AMLFinTechSanctions

How North Korea is evading sanctions

By February 28, 2018 No Comments

In hot water – How North Korea is evading sanctions

US President Donald Trump announced a new round of sanctions – the “heaviest ever” – on North Korea last week. They have been specifically designed to make it more difficult for North Korea to use shipping as a means to evade sanctions. These come after numerous warnings since January from Japan, whose spy planes have observed North Korean vessels exchanging cargo (most likely oil) off the coast of China with other vessels.

In an attempt to evade detection, North Korean ships tend to use a “false flag”, a well-known deception technique where a flag of another, less-suspect nation is flown, instead of your own. In the most recent cases it has been flying the flag of Belize. Kim Jong-un has called the new sanctions tantamount to “an act of war”, returning to the usual provocative rhetoric after two weeks of pleasantries and attempted diplomatic meetings at the Winter Olympics. Evidence emerged early this week that sanctions on the rogue nation may be having their desired effect, with reports of North Korea allegedly having to sell precious electricity to China to earn money. Will the “heaviest ever” sanctions be the final measure that brings North Korea to the negotiating table?

Glass half empty – the CPI 2017

Transparency international released the Corruption Perception Index (CPI) 2017 last week, the well-known barometer of how corrupt countries are perceived to be. On a scale where 1 (very corrupt) to 100 (squeaky clean), results were less than positive, with over half of the world’s countries scoring 50 points or less. Additionally, no country scored 100 points – New Zealand, Denmark and Finland all tied in first place with 90 points. The bottom rungs were occupied by the world’s failed states, with Somalia coming last place and also as the only country to score in single digits.

The results of the CPI 2017 were not particularly surprising as there were no great shifts in the ranking from previous years. Transparency International took the opportunity however, to highlight the growing level of violence against anti-corruption activists and journalists over the last year. Few will forget the murder of Maltese journalist Daphne Caruana Galizia, for her investigation into the Panama Papers but she was just one of 15 who were killed last year for covering stories related to corruption. Following the news that another journalist was killed over the weekend for covering corruption, it’s important to shine a light on the human cost associated with these rankings.

More than meets the eye – FATF Week 2018

What came out of the FATF Plenary Week? Clearly a lot more than the official statement is letting on. Rampant confusion spread over whether Pakistan was – or wasn’t – given a three month reprieve from being placed on the FATF gray list before the announcement had even been made. Equally, the lack of progress made on Iran’s position suggests that the FATF Plenary is not immune from becoming a stage to play out diplomatic disputes.

So what do we know? FATF introduced its new operational plan for combating the financing of terrorism, which among a number of things, should allow for a clearer understanding of threats as well as better information sharing across borders. The mutual evaluation report of Iceland was discussed and the follow-up reports of Spain and Norway reviewed. The FATF working groups on FinTech and RegTech discussed how the FATF recommendations can be applied to achieve effective compliance in this sector. The hot topic of virtual currencies was also raised, with the group deciding that it would step up its level of scrutiny of virtual currencies to better understand their financial crime risk. To get more details on what was discussed click here

 

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