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U.S. finds new firms to sanction

Hong Kong, Taiwan companies involved in fuel transfers to North
Sept 02,2019
In its latest crackdown on illicit ship-to-ship transfers of refined petroleum goods, the U.S. Treasury Department slapped sanctions on three shipping companies based in Taiwan and Hong Kong, along with two Taiwanese individuals, alleged to have helped North Korea evade sanctions.

The Treasury’s Office of Foreign Assets Control on Friday in Washington designated Jui Pang Shipping and Jui Zong Ship Management, both based in Taiwan, and Hong Kong-based Jui Cheng Shipping for alleged involvement in ship-to-ship transfers of refined petroleum goods to North Korea in violation of UN sanctions.

Taiwanese individuals Huang Wang Ken, the CEO and largest shareholder in Jui Pang, a marine cargo handling company, and his wife, Chen Mei Hsiang, a member of the board of directors of Jui Pang and director of Jui Zong, were also blacklisted the same day.

The office further identified the Panama-flagged vessel Shang Yuan Bao, seen to have been involved in at least two ship-to-ship transfers, as blocked property. The three designated companies are said by the Treasury to have engaged in “significant” transfer of petroleum goods to North Korea through their “ownership and control” of the Shang Yuan Bao.

The office said Huang and Chen used the Shang Yuan Bao to transport 1.7 million liters (449,000 gallons) of petroleum products to Paek Ma, a North Korean-flagged ship blacklisted by the United States and UN, between April and May 2018. In June 2018, the vessel carried out another ship-to-ship transfer of petroleum with another North Korea-flagged vessel, the Myong Ryu 1, it added. Huang was said to have “falsely reported” that the petroleum products were headed for the Philippines.

The Shang Yuan Bao was banned from port entry by the UN Security Council’s 1718 sanctions committee in October 2018 and has been designated to be deflagged for its involvement in illicit ship-to-ship transfers with North Korea.

U.S. Treasury Under Secretary Sigal Mandelker said in a statement that Washington “will implement and enforce existing U.S. and UN sanctions on individuals, entities and vessels involved in illicit ship-to-ship transfers with North Korean-flagged vessels,” warning that shipping companies that trade with the North “are exposing themselves to significant sanctions risk, despite the deceptive practices they try to employ.”

The sanctions enable the freezing of any property or assets within U.S. jurisdiction of any person or entity on the list and can also prohibit financial transactions with U.S. citizens. Foreign financial institutions can also risk U.S. sanctions if they have transactions with designated entities.

Pyongyang’s use of illicit ship-to-ship transfers to import refined petroleum is in violation of UN Security Council Resolution 2375 of September 2017 and Resolution 2397 of December 2017, which capped North Korea’s imports of refined petroleum to 500,000 barrels for 12 months.

However, in June, the United States and its allies sent a letter to the Security Council sanctions committee alleging that North Korea has exceeded its cap on refined petroleum imports through illicit ship-to-ship transfers in violation of UN sanctions.

Washington has adhered to its maximum pressure strategy toward Pyongyang, meant to cut cash flow into the North to fund its nuclear weapons program and has maintained that it is not ready to lift sanctions until the complete denuclearization of North Korea.

The Treasury Department described such transfers as a “method of transferring cargo from one ship to another while at sea rather than while located in port, to enable North Korea’s import of refined petroleum products,” calling it a “deceptive practice” commonly used by Pyongyang.

It highlighted that the restriction on North Korea’s refined petroleum imports “is a critical part of the UN sanctions regime” and that the “international community must implement and enforce all existing sanctions and take action against those evading these sanctions.”

The Treasury added that Washington “acknowledges and is grateful for Taiwan’s continued efforts to combat” the North’s “efforts to evade sanctions and to obtain resources” for its weapons of mass destruction and missile programs.

BY SARAH KIM [kim.sarah@joongang.co.kr]