a Syrian arms trafficker, Hussein al-Ali, as a foreign intermediary for North Korea who allegedly sought to sell arms to Houthi rebels in Yemen. The U.N. was also investigating his son for alleged illicit gold-mining activities in the Democratic Republic of Congo, Griffiths said.
International financial sanctions are the most poorly enforced and the most actively evaded by the regime, with North Korea operating with “seeming impunity” in several countries, according to the U.N. report. North Korea continues to transfer funds from accounts closed in European Union banks to financial firms in Asia, it said.
The U.N. panel of experts, which usually produces reports twice a year on the North Korea sanctions, is also concerned about Uganda's ties to North Korea, according to Griffiths.
Past reports showed North Korean regime personnel training Ugandan military pilots and military police in violation of U.N. sanctions. Uganda later stated it had ended the cooperation with the North Koreans.
"Unfortunately, recently reports have emerged that this is not the case, and the North Koreans are back in Uganda actively training Ugandan special forces and supplying them with large quantities of small arms and light weapons," Griffiths said.