- By Catherine A. TraywickCatherine A. Traywick is a fellow at Foreign Policy.
Let’s say you’re the supreme leader of a pariah state. You’re looking to move a few hundred tons of Soviet-era arms across international boundaries, but you’ve been slapped by a harsh arms embargo. You’d like to quietly transport a weapons shipment across the globe, but you’d really rather avoid detection. So what’s a Dear Leader to do?
Thanks to a new U.N. report, you don’t have to guess. On Tuesday, a panel of eight experts concluded that, despite nearly a decade of U.N. sanctions, North Korea’s illicit arms trade is thriving and remains a major source of revenue for the heavily sanctioned country. Its secret for success? A sophisticated system for evading sanctions that makes clever use of foreign embassies, shell companies, flags of convenience, secret cargo holds, and — of course — code words.
As the crew of the Chong Chon Gang learned in July 2013, when the North Korean-flagged ship was caught transporting a large cache of Cuban weapons, these tactics don’t always work. But even the best of criminals won’t get away every time.
The U.N. report includes a detailed look at that ship’s seizure, which the panel of experts say provides "an unrivalled insight" into the "multiple and tiered circumvention techniques" used by North Korea. So if you’re looking to tear a page out of the hermit kingdom’s playbook, contravene international arms sanctions, and ship weapons around the globe, here’s how it’s done.
1. Create a vast web of shell companies to own and operate your illicit trade fleet
You’ll want some distance between yourself and the fleet carrying your weapons– even if, as in the case of the Chong Chon Gang, the ships bear your national flag. As the report explains, "the maritime industry is characterized by complex ownership and operator arrangements." This is something you can use to your advantage.
A web of private shell companies that purportedly own or operate the ships in question will, the report says, "deflect scrutiny with a veneer of legitimate trading." And, in the event that the ship’s illicit cargo is discovered, this approach offers a few other advantages. First, you, Dear Leader, can always argue that the company, being privately owned, is solely responsible for violating the law. Second, if the company’s assets are seized or frozen, its financial impact can be contained, allowing the larger trade to continue more or less uninterrupted. Once the seized ship is released, you can always rename, reflag, and declare it the property of a brand new company.
2. Make good use of your foreign embassies
The U.N. report alleges that North Korea’s embassies in Singapore and Cuba facilitated the country’s illicit trade deals — remember, diplomatic protection is your friend. The embassy in Singapore shared facilities with a company that acted as the shipping agent for the company that owned the Chong Chon Gang. Meanwhile, the North Korean embassy in Cuba is believed to have arranged the shipment.
3. Come up with some code words (but don’t write them down)
In the case of the Chong Chon Gang, the ship’s captain had "secret" instructions for smuggling the arms, as well as special phrases he should use when referring to the shipment. For example, the captain was ordered to refer to "containers" as "mechanical parts" and told to watch out for the message "Payment arranged for 26K," which would indicate that he should make a false declaration of his shipment in Panama. Conversely, the message "Payment was not arranged for 26K" would indicate that he need not declare the shipment at all. Unfortunately, the captain kept the instructions on paper, making it all the easier for the U.N. to get their hands on the evidence.
Lesson: Don’t write down your secret codes.
4. Conceal the illicit cargo by any means necessary
Following the example of the Chong Chon Gong, modify your ships so they can accommodate 40-foot containers deep within their cargo holds. The illicit freight should be placed at the bottom of the holds, covered with some innocuous cargo (like thousands of bags of sugar), closed, then covered with another layer of innocent cargo (like more sugar). Containers should also have false walls and bottoms to add another level of security. Create false stowage plans and customs declarations to fool everyone.
5. Conceal your position as you move through open waters
If you want to avoid unnecessary attention from less friendly nations, turn off your ship’s automatic identification system and falsify your shipping logs, so no one can track your location. But don’t take it too far. As the Chong Chon Gang’s crew learned the hard way, these tactics are also sure to generate suspicion. So if your ship does gain the attention of the authorities, do not ignore calls from nearby ports! Just show your falsified documents, and hope for the best.
Here’s the full U.N. report, with the complete rundown of North Korea’s illicit trade strategies.