Geoffrey S. Berman, United States Attorney for the Southern District of New York, John C. Demers, Assistant Attorney General for National Security, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation, and John Brown, Assistant Director of the Counterintelligence Division of the Federal Bureau of Investigation, announced today the filing of a civil forfeiture complaint against M/V Wise Honest (the “Wise Honest”), a 17,061-ton, single-hull bulk carrier ship registered in the Democratic People’s Republic of Korea (“DPRK” or “North Korea”). 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 the DPRK. Payments for maintenance, equipment, and improvements of the Wise Honest were made in U.S. dollars through unwitting U.S. banks. This conduct violates longstanding U.S. law and United Nations Security Council resolutions.
U.S. Attorney Geoffrey S. Berman said: “Today’s civil action is the first-ever seizure of a North Korean cargo vessel for violating international sanctions. Our Office uncovered North Korea’s scheme to export tons of high-grade coal to foreign buyers by concealing the origin of their ship, the Wise Honest. This scheme not only allowed North Korea to evade sanctions, but the Wise Honest was also used to import heavy machinery to North Korea, helping expand North Korea’s capabilities and continuing the cycle of sanctions evasion. With this seizure, we have significantly disrupted that cycle. We are willing and able to deploy the full array of law enforcement tools to detect, deter, and prosecute North Korea’s deceptive attempts to evade sanctions.”
Assistant Attorney General John C. Demers said: “This sanctions-busting ship is now out of service. North Korea, and the companies that help it evade U.S. and U.N. sanctions, should know that we will use all tools at our disposal — including a civil forfeiture action such as this one or criminal charges — to enforce the sanctions enacted by the U.S. and the global community. We are deeply committed to the role the Justice Department plays in applying maximum pressure to the North Korean regime to cease its belligerence.”
FBI Assistant Director William F. Sweeney Jr. said: “Working with our law enforcement and intelligence partners around the world gives the FBI the ability to interdict illicit activity globally. Our counterintelligence efforts are squarely focused on protecting the American people. This seizure should serve as a clear signal that we will not allow foreign adversaries to use our financial systems to fund weapons programs which will be used to threaten our nation.”
FBI Assistant Director John Brown said: “Although barred from doing business in this country, North Korea continues to violate U.S. and international sanctions while simultaneously taking advantage of unwitting U.S. companies. The FBI is committed to ensuring that North Korea be held responsible for their blatant disregard for U.S. law. I am proud of the work done by the many men and women of the FBI who pursued this case.”
According to the documents filed today in Manhattan federal court:
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 Office of Foreign Assets Control (“OFAC”) has determined are involved in the facilitation of proliferation of weapons of mass destruction are prohibited from engaging in transactions with U.S. persons, involving U.S.-origin goods, or using the U.S. 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.
From at least November 2016 through April 2018, the Wise Honest was used by Korea Songi Shipping Company, an affiliate of Korea Songi General Trading Corporation, to export coal from North Korea to foreign purchasers, and to import machinery to North Korea (the “Korea Songi Scheme”). On June 1, 2017, OFAC designated Korea Songi General Trading Corporation, also known as “Songi Trading Company,” pursuant to Executive Order 13722 for its involvement in the sale, supply, or transfer of coal from North Korea. OFAC also determined that Songi Trading Corporation was a subordinate of the Korean People’s Army.
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 automatic identification system (“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, Kwon Chol Nam, one of Korea Songi Shipping Company’s representatives, paid for numerous improvements, equipment purchases, and service expenditures for the Wise Honest in U.S. dollars through unwitting U.S. financial institutions. Such transfers constitute a provision of services by U.S. banks to both the sender and recipient of the funds, and longstanding U.S. law prohibits banks from providing such services to North Korean parties. Payments totaling more than $750,000 were transmitted through accounts at a U.S. financial institution in connection with the March 2018 shipment of coal on board the Wise Honest.
The Wise Honest is currently in the custody of the United States, having previously been seized pursuant to a warrant issued in the Southern District of New York.
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Mr. Berman and Mr. Demers praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division, and thanked the Department of Justice’s Money Laundering and Asset Recovery Section’s Program Operations Unit and Office of International Affairs, the United States Coast Guard, and the Department of State for their assistance.
The case is being handled by the Office’s Terrorism and International Narcotics as well as the Money Laundering and Transnational Criminal Enterprises Units. Assistant U.S. Attorneys David W. Denton Jr. and Benet J. Kearney of the U.S. Attorney’s Office for Southern District of New York, and Trial Attorney Christian Ford of the National Security Division’s Counterintelligence and Export Control Section are in charge of this case.