S/2013/337 - National Committee on North Korea

S/<strong>2013</strong>/<strong>337</strong>
142. Panel investigations into incidents of possible violation of sanctions point to
the use by the Democratic People’s Republic of Korea of trade-based moneylaundering
through front companies and agents to pay for illicit procurements and to
transfer the proceeds of sales of weapons and items related to weapons of mass
destruction. It uses company formation agents to establish firms offshore in locales
where laws make it difficult or impossible to determine beneficial ownership. It may
often change company secretaries and nominal directors and operate offices and
conduct its banking under a similar name in a different country. Paragraph 11 of
resolution 2094 (<strong>2013</strong>) refers to bulk cash, reflecting concerns that the Democratic
People’s Republic of Korea is reportedly making increasing use of cash couriers to
bypass transfers between financial institutions.
143. Bank vigilance is the first line of defence against deception, especially knowyour-customer
practices that are integrated into overall compliance procedures. In
one case, the Panel learned that a bank became aware of account activity
inconsistent with its customer’s business; it filed a suspicious transaction report
which tipped off authorities in time to prevent a major illicit transaction. When there
have been financial leads, such as in the matters of the Thai arms seizure and the
attempted purchase of luxury yachts, the Panel was able to develop important
additional evidence. Even so, most Member States’ investigations of incidents of
alleged non-compliance do not try to “follow the money” but rely on evidence
collected about violations of export controls. Dual-track investigations, a
recommended best practice, are indispensible in detecting and shutting down illicit
financial networks involving the Democratic People’s Republic of Korea.
144. Resolution 2094 (<strong>2013</strong>) introduces new measures on banking summarized in
annex I. There is a notable lack of transparency on the part of financial institutions
in the Democratic People’s Republic of Korea. To assist Member States with the
implementation of the new measures, the Panel, in annex XXIII, has listed banks
that it knows or believes to be in operation as at 7 March <strong>2013</strong>.
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