On September 1, 2020, the Department of State’s Bureau of International Security and Nonproliferation, the Department of the Treasury’s Office of Foreign Assets Control (OFAC), and the Department of Commerce’s Bureau of Industry and Security (BIS) issued a joint advisory to alert persons to the Democratic People’s Republic of Korea’s (North Korea) ballistic missile procurement activities. The advisory identifies key North Korean procurement entities, examples of certain materials and equipment North Korea likely imports, and deceptive techniques employed by North Korean proliferators and procurement networks in support of the regime’s ballistic missile program.  The advisory also provides an overview of U.S. sanctions authorities related to North Korea proliferation, and lists North Korea-related sanctions enforcement resources.

The joint advisory indicates that North Korea’s ballistic missile procurement activities “expose the electronics, chemical, metals, and materials industries as well as the financial, transportation, and logistics sectors to the risk of possibly violating United Nations (UN) and U.S. sanctions.”  It further highlights that to obtain these materials, North Korea uses an extensive overseas network of procurement agents, including officials who operate from North Korean diplomatic missions or trade offices, as well as third country nationals and foreign companies.  This network includes collaboration with foreign-incorporated companies, such as Chinese and Russian entities, to acquire foreign-sourced basic commercial components and then consolidate and repackage them for onward shipment to North Korea, concealing the true end-user from the manufacturers and distributors of the materials and equipment.

The advisory notes that individuals and entities producing or trading in these products, or providing related financial or other services must be “vigilant regarding any involvement in the transfer of sensitive technology to North Korean entities” and are “encouraged to ensure they understand fully all sanctions obligations and risks that pertain to their activities.”  Persons should make informed decisions about providing products or services to customers based on the risks associated with those specific customers; implement appropriate Know-Your-Customer (KYC) policies and procedures; and conduct other sufficient due diligence in business transactions.