North Korean efforts to evade international sanctions have been aided by companies registered in Britain, according to an investigation by the London-based Royal United Services Institute.
The report explains how Britain-registered companies are being used to operate cargo ships smuggling coal out of North Korea, which is the country's biggest export. Income from the trade provides crucial funds for Pyongyang's nuclear and ballistic missile program, according to the United Nations Security Council.
The United States, European Union and the United Nations have imposed sanctions on North Korea over its continued pursuit of nuclear weapons.
"U.K.-registered entities are being used as front companies and owners of vessels that are essentially involved in the illicit smuggling of North Korean coal, which is in contravention of United Nations Security Council resolutions," said report co-author Hamish Macdonald.
The report details how North Korea is able to access U.S. and international financial systems by using a complex network of global actors and company structures.
One such network is Weihai World-Shipping Freight, based in China. Six of the company's vessels are identified by the report as being involved in the smuggling of North Korean coal. Of these, four vessels have been owned by companies registered in Britain. One vessel, the Lucky Star, loaded coal in North Korea as recently as January. Another, Asia Bridge, loaded coal at Nampo in North Korea in early August.
"Networks behind these front companies are doing this for a number of reasons, including to obfuscate the origins of the network, which are already sanctioned by the U.N. Security Council. And they're also using the U.K. system as sort of a veneer of respectability to lower the levels of scrutiny against their activities and the vessels involved in those activities," Macdonald said.
The investigators were able to track the paths of the vessels using satellite and shipping data. Ships involved in smuggling frequently switch off their automatic tracking systems to try to avoid detection. Cargo is often transferred from one vessel to another at sea.
The report's authors say their investigation raises significant questions about the enforcement of sanctions in Britain, which they say must tighten oversight on the formation of companies because it is now too easy to create bogus firms.
"It takes about 24 hours. It costs about 12 pounds ($15). You need a director and a shareholder and address within the U.K., which can just be a secretary address, which was used in this case, as well. And the directors and shareholders don't actually have to be U.K. citizens or a have ever set foot in the United Kingdom."
In a statement, the British government told VOA it works "closely with law enforcement partners in the U.K. and beyond where individuals or companies are suspected of illegal activities," adding that an overhaul of the system was being planned.
