Executive Order Targeting North Korea’s Proliferation Activities

Other activities in violation of U.N. Security Council also targeted

U.S. DEPARTMENT OF THE TREASURY
August 30, 2010

Fact Sheet: New Executive Order Targeting Proliferation and Other Illicit Activities Related to North Korea

Today President Obama issued an Executive Order freezing the assets of certain persons with respect to the Democratic People’s Republic of Korea (North Korea). This new Order expands the scope of the national emergency declared in Executive Order 13466 of June 26, 2008 and takes additional steps to address that national emergency. In the new Executive Order, the President finds that certain actions and policies of the Government of North Korea constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.

The Order targets the government of North Korea’s continued involvement in a wide range of proliferation and other illicit activities in defiance of UN Security Council Resolutions (UNSCRs) 1718 and 1874 and other illicit activities in defiance of international norms. The Order directs the Secretary of the Treasury, in consultation with the Secretary of State, to target for sanctions individuals and entities facilitating North Korean trafficking in arms and related materiel; procurement of luxury goods; and engagement in illicit economic activities, such as money laundering, the counterfeiting of goods and currency, bulk cash smuggling and narcotics trafficking. This new Executive Order supplements existing U.S. sanctions targeting proliferators of weapons of mass destruction (WMD) and those who support them, under which North Korean entities and individuals have been designated to date.

President Obama also identified the following entities and individual for sanctions by listing them on the Annex to the Order:

• The Reconnaissance General Bureau (RGB), North Korea’s premiere intelligence organization involved in North Korea’s conventional arms trade;

• RGB commander Lieutenant General Kim Yong Chol;

• Green Pine Associated Corporation, a North Korean conventional arms dealer subordinated to the control of the RGB; and

• Office 39 of the Korean Workers’ Party, which provides critical support to North Korean leadership in part through engaging in illicit economic activities and managing the leadership’s slush funds.

The U.S. government has longstanding concerns regarding North Korea’s involvement in a range of illicit activities conducted through government agencies and associated front companies. North Korea’s nuclear and missile proliferation activity and other illicit conduct violate UN Security Council Resolutions 1718 and 1874, and these activities and their other illicit conduct violate international norms and destabilize the Korean Peninsula and the entire region. In signing this Order, President Obama has frozen the property and interests in property of the three entities and one individual listed on the Annex. This Order provides the United States with new tools to disrupt illicit economic activity conducted by North Korea.

• Arms proliferation: North Korea has long been engaged in the sale of conventional arms to countries in the Middle East, Southeast Asia, and Africa. Since the 2009 adoption of UNSCR 1874, which bans all arms transfers from North Korea, authorities in Asia, Africa, and the Middle East have seized North Korean shipments suspected of carrying prohibited arms and related materiel.

• Narcotics trafficking: During the past three decades, North Korean citizens, diplomats and government officials have engaged in narcotics trafficking. Officials in Turkey, Egypt, Taiwan and Japan have linked North Korean officials to narcotics possession, distribution and smuggling.

• Counterfeiting currency: The United States continues to investigate North Korea’s manufacture and distribution of the highly deceptive counterfeit of the U.S. $100 and $50 bills, also known as the “supernote.” The United States Secret Service has made definitive connections between the supernote and the government of North Korea. Since its first detection in 1989, the Secret Service has seized approximately $63 million of supernotes globally.

• Procurement of luxury goods: UNSCR 1718 requires Member States to prohibit the direct or indirect supply, sale of transfer to North Korea of luxury goods, which North Korean leadership uses to secure the loyalty of elites and the military. In July 2009, Italian authorities prevented the sale of luxury yachts worth more than $15 million to an Austrian company because they were ultimately destined for North Korea.

• Deceptive financial practices: North Korea continues to engage in deceptive financial practices to disguise the true nature of its transactions, using government agencies and front companies to engage in WMD and missile proliferation-related and other illicit activities and to evade detection by financial institutions around the world. All of the conduct above is facilitated by the deceptive financial practices North Korea engages in to disguise the true nature of its transactions.

President Obama identified the following entities and individual for sanctions by listing them on the Annex to the Order:

The Reconnaissance General Bureau (RGB)

The Reconnaissance General Bureau is North Korea’s premiere intelligence organization, created in early 2009 by the merger of existing intelligence organizations from the Korean Workers’ Party, the Operations Department and Office 35, and the Reconnaissance Bureau of the Korean People’s Army. RGB trades in conventional arms and controls the North Korean conventional arms firm Green Pine Associated Corporation (Green Pine), which was also identified for sanctions by the President today for exporting arms or related materiel from North Korea.

The RGB is commanded by General Kim Yong Chol, who was also identified for sanctions today.

Green Pine Associated Corporation (Green Pine)

The conventional arms firm Green Pine Associated Corporation was subordinated to the control of the RGB in 2009 and has been identified for sanctions by the President for exporting arms or related material from North Korea. Green Pine specializes in the production of maritime military craft and armaments, such as submarines, military boats and missiles systems, and has exported torpedoes and technical assistance to Iranian defense-related firms.

Green Pine is responsible for approximately half of the arms and related materiel exported by North Korea and has taken over many of the activities of the Korea Mining Development Trading Corporation (KOMID), which is listed in the Annex to Executive Order 13382 of June 2005. KOMID was also designated by the UNSCR 1718 Committee to be subject to the provisions of paragraph 8(d) of UNSCR 1718.

Office 39 of the Korean Workers’ Party (Office 39)

Office 39 of the Korean Workers’ Party engages in illicit economic activity to support the North Korean government. It has branches throughout the nation that raise and manage funds and is responsible for earning foreign currency for North Korea’s Korean Workers’ Party senior leadership through illicit activities such as narcotics trafficking.

Office 39 controls a number of entities inside North Korea and abroad through which it conducts numerous illicit activities including the production, smuggling, and distribution of narcotics. Office 39 has also been involved in the attempted procurement and transfer to North Korea of luxury goods.

• Office 39 produced methamphetamine in Sangwon, South Pyongan Province and was also involved in the distribution of methamphetamine to small-scale North Korean smugglers for distribution through China and South Korea. Office 39 also operates poppy farms in North Hamkyo’ng Province and North Pyongan Province and produces opium and heroin in Hamhu’ng and Nachin.

• In 2009, Office 39 was involved in the failed attempt to purchase and export to North Korea -- through China -- two Italian-made luxury yachts worth more than $15 million. Halted by Italian authorities, the attempted export of the yachts destined for Kim Jong-il was in violation of United Nations sanctions against North Korea under UNSCR 1718, which specifically require Member States to prevent the supply, sale, or transfer of luxury goods to North Korea.

Office 39 previously used Banco Delta Asia to launder illicit proceeds. Banco Delta Asia was identified by the Treasury Department in September 2005 as a “primary money laundering concern” under Section 311 of the USA PATRIOT Act because it represented an unacceptable risk of money laundering and other financial crimes.

Identifying Information:

Entity: Reconnaissance General Bureau
AKA: Chongch’al Ch’ongguk
AKA: RGB
AKA: KPA Unit 586
Location: Hyongjesan-Guyok, Pyongyang, North Korea
Alt. Location: Nungrado, Pyongyang, North Korea

Individual: Kim Yong Chol
AKA: Kim Yong-Chol
AKA: Kim Young-Chol
AKA: Kim Young-Cheol
AKA: Kim Young-Chul
Location: Pyongan-Pukto, North Korea
DOB: circa 1947
Alt. DOB: circa 1946

Entity: Green Pine Associated Corporation
AKA: Chongsong Yonhap
AKA: Ch’o’ngsong Yo’nhap
Location: c/o Reconnaissance General Bureau Headquarters,
Hyongjesan-Guyok, Pyongyang, North Korea
Alt. Location: Nungrado, Pyongyang, North Korea

Entity: Office 39
AKA: Office #39
AKA: Office No. 39
AKA: Bureau 39
AKA: Central Committee
AKA: Bureau 39
AKA: Third Floor Division 39
Address: Second KWP Government Building (Korean – CH’O’NGSA),
Chungso’ng, Urban Town (Korean -- DONG),
Chung Ward, P’yongyang, North Korea
Address: Chung-Guyok (Central District), Sosong Street,
Kyongrim-Dong, Pyongyang, North Korea
Address: Changgwang Street, Pyongyang, North Korea