US Treasury cites tanker, entities for illicit oil transfers with North Korean ships

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has designated one vessel, two individuals, and three entities as being involved in illicit ship-to-ship (STS) oil transfers to North Korean-flagged ships in violation of United Nations sanctions against Pyongyang.

The OFAC designated Taiwan-based individuals Huang Wang Ken and Chen Mei Hsiang and the Taiwan-based entities Jui Pang Shipping and Jui Zong Ship Management , as well as Hong Kong-based entity Jui Cheng Shipping Company, pursuant to Executive Order 13810 for having engaged in at least one significant importation from or exportation to North Korea of any goods, services, or technology.

In addition, the OFAC identified the Panama-flagged product tanker Shang Yuan Bao as blocked property in which Huang Wang Ken, Chen Mei Hsiang, Jui Pang, Jui Cheng, and Jui Zong all have an interest.

In October 2018, the UN Security Council’s 1718 Committee included Shang Yuan Bao in a port entry ban and designated it for deflagging in response to its involvement in illicit STS transfers with North Korean-flagged vessels.

In 2018, Shang Yuan Bao conducted at least two STS transfers with North Korean-flagged vessels, which both later offloaded their cargo in North Korea’s Nampo port.

Between April and May 2018, Huang Wang Ken, the CEO and largest shareholder in Jui Pang, a Taiwan marine cargo handling company, worked with several other individuals to use Shang Yuan Bao to transport 1.7 million litres of petroleum products to the UN- and US-designated North Korea-flagged vessel Paek Ma through an STS transfer.

Huang and his partners falsely reported that the petroleum products were destined for the Philippines. Shang Yuan Bao, however, transported the petroleum beyond the territorial waters of any state to carry out the STS transfer to Paek Ma, which was identified on February 23, 2018, as property in which Paekma Shipping, an entity whose property and interests in property were blocked pursuant to EO 13810 also on February 23, 2018, has an interest.

In June 2018, Shang Yuan Bao carried out an additional STS transfer of petroleum with another North Korean-flagged vessel, Myong Ryu 1.

The OFAC assesses that the persons who owned and controlled Shang Yuan Bao at the time of the petroleum transfers are ultimately responsible for the petroleum products that were illicitly transferred to the North Korean vessels and ultimately delivered to North Korean territory. This includes Chen Mei Hsiang, who is a member of the board of directors of Jui Pang, director and sole owner of Jui Zong, and spouse of Huang Wang Ken.

The OFAC also designated Taiwan companies Jui Pang and Jui Zong, as well as Hong Kong company Jui Cheng, for engaging in a significant importation from or exportation to North Korea through their ownership and control of Shang Yuan Bao when it engaged in the STS transfers.

As a result of the OFAC’s legal action, all property and interests in property of these individuals and entities that are in the United States or in the possession or control of US persons must be blocked and reported to the OFAC. The OFAC’s regulations generally prohibit all dealings by US persons or within the United States (including transactions transiting the United States) that involve any property or interests in property of blocked or designated persons.

In addition, persons that engage in certain transactions with the persons designated may themselves be exposed to designation. Furthermore, any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals designated could be subject to US correspondent account or payable-through sanctions.