The Wise Honest, one of North Korea’s largest bulk carriers, was used to illicitly ship coal from North Korea and to deliver heavy machinery to North Korea. Payments for maintenance, equipment, and improvements of the Wise Honest were made in US dollars through unwitting US banks.
Pursuant to the International Emergency Economic Powers Act and the North Korea Sanctions and Policy Enhancement Act of 2016, North Korea and other individuals or entities, that the Department of the Treasury’s OFAC has determined are involved in the facilitation of proliferation of weapons of mass destruction, are prohibited from engaging in transactions with US persons, involving US-origin goods, or using the US financial system.
The United Nations Security Council has similarly prohibited the provision of goods, technology, and services to North Korea, including the sale, supply, or transfer of coal.
According to the documents filed in Manhattan federal court on 9 May, from at least November 2016 through April 2018, the Wise Honest was used by Korea Songi Shipping Company to export coal from North Korea to foreign purchasers and import machinery to North Korea (Korea Songi Scheme).
On June 1, 2017, OFAC designated Songi Trading Company pursuant to Executive Order 13722 for its involvement in the sale, supply, or transfer of coal from North Korea.
On or about March 14, 2018, the Wise Honest was loaded with coal in Nampo, North Korea. On or about April 2, 2018, foreign maritime authorities intercepted and detained the Wise Honest.
Maritime regulations require vessels like the Wise Honest engaged in international voyages to operate an AIS capable of providing information about the vessel to other ships and coastal authorities. However, despite its March 2018 voyage from North Korea, the Wise Honest had not broadcast an AIS signal since August 4, 2017.
Participants in the Korea Songi Scheme attempted to conceal the Wise Honest’s DPRK affiliation by falsely listing different countries for the Wise Honest’s nationality and the origin of the illicit coal in shipping documentation.
In connection with the Korea Songi Scheme, one of Korea Songi Shipping Company’s representatives paid for numerous improvements, equipment purchases, and service expenditures for the Wise Honest in US dollars through unwitting US financial institutions.
Such transfers constitute a provision of services by US banks to both the sender and recipient of the funds, and longstanding US law prohibits banks from providing such services to North Korean parties.
Payments totaling more than $750,000 were transmitted through accounts at a US financial institution in connection with the March 2018 shipment of coal onboard the Wise Honest.
The Wise Honest is currently in the custody of the US, having previously been seized pursuant to a warrant issued in the Southern District of New York.