Did North Korea Violate Sanctions? Does Kim Jong Un Care?

Russian press has been all aflutter about possible additional sanctions because Russia has been using missiles supplied by North Korea to attack Ukraine.

Let’s put aside the level of pathetic you have to be to have North Korea supply your missiles! Global superpower? Russia buying munitions from North Korea is like buying a sandwich from a homeless guy who just dug it out of the trash outside a McDonalds.

However, National Security Council spokesman John Kirby called the development a “significant and concerning escalation.”

I understand this. The fact that Russia is purchasing weapons it cannot replenish on its own from the world’s weird, pariah regime that starves its population so badly, they’re reportedly turning to cannibalism as a means of survival indicates that Russia is in it for the long haul in Ukraine. No matter what the cost — and the cost is pretty vast after two years of war — Putin continues to push, target civilians, and work to destroy its neighbor, while his savage troops engage in genocide, kidnapping, rape, and torture.

But back to North Korea.

Russia denies the allegation that the “Democratic” People’s Republic is providing Russia with missiles, but it’s instructive to see that North Korean dictator Kim Jong Un is calling for missile launch vehicle production to be expanded in the country and has recently visited Russia to discuss military cooperation.

The United States asserts that Russia’s procurement of ballistic missiles from North Korea was a direct violation of numerous UN Security Council resolutions, and the Wall Street Journal recently reported that Russia is also turning to Iran for help with short-range ballistic missiles.

All three countries are some of the most heavily sanctioned in the world, with Russia holding the top spot. But Russia is entangled in the global economy. It’s a major energy exporter, one of the biggest exporters of diamonds, minerals, gold, and other products, and despite what the Kremlin propagandists might tell you, Russia has seen a significant impact from global sanctions. If sanctions did nothing, why is Russia spending so much effort and money to evade them?

North Korea is less integrated into the global economy. It’s been heavily sanctioned for years by the international community, and there’s a reason its nickname is “the hermit kingdom.” The DPRK already is comprehensively sanctioned by the UN, by the United States — with both primary and secondary sanctions—by the EU, UK, and other countries. North Korea on the surface has much less to mose, despite the best efforts of its pals in China and Russia.

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That said, North Korea does make some efforts to evade sanctions and has been involved in smuggling — everything from cigarettes to drugs to oil —  for years. Regulators have been flagging evasion methodologies Pyongyang uses to get access to what it needs for years:

📌 Physically Altering Vessel Identification

📌 Ship-to-ship transfers

📌 Falsifying Cargo and Vessel Documents

📌 Disabling or manipulating automatic identification systems (AIS) to transmit fraudulent routes

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So does the Kim regime really care if one more North Korean company or individual is sanctioned? Depends on what kind of company and who the individual is.

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The elites in North Korea love their luxuries. Yes, Kim loves giving out luxury Mercedes vehicles to his sociopath supporters, and the company is investigating how their cars keep winding up in North Korea. Voice of America reports that Kim himself has been driving a Mercedes Maybach, which can cost anywhere from $500,000 to more than $1.5 million. He is believed to have brought the car aboard an armored train when he traveled to Russia to meet with Putin in September.

North Korean hackers may have stolen as much as $600 million in cryptocurrency last year and as much as $3 billion over the course of the past six years.

Sanctions are obviously not persuading the Kim regime to stop the bad activities in which they are involved. But they certainly seem to be depriving Pyongyang of needed resources. That’s an effect.

With North Korea, sanctions seem to be a mixed bag, but I would submit that the fact that the Kim regime engages in evasion tactics, theft, smuggling, and other illicit activities to gain access to what it needs, sanctions are fairly effective.

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That said, enforcement needs to be a significant part of the picture when it comes to North Korea. Sanctioning additional North Korean companies operating outside that country may legally prevent firms and financial institutions from transacting with them, but criminal prosecution, seizures, and significant fines will make sanctions more effective.

In addition, blocking the resources North Korea is using to steal, hack, smuggle, and hide stolen assets can also help limit Pyongyang’s resources:

📌 OFAC in 2022 sanctioned virtual currency mixer Blender.io, which the DPRK used to support its malicious cyber activities and laundering of stolen virtual currency. OFAC also sanctioned Tornado Cash, which has been used to launder more than $7 billion worth of virtual currency since its creation in 2019, including $455 million stolen by the DPRK’s state-sponsored cyber hacking group Lazarus.

📌 A New York federal court in 2021 entered a judgment of forfeiture regarding the M/T Courageous, a 2,734-ton oil-products tanker used to make illicit deliveries of petroleum products through ship-to-ship transfers with vessels flagged in North Korea and direct shipments to the North Korean port of Nampo.

📌 OFAC last year settled with British American Tobacco (BAT) for $508 million for violations of US sanctions against North Korea. BAT from 2009 to 2016 engaged in a conspiracy to send more than $250 million in profits from a North Korean joint venture through the US financial system by relying on designated North Korean banks and a variety of intermediaries. BAT’s Singaporean subsidiary also exported tobacco to the North Korean Embassy in Singapore until 2017, using unwitting U.S. banks to receive or process these payments.

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So on the surface, international sanctions appear to have no effect on North Korean activities, but its facilitators and tools it uses to continue malign behavior are being held accountable, forcing Pyongyang to adjust and expend more resources to find new methodologies and techniques to evade sanctions.

Smuggling and evasion are expensive. North Korea likely has to pay a lot to give its business partners a reason to risk arrest and prosecution, especially since the United States and its partners have been increasing their focus on enforcement. And North Korea’s trading partners are few and far between, indicating that potential trading partners will forego the higher profits to avoid reputational damage.

Sanctions are also made to increase the reputational risks for bad actors, and although doesn’t seem to be too worried about his global reputation, his country doesn’t seem to have too many friends and only the most predatory of regimes are willing to do business with Pyongyang.

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Does Kim Jong Il care?

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I think Kim loves to portray himself as the rebel on the world stage, taking on the big, bad West, and developing weapons of mass destruction as a spit in the face of the evil United States. And as long as China and Russia continue to bolster the Kim regime, North Korea will continue to engage in its malign activities.

But at the same time, as resources become more scarce, the pool of slave labor shrinks as people die, and luxuries become more and more scarce, North Korea will begin to care more.