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BLOG Sep 03, 2020

US Department of State Advisory on DPRK Ballistic Missile Procurement

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Byron McKinney

Product Management Director, Maritime, Trade & Supply Chain, S&P Global Market Intelligence

A joint advisory document has been released by three US government departments regarding North Korea's ballistic missile procurement activity. This advisory, published on September 1st, 2020, has been released by the following US Department of State; Office of Foreign Asset Control (OFAC), Bureau of Industry & Security (BIS) and the Bureau of International Security and Nonproliferation.

The advisory notice highlights the techniques, actors, networks and components used by North Korea to advance and expand its missile program. The document notes that industries within trade and supply chain finance are the front-line in managing the risks associated with the provision, financing or production of goods and components that can be used for missile technology. As part of this front-line, financial institutions and freight forwarders need to show vigilance when shipping or transferring products and components that could potentially aid the DPRK's missile technology program.

In addition to the general outline of the advisory and the need for a sanctions compliance program that meets the challenges of identifying actors, entities and goods as part of a risk based approach, the document also highlights a variety of involved parties to the DPRK missile program, the tactics employed by these entities and the types of products and goods procured.

North Korean companies such as KOMID, MID and Korea Tangun have utilised a number of methods with which to procure items that the DPRK cannot produce domestically. Much of this procurement is activated through Russia and China but also other countries in Asia. An example highlighted by the US Department of State, relates to commercial goods such as multi-axle heavy vehicles, filament winders and solid propellants as the most widely procured for import to the DPRK.

An appendix to the advisory document outlines in further detail a number of items, components and equipment which is often imported for use in North Korean missile development;

  • Fibrous material such as carbon, kevlar and aramid fibres
  • Truck chassis including transmissions for vehicles with more than four axles
  • Specialty steels and aluminiums
  • Bearings with particular tolerances
  • Isostatic equipment
  • Precursor chemicals
  • Electronic relays and convertor chips
  • Guidance devices such as gyroscopes

Many of the above items are complex to identify from goods descriptions on trade documents but the key message from the advisory is to be vigilant and mindful of possible red flags. Employing best practice to ensure that unexpected or out of the ordinary patterns in relation to companies, customer locations and goods are investigated thoroughly is a key element of the advisory. Those practitioners across the trade and supply chain industries that do not have a living and working sanctions compliance program in place and an understanding of 'catch-all' export controls run the risk of enforcement authority and monetary fines.

The US Department of State advisory document can be found here.

Posted 03 September 2020 by Byron McKinney, Product Management Director, Maritime, Trade & Supply Chain, S&P Global Market Intelligence

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