United Nations Sanctions on Iran and North Korea: An

MARCH 2014

United Nations Sanctionson Iran and North Korea:An Implementation Manual

ENRICO CARISCH AND LORAINE RICKARD-MARTIN

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ABOUT THE AUTHORS

ENRICO CARISCH is a Partner in Compliance and Capacity

Skills International, LLC, which provides advice and training

on sanctions compliance and implementation to the public

and private sectors and conducted UN system-wide

sanctions training in 2011 and 2012. He was a member of

several United Nations Panels of Experts from 2002 to

2010 and an investigative journalist for twenty-five years.

LORAINE RICKARD-MARTIN is a Partner in Compliance

and Capacity Skills International, LLC, and a lecturer in

United Nations sanctions at Columbia University’s School

of International and Pubic Affairs. She was a sanctions

committee secretary and a senior political affairs officer in

the Security Council Affairs Division of the UN Department

of Political Affairs, from 1995 to 2009.

ACKNOWLEDGEMENTS

The authors would like to express their appreciation to

peer reviewers Christine Lee, George Lopez, Peter Scott,

and Christine Wing for their insightful and valuable

comments; and to Diane Barkley, Aleandro Carisch, William

J. Haynes, III, Bryan Knouse, Shawna Meister, Niall P.

Murphy, and Lindsey G. Zeichner for their expert research

and other assistance on this project.

The sanctions implementation manual is a joint project of

IPI, Compliance and Capacity Skills International, and

Security Council Report, funded by the government of

Canada. IPI would like to thank Kristen Boon, visiting senior

advisor, for her integral contributions to the project.

IPI owes a debt of thanks to its donors whose support

make publications like this one possible. In particular, IPI

would like to thank the government of Canada for its

support of this project.

CONTENTS

Illustrations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

How to Use this Manual . . . . . . . . . . . . . . . . . . . . . . . . vii

Understanding Sanctions . . . . . . . . . . . . . . . . . . . . . . . . 1

UN SANCTIONS COMMITTEES AND AFFILIATEDSUPPORT

UN SANCTIONS GENERAL PROCESSES

OBLIGATION TO IMPLEMENT AND COMPLY WITH

UN SANCTIONS

Weapons of Mass Destruction . . . . . . . . . . . . . . . . . . . 2

COUNTERING THE PROLIFERATION OF WMD

THE 1540 RESOLUTION

NON-PROLIFERATION: IRAN AND THE DPRK

United Nations WMD Sanctions. . . . . . . . . . . . . . . . . . 4

UN SANCTIONS ON THE DPRK

UN SANCTIONS ON IRAN

THE P5+1 JOINT PLAN OF ACTION

DPRK and Iran Sanctions MeasuresExplained . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

CONVENTIONAL AND NON-CONVENTIONALARMS EMBARGO

BUNKERING

INSPECTION ON HIGH SEAS

TRAVEL BANS

ASSET FREEZES

OTHER FINANCIAL SANCTIONS

LUXURY GOODS EMBARGOES

WMD Sanctions Violations . . . . . . . . . . . . . . . . . . . . . . 9

EFFECTIVE INTERVENTIONS AGAINST WMDPROLIFERATION—THE CATCH-ALL PROVISION

SANCTIONS AGAINST NUCLEAR WEAPONSPROLIFERATION

SANCTIONS AGAINST THE PROLIFERATION OFBALLISTIC MISSILE TECHNOLOGIES

SANCTIONS AGAINST THE PROLIFERATION OFCHEMICAL AND BIOLOGICAL WEAPONS

MARITIME PORTS, AIRPORTS, AND ACCESS

ROADS TO AND FROM THE DPRK AND IRAN

Lessons Learned from the Implementationof DPRK and Iran Sanctions . . . . . . . . . . . . . . . . . . . . . 11

DPRK NETWORK OF PROLIFERATORS

DPRK EVASION AND SMUGGLING STRATEGIES

DPRK’S USE OF ITS DIPLOMATS

IRAN’S PROCUREMENT NETWORKS

IRAN’S USE OF NETWORKS OF EXPATRIATESAND FRONT COMPANIES

IRAN AS SUPPLIER OF CONVENTIONAL ARMS

IRAN’S DRIVE FOR HIGH-QUALITY WMD ITEMS

Case Histories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ILLEGAL TRADE OF RESTRICTED NUCLEAR ITEMS

ILLEGAL TRADE OF RESTRICTED BALLISTIC

MISSILE ITEMS

Best Practices and Recommendations . . . . . . . . . . . 18

1. STATE IMPLEMENTATION OFFICERS

2. CUSTOMS AND BORDER CONTROL PRACTITIONERS

3. REGULATORS OF THE TRANSPORTATION SECTORAND COMPLIANCE OFFICERS OF THETRANSPORTATION INDUSTRY

4. REGULATORS OF FINANCIAL SERVICES,COMPLIANCE OFFICERS OF BANKS, ANDFINANCIAL INTERMEDIARIES

SOURCES FOR FURTHER INFORMATION

Annexes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

ILLUSTRATIONS

Tables

1. BALLISTIC MISSILES WITH A RANGE OF

AT LEAST 300 KM AND CAPABLE OF

CARRYING A PAYLOAD OF 500 KG. . . . . . . . . . . . . . . . . . . . . 4

2. SUMMARY OF THE UN PANEL OF EXPERTS

REPORT (S/2013/331) CONCERNING IRAN’S

PROCUREMENT OF HIGH-QUALITY ITEMS . . . . . . . . . . . . . 15

3. VESSEL CONFIGURATIONS ACCORDING TO

THEIR LIKELIHOOD OF SANCTIONABLE AND

CRIMINAL INVOLVEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

v

Abbreviations

AG Australia Group

BWC Biological Weapons Convention

CNC Computer Numerically Controlled

CTBT Comprehensive Nuclear-Test-Ban Treaty

CWC Chemical Weapons Convention

DPRK Democratic People’s Republic of Korea (North Korea)

FATF Financial Action Task Force

HCOC Hague Code of Conduct Against Ballistic Missile Proliferation

IAEA International Atomic Energy Agency

IATA International Air Transport Association

INTERPOL International Criminal Police Organization

IMO International Maritime Organization

IRGC Islamic Revolutionary Guard Corps

IRISL Islamic Republic of Iran Shipping Lines

ISM Safety Management Code

ISU Implementation Support Unit for the Biological Weapons Convention

KPA Korean People’s Army

MTCR Missile Technology Control Regime

NDC National Defense Commission

NPT Treaty on the Non-Proliferation of Nuclear Weapons

NSG Nuclear Suppliers Group

OPCW Organization for the Prohibition of Chemical Weapons

PSC Port State Control

PTBT Partial Test Ban Treaty

ROK Republic of Korea (South Korea)

SIPRI Stockholm International Peace Research Institute

SOLAS International Convention for the Safety of Life at Sea

vi

SRSG Special Representative of the Secretary-General

UN United Nations

UNGA United Nations General Assembly

UNODA United Nations Office for Disarmament Affairs

UN PoE Panel of Experts

UNSC United Nations Security Council

WA Wassenaar Arrangement

WCO World Customs Organization

WMD Weapon(s) of Mass Destruction

WPK Workers’ Party of Korea

vii

This manual is intended as a tool for officials of UN member states, international organizations, companies,and corporations to support sanctions implementation. The manual delivers to frontline actors in the publicand private sectors specific guidance to enable more effective compliance with UN non-proliferation sanctionson Iran and the Democratic People’s Republic of Korea (DPRK).

How to Use this Manual

This manual is intended to close the gap between the political language of the relevant sanctions resolu-tions and the technical nature of the lists of restricted items and technologies, by offering simple, action-able instructions for implementation. Wherever possible, texts and searchable reference data are offered inlayperson’s language without elaborating on the underlying regulatory and policy details.

Users of the manual should be cognizant that while the greatest care was taken to reflect the letter andspirit of the UN sanctions regimes adopted under resolutions 1718 (2006) (DPRK), and 1737 (2006) (Iran),this manual is intended to support and not to replace the original UN resolutions, presidential statements,and related documents (see Annexes I and II).

It is recommended that users first familiarize themselves with the essentials of UN sanctions as brieflynoted in the first section of the manual, “Understanding Sanctions.” Users will next find information thatwill help them to confirm whether a particular request for export/import, transportation, or transactioninvolving an item or component may be an attempt at illegal proliferation or sanctions violation. For thispurpose, the general descriptive texts for each of the three principal proliferation technologies—nuclearweapons, chemical/biological weapons, and ballistic missiles—provide introductory information. Asummary of case studies of recent proliferation efforts, including smuggling networks and techniques, isaimed at increasing vigilance among those responsible for implementing the United Nations sanctionsregimes on Iran and the DPRK.

Best practices for member state officials, customs and border control agents, the shipping industry, banks,insurance agencies, and financial intermediaries further elaborate practical sanctions implementationsteps. Annexed technical materials consist of concise and searchable lists for all prohibited items,equipment, and technologies for both sanctions regimes. The technical descriptions of these items areenhanced, where feasible, with information about the appearance, notable features, key parameters, specialmarkings, as well as where applicable, photographs and graphs. These elaborations are designed to assistlaypersons in ascertaining whether a particular component or item is restricted.

1

Understanding Sanctions

Throughout history, sanctions have been used as apolitical tool to coerce, constrain (or contain), anddeter, most often by states instituting generalblockades or limiting the trade privileges of others.The establishment of the United Nations in 1945—with its primary purpose of maintaining interna-tional peace and security—introduced underChapter VII, Article 41, of the UN Charter, the useof “measures other than the use of force,” (e.g.,sanctions). It was not until the end of the Cold Warin the early 1990s, however, that the UN SecurityCouncil, the UN body directly responsible forresponding to threats to international peace andsecurity, made extensive use of its ability to imposemultilateral sanctions. From 1990 to 2000, oftenreferred to as the “sanctions decade,” the SecurityCouncil adopted thirty-nine resolutions imposingsanctions on nine countries and two groups (theNational Union for the Total Independence ofAngola [UNITA] and al-Qaida), in contrast tohaving imposed sanctions on only two countries(Southern Rhodesia and South Africa) from 1945to 1990.1

Many of these early sanctions regimes failed toachieve—or only partially achieved—their goals,while others resulted in disproportionate andunacceptable humanitarian costs. In the mid-1990s, the international community introduced“smart” or “targeted” sanctions, substantiallyeliminating humanitarian costs. Recent improve-ments to due process provisions for listing anddelisting have served to further mitigate theunintended consequences of this vital conflictresolution tool.

Sanctions have become much more sophisticatedand narrowly targeted to the leaders and elites mostresponsible for wars, violence, atrocities, terrorism,and proliferation of weapons of mass destruction(WMD). Currently there are fourteen active UNsanctions regimes. Almost all are centered on aconventional or non-conventional arms embargo,and they usually include an asset freeze or otherfinancial sanctions, a travel ban, aviation sanctions,and political or diplomatic sanctions.

UN SANCTIONS COMMITTEES ANDAFFILIATED SUPPORT

Under the provisions of Article 25 of the UNCharter, all member states are legally obligated tocarry out Security Council decisions. As such, it isthe responsibility of UN member states, and otherrelevant actors, to implement sanctions.

Security Council resolutions provide details ofthe measures imposed, related exemptions, criteriafor listing, reporting deadlines, as well as themandates of the committees established to overseethe sanctions regimes and the monitoring groupsthat assist them. The committee for Iran sanctionsis called the 1737 Committee after the first resolu-tion that imposed sanctions on Iran in 2006. Thecommittee monitoring sanctions on the DPRK isreferred to as the 1718 Committee. These commit-tees report directly to the Security Council, actingas an intermediary between the council and states,organizations, and monitoring bodies, variouslycalled Panels of Experts, or Groups of Experts(called “panels” in this manual).

Panels are mandated to assist the committees inmonitoring compliance with the sanctionsmeasures. Members of panels are chosen on thebasis of their specialized knowledge in conven-tional or non-conventional arms, including armstrading and the tracing of military materiel. Othersare experts in financial transactions, internationalborder control and customs procedures, air andmaritime transportation, pertinent regional issues,and other relevant areas of specialization,according to the nature of the particular sanctionsregime. Their information-gathering activitiesserve to identify and report on incidents ofnoncompliance with sanctions—commonly called“sanctions-busting.” Being named in the report of apanel can result in wide-ranging repercussions fora person, entity, or state, including beingdesignated for individual targeted sanctions orsecondary sanctions on states.UN SANCTIONS GENERAL PROCESSES

Committees are tasked with designating persons,groups, organizations, or businesses for the list ofthose subject to individual targeted sanctions. For

1 On the Security Council in the 1990’s see David Cortright and George A. Lopez, eds., The Sanctions Decade: Assessing UN Strategies in the 1990’s, A Project of theInternational Peace Academy (Boulder, CO: Lynne Rienner, 2000).

2 Enrico Carisch and Loraine Rickard-Martin

those listed, the effect in the case of an asset freezeis that their assets are blocked as long as theyremain listed (usually not seized, or confiscated),depriving the targets of the use and benefit of theseeconomic resources. In the case of a travel ban,individuals are prohibited from traveling acrossinternational borders.

In an effort to reduce unacceptable conse -quences, the council provides exemptions to anasset freeze and a travel ban as stated in the relevantresolution, including for humanitarian reasons,such as basic and extraordinary expenses, and forjudicial, medical, safety, and religious reasons forIran, and for states to allow the return of theircitizens. The nature of exemptions and proceduresfor submitting requests applicable to the 1718 and1737 committees are detailed in Annexes I and II.

The Security Council imposes sanctions for aslong as it deems necessary, thus sanctions may berenewed or refined with future resolutions. Whenthe council decides to lift sanctions, it typicallyadopts a resolution for this purpose. OBLIGATION TO IMPLEMENT ANDCOMPLY WITH UN SANCTIONS

In order to comply with their obligations underArticle 25 of the UN Charter, states may amend orenact laws or regulatory provisions, or issue anexecutive decision to enable compliance with UNsanctions. The governments of member states arealso required to ensure that their citizens, organiza-tions, and businesses comply with the provisions ofUN sanctions.

Since nearly every country in the world iscurrently a member of the United Nations, everyinternationally recognized sovereign state isobligated to implement and enforce UN sanctions,and by extension their nationals, groups, organiza-tions, and businesses are obligated to comply withUN sanctions.2 International organizations andcivil society groups are responsible for ensuringthat their activities do not contravene UnitedNations sanctions, which the council increasinglyrecognizes when it, for example, “[e]ncouragesinternational agencies to take necessary steps toensure that all their activities with respect to the

DPRK are consistent with the provisions of resolu-tions 1718 (2006) and 1874 (2009), and furtherencourages relevant agencies to engage with theCommittee regarding their activities with respectto the DPRK that may relate to provisions of theseresolutions.”3

Weapons of MassDestruction

WMD fall under one of three categories: nuclearweapons, biological/toxins, and chemical weapons;and ballistic missiles are the most frequently usedform of delivery of these weapons:• Nuclear weapons are explosive devices that

deliver high intensity heat, blast, radiation, andradioactive fallout, either through fissionreactions (splitting of the nucleus of a particle)and/or fusion reactions (joining of two nuclei).

• Biological weapons use pathogens (i.e., an agentthat causes disease) to attack the cells and organsof humans, animals, or plants (e.g., crops), whiletoxic weapons use poisons to kill livingorganisms. Commonly known biologicalweapons include Agent Orange, anthrax, ordetrimental herbicidal products.

• Chemical weapons attack the nervous system andlungs of humans, and are usually dispersed bygas, but also may be transmitted through liquidsor solids. Nerve gas and mustard gas arecommon examples of chemical weapons.

• Missiles (typically ballistic) are the primarymeans of delivery of nuclear weapons, and arealso sometimes used to transport other categoriesof WMD.Five countries are recognized as “nuclear weapon

states” by the Treaty on the Nonproliferation ofNuclear Weapons (NPT).4 These are China, France,the Russian Federation, the United Kingdom, andthe United States. Although status as a nuclearweapon state is not a requirement for being apermanent member of the Security Council, the P-5 are also the NPT-defined nuclear weaponstates.

2 According to the UN General Assembly, currently 193 countries are members of the UN. 3 UN Security Council Resolution 2087 (January 22, 2013), UN Doc. S/RES/2087, para. 11.4 The Nuclear Nonproliferation Treaty (NPT) came into force in 1970. Its text explicitly states that, for the purposes of the treaty, “a nuclear-weapon State is one

which has manufactured and exploded a nuclear weapon or other nuclear explosive device prior to 1 January 1967.”

IMPLEMENTING UNITED NATIONS SANCTIONS 3

5 Belarus, Kazakhstan, and Ukraine had inherited from the former Soviet Union a substantial nuclear arsenal as well as, in the case of Kazakhstan, an important testsite. All three countries voluntarily either turned their arsenal over to Russia or disbanded it and related sites after the breakup of the Soviet Union, and they eachbecame signatories to the NPT.

6 An important caveat is that in many nuclear free zones there are colonies, military bases, and other installations under the control of nuclear weapon states ofwhich not all have signed the nuclear free zone agreements.

The DPRK, India, and Pakistan have alsodetonated nuclear weapons. Israel is widelybelieved to have nuclear weapons, although it hasnot openly stated so. With the exception of theDPRK, none of these states were ever signatories tothe NPT. The DPRK formally withdrew from thetreaty in 2003, and held its first test of a nuclearweapon in 2006. South Africa is the only state thathas dismantled and disarmed its nuclear weaponsarsenal.5 It was not a member of the NPT duringthe time it had a nuclear weapons program, butjoined after its program was disarmed. A numberof “nuclear-weapon-free zones” have beenestablished in many regions of the world, with themajority located in the Southern Hemisphere. Themost important zones are the following:6

• Treaty of Tlatelolco covering Latin America andthe Caribbean;

• Treaty of Rarotonga covering the South Pacific;• Treaty of Bangkok covering Southeast Asia;• Treaty of Pelindaba covering all of Africa;• Treaty on a Nuclear-Weapon-Free Zone in

Central Asia; and• Mongolia, which has declared itself a nuclear-

weapon-free zone and obtained recognition fromthe UN General Assembly with ResolutionA/RES/55/33S.

COUNTERING THE PROLIFERATION OFWMD

The first resolution adopted by the UN GeneralAssembly in 1946 established a commission to dealwith problems related to the discovery of atomicenergy. The elimination of all national atomicarsenals remains a UN priority as part of itsmandate to maintain international peace andsecurity. Distinct from the UN’s disarmamentagenda, a number of multilateral treaties have beenestablished with the aim of containing andpreventing the proliferation and testing of nuclear,chemical, and biological weapons. These includethe NPT, the Treaty Banning Nuclear Weapon Testsin the Atmosphere, in Outer Space and UnderWater, also known as the Partial Test Ban Treaty(PTBT), and the Comprehensive Nuclear-Test-Ban

Treaty (CTBT). The treaties in force against theuncontrolled proliferation of chemical and biolog-ical weapons include the Biological WeaponsConvention (BWC) and the Chemical WeaponsConvention (CWC). No international conventionexists to control the spread of ballistic missiles,which are among the most dangerous deliverysystems for WMD. However, two importantsupport mechanisms exist with the Hague Code ofConduct Against Ballistic Missile Proliferation(HCOC) and the Missile Technology ControlRegime (MTCR).

Specialized UN agencies were formed, such asthe International Atomic Energy Agency (IAEA) topromote safe, secure, and peaceful nuclear tech -nologies; and the United Nations Office forDisarmament Affairs (UNODA), the Organizationfor the Prohibition of Chemical Weapons(OPCW), and the Implementation Support Unit(ISU) for the Biological Weapons Convention, toassist member states in the implementation of thesetreaties.

These treaties and support organizations formthe underpinning for the 1718 and 1737 sanctionsregimes for the monitoring and control of WMDequipment and their components. The lists ofWMD items prohibited by the two sanctionsregimes are based on the four multilateral non-proliferation export-control mechanisms, asfollows: the Nuclear Suppliers Group (NSG) fornuclear weapons technology, the Australia Groupfor chemical and biological weapons technology,the MTCR, and the Wassenaar Arrangement(WA), which defines conventional and non-conventional arms and dual-use equipment.THE 1540 RESOLUTION

In addition to the DPRK and Iran sanctionsregimes, the UNSC has adopted under Chapter VIIof the UN Charter the WMD-specific Resolution1540. The 1540 resolution requires member statesto adopt and enforce legal and regulatory measuresagainst the proliferation of WMDs, and tocriminalize non-state actor involvement in suchactivity. While Resolution 1540 also established acommittee of the Security Council and a panel of


experts to monitor implementation of the resolu-tion, it is not a sanctions regime, as no sanctionswere imposed thereunder. The 1540 Committeeworks toward providing regional seminars andcontinual expertise to member states on manyaspects of non-proliferation, and buildingimportant foundations by raising awareness of the1718 and 1737 sanctions implementation andmonitoring mechanisms.NON-PROLIFERATION: IRAN AND THEDPRK

Iran and the DPRK have signed and ratified theNPT—Iran in 1970 and the DPRK in 1985.However, as mentioned earlier, the DPRK withdrewfrom the treaty in 2003. Both countries shiftedeventually from peaceful nuclear energy programsunder IAEA monitoring, toward activities that havecaused the Security Council to voice in the preambleto each of its sanctions resolutions various degrees ofconcern from “serious” to “gravest” over treatyviolations. Over time, various indicators, such as theproduction of fissile material (i.e., uranium enrich-ment and reprocessing of plutonium), the construc-tion and operation of undeclared research andtesting facilities, as well as a lack of cooperation and

sometimes open defiance of the IAEA and otherinternational non-proliferation monitors, have leftlittle doubt that Iran and the DPRK are presentingserious proliferation risks and pose a threat tointernational peace and security. While Iran hasbeen guarded in revealing the full extent of its prolif-eration-related activities and aspirations, the DPRKconducted three nuclear tests in 2006, 2009, and2013 at the Punggye-ri Nuclear Test Site.

Further evidence of the two countries’ sanctions-busting intentions are the development andfrequent test firings of their growing ballisticmissile arsenals. An important difference betweenthe proliferation risks presented by these twocountries is that only the DPRK is subject torestrictions on components and commoditiesrelated to chemical and biological weapons.

United Nations WMDSanctions

Both, the 1718 and the 1737 sanctions regimescomprise wide-ranging measures, including banson conventional and non-conventional weapons, atravel ban, an asset freeze, and other financial

BALLISTIC MISSILECATEGORY DPRK IRAN

Short-range ballistic missiles

Liquid fuel Nodong-1, KN-1 (anti-ship) Shahab-1Hwason-6

Solid fuel KN-2 Toksa Tondar-69, Fateh-110 Khalij Fars (anti-ship)

Intermediate-range ballistic missiles

Liquid fuel BM25 Musudan Fajr-3 MIRV (with multiple independent targeted reentry

vehicles) BM25 Musudan

Mixed liquid-solid fuel Unha-2, Unha-3, Shahab-3A, Shahab-3B,Shahab-3C, Shahab-3D

Ghadr-110, Ashoura, Sejjii,Sejjii-2

Long-range or intercontinental ballistic missiles

Liquid Taepodong-2 n/a

Table 1. Ballistic missiles with a range of at least 300 km and capable of carrying apayload of 500 kg.


sanctions. Initial resolutions (1737 for Iran; and1718 for the DPRK) set the stage for increasinglyrefined measures and language in subsequentresolutions to clarify issues that had not beensufficiently specified.

These are the first regimes where the SecurityCouncil has authorized states to seize cargo if theyhave reason to believe that prohibited items areinvolved and report when they do not receivecooperation. The two regimes also provideguidance on the disposal of such embargoed cargo.They also prohibit providing bunkering servicesexcept for vessels operating for humanitarianpurposes. Furthermore, these sanctions explicitlyask states to monitor the activities of individuals,companies, and financial institutions on theirterritories (e.g., Resolution 1929 [2010], paras. 22and 24, Iran). In addition, the regimes includestandard exhortations to cooperate with the panelsand to supply information at their disposalregarding noncompliance with the relevantmeasures (Resolution 1929 [2010], para. 13, Iran;and Resolution 2094 [2013], para. 26, DPRK).UN SANCTIONS ON THE DPRK

Under Chapter VII, the Security Council adoptedResolution 1718 (2006) and subsequent resolutions1874 (2009), 2087 (2013), and 2094 (2013), to dothe following:• clarify and incrementally increase and refine

measures aimed at coercing the DPRK to changeits proliferation policies;

• deny and constrain the DPRK in the acquisitionof restricted items, and its research, develop-ment, and construction of WMD projects;

• deny and constrain financing and transporta-tion-related activities in support of proliferation.To date, the cumulative targeted sanctions

imposed on the DPRK include the following:• an import and export embargo on certain types

of conventional and non-conventional arms, andon any assistance related to military activities,including supplying items or materials connectedto ballistic missiles, nuclear programs, or otherWMD;

• a ban on exporting luxury goods to the DPRK; • targeted financial and travel bans on designated

individuals, entities, and their family members;and

• a ban on providing any type of financial servicesor transfer of assets of any kind that could beused to support the prohibited WMD programsor that may help in the evasion of sanctions (SeeAnnex II).Along with imposing sanctions, the UNSC

established the 1718 Sanctions Committee withResolution 1718 (2006) and a panel of expertsthrough Resolution 1874 (2009), the latter iscurrently mandated to April 5, 2015. In 2009, the1718 Committee began designating individuals andentities for targeted sanctions, which currently liststwelve individuals and nineteen entities.7

The DPRK remains under Security Councilsanctions. It has not complied with UN demands tosuspend its development of weapons of massdestruction, nor has it returned to the “Six PartyTalks” to achieve a peaceful solution and resumeadherence to the NPT.8

UN SANCTIONS ON IRAN

Responding to IAEA reports indicating Iran’s lackof assurances and transparency regarding uraniumenrichment, and the “possible military dimension”of its nuclear program, in December 2006 theSecurity Council adopted Resolution 1737 underChapter VII. Important follow-up resolutions are1747 (2007), 1803 (2008), and 1929 (2010), eachadding to and clarifying the previous sanctionsmeasures.

To date, the overall restrictions imposed on Iraninclude:• an import and export embargo on items or

materials that contribute to the proliferation ofnuclear and ballistic missile programs;

• a ban on the supply of conventional arms;• financial sanctions on insurance, institutions, or

assets that may contribute to WMD prolifera-tion; and

• a travel ban and asset freeze on designatedpersons and entities.

7 UN Security Council, Letter Dated 24 April 2009 from the Chairman of the Security Council Committee Established Pursuant to Resolution 1718 (2006) Addressed tothe President of the Security Council (April 24, 2009), UN Doc. S/2009/222.

8 Following the DPRK’s withdrawal from the NPT in 2003, the ROK, Japan, the US, China, and Russia initiated with the DPRK a series of meetings for the purposeof finding a peaceful resolution to the arising security concerns.


The Iran sanctions regime does not includeprohibitions against chemical or biologicalweapons.

Resolution 1737 also established the 1737 Com -mittee and Resolution 1929 (2010) established apanel of experts to support the committee. Thedesignation of individuals and entities targeted forsanctions began with Resolution 1737 (2006) andthe list currently totals thirty-five individuals andseventy-three entities.THE P5+1 JOINT PLAN OF ACTION

The P5+19 talks with Iran (also called the E3+3talks by European countries) resulted in theimplementation of the six-month Joint Plan ofAction beginning on January 20, 201410 thatincludes the following:• Iran will stop enriching uranium beyond 5

percent, and it will “neutralize” its stockpile ofuranium enriched beyond this point.

• Iran will give greater access to inspectorsincluding daily access at the Natanz and Fordonuclear sites.

• Iran will not further develop the Arak plantwhere it intended to produce plutonium.

• The P5+1 will not impose new nuclear-relatedsanctions for six months as long as Iran complieswith the above restrictions.

• Some Iranian assets will be unfrozen and restric-tions on certain economic sectors includingprecious metals imports will be relaxed.The negotiated terms above relate to EU and US

sanctions and so far, have no impact on the UNsanctions regime, nor has the Security Counciladopted new sanctions language to indicate easingor lifting of the measures in force. Thus the obliga-tion on UN member states to implement all UNsanctions measures imposed under Article 41,Chapter VII of the UN Charter in resolutions 1737,1747, 1803, and 1929 continues.

DPRK and Iran SanctionsMeasures Explained

The DPRK and Iran are subject to much morerefined sanctions measures compared to other UN

sanctions regimes. The remainder of this manualwill be devoted to assisting member states, interna-tional organizations, entities, companies andindividuals in understanding the specificities of theUN measures.

The following explains the restrictive measures asprovided by the relevant Security Council resolu-tions on the DPRK and Iran. While many of themeasures are identical or similar, it isrecommended that decisions regarding sanctionsimplementation be verified on the basis of theactual language of the relevant resolutions (seeAnnexes I and II).CONVENTIONAL AND NON-CONVENTIONAL ARMS EMBARGOES

Any sale, supply, or transfer, directly or throughthird parties, of military materiel to the DPRK isprohibited to all member states according toResolution 1718 (2006), paragraph 8 (a)(i), whichspecifies that the embargoed items include battletanks, armored combat vehicles, large caliberartillery systems, combat aircraft, attack helicop-ters, warships, missiles or missile systems, orrelated materiel including spare parts. RegardingIran, voluntary measures imposed in Resolution1747 (2007), paragraph 6, calling on all memberstates to exercise vigilance and restraint in thesupply, sale, or transfer of certain types of conven-tional weapons, became mandatory by Resolution1929 (2010), paragraph 8 (see Annex I).

For the DPRK, Resolution 1718 (2006), para -graph 8 (a) (ii) and for Iran, Resolution 1737(2006), paragraph 3, also prohibit all WMD relateditems, materials, equipment, goods, and tech -nology identified in the non-proliferation lists (seeAnnexes III, IV, and V). Most items in these lists,particularly regarding restricted nuclear andballistic missile technologies are embargoed forexport to Iran under Resolution 1747 (2007),paragraphs 3 to 6.

Paragraph 8 (b) of Resolution 1718 (2006)determines that the DPRK must cease exporting toother member states all conventional and non-conventional arms. Iran is also prohibited fromexporting conventional or non-conventional armsaccording to Resolution 1747 (2007), paragraph 5.

9 This includes the five permanent members of the Security Council plus Germany.10 See the statement by the coordinator of the P5+1 (E3+3), "EU High Representative Catherine Ashton on the Joint Plan of Action with Iran," available at

www.eeas.europa.eu/statements/docs/2014/140120_02_en.pdf .

www.eeas.europa.eu/statements/docs/2014/140120_02_en.pdf


Paragraph 8 (c) of Resolution 1718 (2006)clarifies that the DPRK embargo includes technicaltraining, advice, services or other assistance relatedto the manufacturing, maintenance, or use of allembargoed military items. For Iran, paragraph 6 ofResolution 1737 (2006) prohibits technicalassistance or training, financial assistance, invest-ment, brokering or other services, and the transferof financial resources or services related to thesupply, sale, transfer, manufacture, or use of theembargoed non-conventional weapons.

However, Resolution 1874 (2009), paragraph 10,allows the supply, sale, or transfer of small armsand light weapons to the DPRK after a state notifiesthe 1718 Sanctions Committee.BUNKERING

Coinciding with the arms embargo, for the DPRKsanctions regime, paragraph 17 of Resolution 1874(2009), and for Iran, paragraph 18 of Resolution1929 (2010), require all member states to prohibit“bunkering services” to vessels believed totransport supplies for the proliferation programs.A bunkering service includes providing fuel,supplies, or other services to a maritime vessel. Theprovision specifically excludes vessels operating forhumanitarian purposes.INSPECTION ON HIGH SEAS

According to Resolutions 1929 (2010), paragraph15 for Iran, and Resolution 2094 (2013), paragraph16 for the DPRK, member states may inspect cargoon vessels if the state has “credible information andcan provide reasonable grounds” that the cargocontains items under sanctions. Furthermore, if aninspection reveals prohibited items, member statesmust seize the prohibited item(s) and dispose ofthem. The authority to inspect applies to airportsand seaports, and to vessels located within amember state’s territorial waters, or on the highseas with the consent of the flag state.TRAVEL BANS

The 1718 (2006) and the 1737 (2006) sanctionsregimes include travel bans for designated individ-uals under the published and frequently updatedconsolidated lists.

As stipulated in Resolution 1718, paragraph 8 (e)for the DPRK, and in Resolution 1929, paragraph10, an individual may be designated for a travel banif the person is engaging in, is directly associatedwith, having responsibility for, providing support

to, or promoting activities related to the develop-ment and proliferation of WMD.

Based on these criteria, member states mayrecommend individuals to the committees forlisting.

The travel bans require that member statesprevent designated individuals (or their familymembers in the case of the DPRK) from entering ortransiting through their territory. This includes allmeans of transportation, such as road vehicles,railways, marine vessels, and aircraft. Therefore,any member state that allows any designatedindivi duals (and/or their family members in thecase of the DPRK) into its territory, or anyindividual or entity that, knowingly or unknow-ingly, transports designated individuals and/ortheir family members across international bordersis violating the travel ban.ASSET FREEZES

Individuals, entities, organizations, or companiescan be the subject of an asset freeze under the Iranand the DPRK sanctions regimes. Member states orpanels of experts recommend to the sanctionscommittees candidates for the asset freeze listsbased on the criteria set forth for the DPRK inResolution 1718, paragraph 8 (d), and for Iran inResolution 1737, paragraph 12. Individuals areeligible to be subject to an asset freeze if they areengaged in the following:• engaging in or providing support to activities

related to the proliferation of WMD programs;• working on behalf of or under the direction of an

individual or entity already designated fortargeted sanctions (i.e., on the list);

• assisting in the evasion of sanctions; and/orotherwise violating the sanctions.An entity, organization, or company may be

listed for the following reasons:• engaging in or providing support to activities

related to the proliferation of WMD programs;• working on behalf of or under the direction of an

individual or entity already designated fortargeted sanctions (i.e., on the list);

• being owned or controlled by an individual orentity already designated for targeted sanctions(i.e., on the list).The resolutions stipulate that the assets of a

designated individual or entity located within the


11 See 1718 Committee, "Implementation Assistance Notice No. 3: Guidelines for the Implementation of Measures Regarding ‘Luxury Goods’ Under SecurityCouncil Resolutions 1718 (2006), 1874 (2009), 2087 (2013) and 2094 (2013)," available atwww.un.org/sc/committees/1718/pdf/implementation_assistance_notice_3.pdf .

territory of a member state must be frozen. Anasset can include funds, financial assets, andeconomic resources belonging to the designatedindividual or entity.

Failure to freeze the assets of the listed individ-uals and entities, could be considered as supportingor assisting those listed, and therefore considered asanctions violation.

It is also important to note that in many casesnational legislation will apply not only todesignated entities (on the UN list), but also to anyentity owned by, controlled by, or operating onbehalf of a designated entity. This, in effect, placesthe onus on the exporter, banker, and state author-ities to determine if a company is acting as a frontcompany or proxy for a designated entity.OTHER FINANCIAL SANCTIONS

In an effort to impede the proliferation of WMD inthe DPRK and Iran, the Security Council has takenan increasingly stronger stance on limiting accessto broader financial resources and services. For thispurpose it has imposed financial restrictions thatinclude, and go beyond, the specific targeted assetsfreeze on designated individuals and entities. Theyprohibit the provisioning of financial services orthe transfer of financial assets to the DPRK or Iranthat could either contribute to the proliferation ofWMD, contribute to obtaining other weapons, orsupport the evasion of sanctions.

Resolution 1874 (2009), paragraph 10, calls uponmember states to prevent financial services ortransfers of financial or other assets and economicresources that could assist the DPRK’s proliferationof WMD. Resolution 1929 (2010), paragraph 11,applies the same restrictions for transactionsbenefitting Iran’s proliferation efforts. Theserestrictions include guarantees for trade-financingwith the DPRK and Iran, and the direct granting ofcredits, allocation of grants, loans or other financialassistance, except those designated for humani-tarian and development purposes, or for thepromotion of the denuclearization of the DPRK.The follow-up resolutions, 2094 (2013), paragraph11, for the DPRK, and 1929 (2010), paragraph 23,for Iran, increase financial restrictions by calling onmember states to prohibit the opening of new

branches, representative offices, or the initiation ofjoint ventures or other project financings involvingDPRK or Iranian banks or financial institutions.Additionally, Resolution 2094 (2013), paragraph11, restricts the provision of bulk cash that couldcontribute to the DPRK’s nuclear or ballisticmissile programs. For example, for the DPRK, this could includefunds used to purchase a centrifuge, to pay for themanufacture of missile guidance systems, topurchase spare parts for a tank, to repair or fuel awarship, or cash payment for the transportationand insurance of any of these restricted items.

Under the Iran sanctions, a number of veryspecific prohibitions are raised. Resolution 1929(2010), paragraph 7, states that Iran shall notacquire an interest in any commercial activity inanother state involving uranium mining, produc-tion, or use of nuclear materials and technology, inparticular uranium enrichment and reprocessingactivities, all heavy-water activities or technologyrelated to ballistic missiles capable of deliveringnuclear weapons. A second directive in the sameresolution calls on all states to require their citizens,residents, and companies to exercise vigilance whendoing business with entities incorporated in Iran orsubject to Iran’s jurisdiction, including those of theIslamic Revolutionary Guard Corps (IRGC) and theIslamic Republic of Iran Shipping Lines (IRISL).LUXURY GOODS EMBARGOES

All member states are prohibited from exportinggoods to the DPRK that could be considered aluxury item. In Annex IV of Resolution 2094(2013), and in the “Implementation AssistanceNotice,” updated on June 25, 2013, the 1718Committee identified the following items: jewelrywith pearls, gems, precious and semi-preciousstones (including diamonds, sapphires, rubies, andemeralds); jewelry of precious metal or of metalclad with precious metal; yachts; luxury automo-biles (and motor vehicles); automobiles and othermotor vehicles to transport people (other thanpublic transport), including station wagons, andracing cars. Depending on an implementing state’sinterpretation of what constitutes luxury, otheritems may also apply.11

www.un.org/sc/committees/1718/pdf/implementation_assistance_notice_3.pdf


12 Non-UN sanctions regimes are not covered by this manual. Users of the manual should take into account that the EU has also imposed sanctions on the DPRK,and a number of countries have imposed unilateral sanctions including Japan (a complete trade embargo), and individual targeted sanctions by China, theRepublic of Korea, Hong Kong, New Zealand, Australia, Canada, the United States, the United Kingdom, and Switzerland. The EU has also imposed measures onIran, while broader unilateral measures have been imposed by Australia, Canada, India, Israel, Japan, and the United States.

13 Chemical precursors help to produce another chemical compound, for example to configure a chemical weapon.

WMD Sanctions Violations12

EFFECTIVE INTERVENTIONS AGAINSTWMD PROLIFERATION—THE CATCH-ALL PROVISION

UN sanctions against the proliferation of WMDbenefit from national and international exportcontrol efforts. With the end of World War II,states began systematically to develop rules andlists of restricted items for their national exportcontrol legislation. Referring to themselves as like-minded states, some of these states initiatedinternational export control instruments andmechanisms, now called export control regimes.Most UN member states are either participants oraccept the regimes as standard-setting mechan -isms.

An intractable challenge to effective WMD non-proliferation efforts are the many items orcomponents of lower-level technology that mayhave dual-use application but are not listed, whilestill having the potential to further a proliferationprogram. Typically, these items and technologiesare widely available because they can serve bothmilitary and civilian purposes. Nuclear or ballisticmissile test equipment; machining tools; certainsteels, other metals, fibers, and aluminum;electronics and their parts or computer equipmentand software; some chemical precursors;13 biolog-ical matters; and related manufacturing and storageequipment can all serve useful civilian or WMD-related purposes.

For instance, some of the materials and technolo-gies that are required for the production of nuclearpower can also be used to develop a nuclear bomb;rockets can propel weather satellites or missileswith a chemical payload. Software can be used toprogram computers for businesses or to directdeadly weapons.

For these obvious reasons the lists of prohibiteditems cannot contain all items, which dependingon their end-use, may have to be subject to controlstoo. The response to the challenge of determiningwhich of these items must be restricted has been tofocus not on describing the nature of an item but

on its end-use. In other words, if a potentiallyunres tricted component, technology, or softwarecould meaningfully contribute to the research,development, construction, use, and maintenanceof a WMD program, it must be controlled. For thispurpose the concept of a “catch-all” provisionemerged.

The provision imposes on the supplier a regula-tory and legal requirement to obtain an exportlicense from the relevant government if a reason-able possibility exists that the end-use of theitem/items may contribute toward WMD prolifer-ation. In many states the “catch-all” provisionextends to “intangibles” or the conveyance via“intangible means,” meaning proliferation-relevantinformation, and the transporting of information,for example, via electronic means.

The imposition of a due diligence burden on thesupplier is a key element in the internationalcommunity’s non-proliferation strategy. Guide -lines that are commonly used to define the duediligence requirements that lead to the legal obliga-tion to obtain an export license typically includethe following considerations:• Do inquiries with the recipient, in the public and

confidential records, or past conduct of therecipient of the item lead to reasons to believethat an export will enable treaty-contraveningactivities related to unsafeguarded nuclear,chemical, and biological weapons programs andtheir means of delivery?

• Do inquiries with the recipient, in the public andconfidential records, or past conduct of therecipient of the item lead to reasons to believethat the end-use of the dual-use item will be in astate that is under embargo by the 1718 and 1737UN sanctions regimes?

• Do inquiries with the recipient, in the public andconfidential records, or past conduct of therecipient of the item lead to reasons to believethat an export of the dual-use item may create anunacceptable risk of an end-use in the context ofan illegal WMD proliferation, or of a diversion toWMD activities?


Most states that have adopted a “catch-all’provision in their export control rules usuallyrefuse an export license if these criteria cannotdefinitively be denied. Further reasons to deny anexport permit is usually recognized by most statesif the export is undertaken by an individual or to anindividual with a direct or indirect role in WMD-related projects.

In early February 2014 the sanctions committeefor the DPRK released “Implementation AssistanceNotice No. 4: Proper Implementation of Paragraph22 of Resolution 2094 (2013),” which is a firstattempt to formalize guidance on catch-allprovisions.14

SANCTIONS AGAINST NUCLEARWEAPONS PROLIFERATION

Currently, two lists are in force as part of the UNsanctions regimes under resolutions 1718 (DPRK)and 1737 (Iran). One refers to nuclear material,equipment, and technology related to the handlingand processing of nuclear materials. The secondlists nuclear-related dual-use equipment, materials,software, and related technology (see Annex III andAnnex IV). Both lists were assembled by theNuclear Suppliers Group (NSG) and were providedvia the IAEA to the sanctions committees asguidelines to identify potentially non-permissibletransfers of nuclear materials, equipment, andtechnology and nuclear-related dual-use items toany non-nuclear-weapon state.

In order to regulate such transfers, suppliersrequire formal governmental assurances fromrecipients that the items and related technologieswill explicitly exclude uses that would result in anynuclear explosive device or “unsafeguarded nuclearfuel-cycle activity.” In other words, the prohibiteditems and technologies are more precisely to beconsidered trigger lists. The documents list anumber of prerequisites that must be met by therecipient state before transfers can be approved. Invery general terms, part of these conditions includewhether the recipient is a lawful and compliantsignatory to the NPT; is not in breach of itssafeguarding agreements with the IAEA; is

adhering to the guidelines of the NSG; and iscomplying with the non-explosive use, safeguard,and retransfer agreements with its suppliers.

Given the extensive international legal andregulatory structure, proliferation of prohibitednuclear weapons technology is usually criminal-ized, involving theft and fraud, false customsdeclarations, and other types of smuggling.SANCTIONS AGAINST THEPROLIFERATION OF BALLISTIC MISSILETECHNOLOGIES

Restricting access to missiles and the closely relateddrone technologies is an important aspect of aneffective non-proliferation strategy.15 Missiles anddrones have a dangerous potential to carry anddeliver payloads of weapons of mass destructionanywhere in the world. The surreptitious natureand function as a vector of WMD elevates certainmissiles and drones to an important strategic threatto the world community.

Nevertheless, the international community hasso far not agreed on a legally binding instrument todeal with these threats. However, there aremultilateral efforts to prevent the proliferation ofmissiles and related technologies, such as theHCOC and the MTCR. As an informal andvoluntary association of countries sharing aninterest in non-proliferation of delivery systems forWMD, the MTCR published a “Missile TechnologyControl Regime Annex Handbook” in 2010.16 Italso serves as an important reference tool for theUN’s WMD sanctions.

The prohibited items, materials, equipment,goods, and technology related to ballistic missileweapons and drone programs are formally identi-fied in Security Council document S/2012/947 (seeAnnex V).SANCTIONS AGAINST THEPROLIFERATION OF CHEMICAL ANDBIOLOGICAL WEAPONS

Chemical and biological weapons are the oldestand most often deployed weapons of mass destruc-tion. At the same time, their illegal use poses the

14 1718 Committee, "Implementation Assistance Notice No. 4: Proper Implementation of Paragraph 22 of Resolution 2094 (2013)," available atwww.un.org/sc/committees/1718/pdf/implementation_assistance_notice_4_english.pdf .

15 Drone technologies are extensively covered in US Government, "Missile Technology Control Regime Annex Handbook,” 2010, under Category I—Item 1:Complete Delivery Systems, 1. A. 2. Complete unmanned aerial vehicle systems (including cruise missile systems, target drones, and reconnaissance drones)capable of delivering at least a 500 kg "payload" to a "range" of at least 300 km.

16 Ibid., Annex III to V.

www.un.org/sc/committees/1718/pdf/implementation_assistance_notice_4_english.pdf

most challenges and their regulation requires agreat deal of vigilance owing to their very diversesource materials, forms of manufacturing, anddeployment. Chemical and biological weapons canbe constituted in the form of easily dispersedpowders, liquids, gases, or many forms of biologicalspecimens. Typically, they are loaded into standardmunitions such as grenades, artillery shells, othertypes of ordnance, or can simply be released fromcontainers into the air, water, or soil, or directlyinjected into individuals.

The Geneva Protocol of 1925 was the first legalinstrument that prohibited the use of chemicalweapons in warfare. The Biological WeaponsConvention (BWC), entering into force in 1975,was the first multilateral disarmament treaty for anentire class of WMD. Nevertheless, significanttechnological development, manufacturing, andstockpiling of chemical and biological weaponscontinue in many countries. After lengthy negotia-tions, the Chemical Weapons Convention (CWC)was adopted by the Conference on Disarmament inGeneva that authorizes the verification of compli-ance by all states. The Organization for theProhibition of Chemical Weapons (OPCW) is theofficial implementation agency of the convention.Efforts to promote confidence-building measuresand better compliance with the BiologicalWeapons Convention (BWC) have resulted inperiodical review conferences and in the formationof the Implementation Support Unit (ISU) to assistStates parties in implementing the Convention.

The UN list (see Annex VI) contains chemicalprecursors, dual-use chemical manufacturingfacilities, equipment, and related technologies. MARITIME PORTS, AIRPORTS, ANDACCESS ROADS TO AND FROM THEDPRK AND IRAN

Air: The DPRK relies on a limited number ofshipping means and routes to handle its exportsand imports. The only commercial airline of theDPRK is Air Koryo with a small fleet of aircraft ofmodest heavy cargo capacity. Since the impositionof UN sanctions, most scheduled services wereterminated, except flights between Pyongyang’sSunan International Airport and Beijing andShenyang in China, Vladivostok in Russia, andperiodic charter services to Moscow, Khabarovsk,Macau, Bangkok, or Shenzhen. In contrast to the

DPRK, dozens of airlines are operating from Iran.Road/Rail: Because of poor road conditions, heavycargo transport on land to the DPRK is limited tothree railway connections with China, via Sinuiju-Dandong, Namyang-Tumen, and Manpo-Ji’an andone line connecting Sonbong with Khasan in theRussian Federation. Road links to China leadacross its border with the DPRK demarcated by theYalu (also called the Amrok River in the DPRK) orto Russia crossing the Tumen or Duman rivers.There are many road connections from Iran to allneighboring states, as well as rail connections withAzerbaijan, Pakistan, Turkey, and Turkmenistan,but not with Armenia. Multiple direct roadconnections with Iraq also extend to the SyrianArab Republic, allowing exports of embargoedmaterial.Sea: There are eight operative maritime ports in theDPRK, with Nampo Seaport as the country’slargest general cargo port. Songrim serves as thecountry’s oil terminal and the harbors of Haeju,Chongjin, Rajin, Sonbong, Hungnam, and Wonsanaccommodate only small coastal vessels. The Panelof Experts on the DPRK has indications that inorder to consolidate and trans-ship consignmentsand to save costs, DPRK sanctions violators alsoprefer using nearby ports such as Hong Kong,China, or Kaohsiung, in the Taiwan Province ofChina. Iran’s seaports to the Indian Ocean includeKorramshahr, Iman Khomeini in BandarMahshahr, Bushehr, Bandar Abbas, Shahid Rajaeenear Bandar Abbas, and Chabahar. Iran’s access tothe Caspian Sea includes the ports of Amirabad,Nowshahr, and Anzali.

Lessons Learned from theImplementation of DPRKand Iran Sanctions

Violators of the Iran and DPRK sanctions regimesare extraordinarily resourceful and versatile inexploiting any gaps in the international commu -nity’s implementation strategies. For example, abilateral scientific and technological assistancememorandum of understanding (MOU) betweenthe DPRK and Iran appears to advance bothcountries’ nuclear and ballistic missile prolifera-tion. According to the UN Panel of Experts mostrecent report released in June 2013, one third of the


DRPK’s foreign sales of WMD technologies appearto end up in the Syrian Arab Republic.17 The Paneldisclosed in 2010 that the DPRK providedassistance for a nuclear program in the Syrian ArabRepublic, including the design and construction ofa nuclear research reactor at Dair Alzour. Thisinstallation was destroyed in a 2007 military attackby Israel, as confirmed by the IAEA.

To prevail against these odds, it is important thatall government officials and compliance officers ofthe private sector with sanctions implementationresponsibilities are not only aware of the 1718 and1737 regime’s provisions. They should understandthe methodologies used by violators of the DPRKand Iran sanctions. The following “lessons learned”sections summarize the structures of the DPRKand Iran proliferation networks, their methodolo-gies in committing violations of the conventionalarms embargoes, and provide case histories of theirproliferation efforts concerning nuclear andchemical/biological weapons, and ballistic missiletechnologies.DPRK NETWORK OF PROLIFERATORS

The DPRK operates government agencies,academic institutions, and companies for both theprocurement as well as the sale of embargoedmaterial. The National Defense Commission(NDC), the Workers’ Party of Korea (WPK), andthe Korean People’s Army (KPA) are the centralactors in these endeavors. Within this structure, theGeneral Bureau of Surveillance of the KoreanPeople’s Army and the Second Academy of NaturalSciences lead in the research, development,manufacturing, marketing, and export of conven-tional arms and military equipment.

In response to the 1718 Sanctions Committee’sdesignation of a number of violators of DPRKsanctions, this original procurement networkexpanded with substitute actors to allow greaterflexibility in their illegal procurement andmarketing efforts. The General Bureau ofSurveillance of the Korean People’s Armyaccorded a major role in the country’s embargoedarms exports to Green Pine Associated Company,which also operates under the name PaeksanAssociated Corp. Green Pine frequently fronts

Korea Mining Development Trading Corporation,also known as Changgwang Sinyong Corporation,Changgwang Trading Corporation, or “KOMID.”

Office 39 of the WPK heads the leading banksand financial facilitators of proliferation efforts andembargo violations. Banks and financial institu-tions engaged through Office 39 are TanchonCommercial Bank and its affiliate AmroggangDevelopment Bank, Korea Kwangson BankingCorporation (KKBC) and their networks ofoverseas branches. Korea Daesong Bank and KoreaDaesong General Trading Corporation are notedfor facilitating international proliferation activities.

Beginning in March 2013 with the establishmentof the State Space Development Bureau, thedevelopment and construction of the DPRK’sballistic missile program may be a shared responsi-bility with the previous lead managers of theMunitions Industry Department of the CentralCommittee of the Workers’ Party of Korea(variously referred to as the Military ProductionArms Department, the Military Supplies IndustryDepartment, the Machine Industry Department,and the Machine Building Industry Department, orthe WPK Central Committee).DPRK EVASION AND SMUGGLINGSTRATEGIES

These entities and a growing and ever-changinggroup of front companies practice multiple evasionstrategies in the import and export of restricteditems and goods. The illicit content of consign-ments is masked, for example, by DPRK’s customsofficials sealing containers for transit, mislabelingcontainers, falsely describing shipping documentsand commercial invoices, or making false declara-tions to customs and border control. Beginning inJune 2010, the UN Panel of Experts uncovered anumber of smuggling and evasion strategies. Inthird countries, illegal shipments in DPRK custom-sealed consignments18 are often repackaged intostandard shipping containers together with otherlegitimate items and forwarded with new labels thatconceal their true origin and content—an effectivestrategy at least against perfunctory physicalexamination. Such laundering practices of illegalshipments, repeated multiple times, combined with


17 UN Security Council, Report of the Panel of Experts Established Pursuant to Resolution 1874 (2009) (June 11, 2013), UN Doc. S/2013/337.18 This particular form of smuggling was first reported by the UN Panel in its June 2010 report (UN Security Council, Report of the Panel of Experts Established

Pursuant to Resolution 1874 (2009) [November 5, 2010], UN Doc. S/2010/571) and again in its June 2012 report (United Nations Security Council, Report of thePanel of Experts Established Pursuant to Resolution 1874 (2009) [June 14, 2012], UN Doc. S/2012/422).


circuitous shipping routes that change at theslightest hint of a high-seas inspection, make theproliferation efforts very hard to detect.

Another important evasion strategy is thelayering of multiple levels of contractors dealingwith the shipping and financial aspects of anembargoed transaction. Using several intermedi-aries serves to obfuscate a shipment to the pointwhere efficient backtracking to the originalconsignor or recipient will be very difficult. In manycases, the embargoed items can be concealed bysupplying partly disassembled units along with thetechnical personnel capable of reassembling them atthe destination. The following two examplesillustrate the multi-smokescreen strategy practicedby DPRK arms proliferators in recent years.Case 1: DPRK-Iran arms sales involving falsedeclarations, trans-shipment, filing of multipleflight plans and multi-layering of transportersIn December 2009 the authorities at Don MueangAirport in Bangkok, Thailand, intercepted anIlyushin-76 aircraft chartered by Korea MechanicalIndustry Company Ltd. of the DPRK from AirWest Company during a refueling stop.Investigations conducted by the government ofThailand revealed that the airplane carried 35 tonsof arms, 240 mm rockets, rocket-propelledgrenades, and other military materiel from SunanInternational Airport in Pyongyang and was enroute to the ultimate recipient, Top EnergyInstitute in Iran. Air Koryo, the national carrier ofthe DPRK, had issued the airway bill on which thecargo was identified as “145 crates of mechanicalparts.” To further conceal the identity of theconsignor and the destination, a web of intermedi-aries had filed multiple flight plans. They includedthe Georgia-registered Ilyushin Il-76 cargo planeowner, based in the United Arab Emirates, wholeased it to a New Zealand company by the name ofSP Trading Limited, who chartered it to the HongKong based Union Top Management. The UNPanel of Experts in its most recent report suspectsthat Aleksandr Viktorovich Zykov, a Kazakhstannational and director of the airline East Wing, hislong-time associates Iurii Lunov and Igor Karev-

Popov, Ukraine nationals, orchestrated themultiple changes of ownership of the aircraft toultimately retain control over it through his wife,Svetlana Zykova, and his associate’s company, SPTrading Limited.19

Case 2: DPRK-DRC arms transfer involvingfraudulent cargo manifest, multi-trans-shipmentand en-route repackaging

A shipment to the Democratic Republic of theCongo shipped by Machinery Export and ImportCorporation of the DPRK, intercepted in Durban,involved spare parts to refurbish T-54 and T-55tanks and other military equipment. Cargomanifests designated the items as spare parts forbulldozers, but the shipment had been on acircuitous route to confuse customs inspectors. Thematerial originated in the DPRK and was transferredin the port of Dalian, China, to the British-flaggedCGM Musca, owned by French ship operator CMACGM. It was again transferred in Port Klang,Malaysia, to the Westerhever, sailing under theLiberian flag on behalf of Delmas Shipping. The UNPanel had investigated this case in February 2010and reported subsequently that during thesetransfers the spare parts were repackaged in themidst of a large consignment of sacks of rice.20

DPRK’S USE OF ITS DIPLOMATS

Officials and diplomats of the DPRK have a longhistory of using their diplomatic status to acquireproliferation-relevant information or operateprocurement networks. Based in the DPRKembassy and as the representative to the IAEA,Yun Ho-Jin (now under targeted UN sanctions)was running an illicit procurement network andpursuing other illicit and criminal activities.21

The DPRK’s Europe-based diplomats are report-edly interested in acquiring technology andtechnical know-how on metal processing. DPRKdiplomats in African capitals have arranged for thesale of military items and their maintenance andrepair in contravention of UN sanctions. Usingdiplomatic covers, procurement officers such as OHak-Chol have attempted to acquire weapons,such as ManPads (Man-Portable Air Defensesystems), and evade the UN ban on luxury goods.22

19 UN Security Council, Report of the Panel of Experts Established Pursuant to Resolution 1874 (2009) (June 11, 2013), UN Doc. S/2013/337, paras. 75–79.20 UN Security Council, Report of the Panel of Experts Established Pursuant to Resolution 1874 (2009) (November 5, 2010), UN Doc. S/2010/571, para. 63.21 UN Security Council, Report of the Panel of Experts Established Pursuant to Resolution 1874 (2009) (June 11, 2013), UN Doc. S/2013/337, para. 49.22 Ibid., para. 50.


IRAN’S PROCUREMENT NETWORKS

Documented launches of ballistic missiles duringthe “Great Prophet 7” military exercises conductedin 2012 by the Aerospace Force of the IslamicRevolutionary Guard Corps were reported by theUN Panel of Experts as violations of UN sanctions.The Revolutionary Guard is frequently also referredto as Sepāh, for “army” or Sepāh e Pāsdārān, for“army of guardians,” all abbreviations of its Farsiname: هاپس نارادساپ بالقنا .،یمالسا

Founded in 1979 as the country’s principal force indefense of the Islamic revolution, it quickly consoli-dated the Qods Force (paramilitary and elite forces),the Basij Forces (volunteer militia), and the Ansar-ul-Mehdi (counter-intelligence and tactical protectionforces). Because of its prominent role in the revolu-tion, the Revolutionary Guard asserts control overimportant economic actors and academic institu-tions. The Qods Aeronautics Industries, whereunmanned aerial vehicles are developed for export,or the Khatam al-Anbiya, Iran’s leading engineeringand construction company, which is working onsome of the proliferation projects, are examples ofsignificant national institutions operating under theGuard’s aegis. They and many other Guard-controlled companies and research institutions aswell as its most senior military, economic, andscientific leaders associated with WMD proliferationprojects, are subject to targeted UN sanctions.IRAN’S USE OF NETWORKS OFEXPATRIATES AND FRONT COMPANIES

Iran’s procurement networks typically employ acombination of trans-shipments, fraudulentcustoms declarations, falsified end-use information,concealment of embargoed items among legitimatecargo, and the use of front companies operatingoutside and inside Iran. The UN Panel of Expertsalso reported on ways by which Iran has attemptedto transport contraband military equipment usingoverland transport, on board Iranian ships andairplanes (e.g., Iran Air, Mahan Air, and Yas Air),and taking advantage of poorly monitored airspacein neighboring countries such as Iraq orAfghanistan. Its network of agents is often recruitedfrom expatriate Iranian and other sympatheticinternational traders, as well as from Iraniandiplomats stationed either in highly industrialized

countries, for buying WMD-relevant components,or selling conventional military goods.

Iranian procurement networks have furtherrefined the use of front companies by furnishing afalse address for onward delivery of items to a thirdcountry, and setting up companies in countries thatpermit quick and unbureaucratic registrationprocedures. Often, such companies are used foronly one or a short series of quick-successiontransactions before they are abandoned.

Sometimes illicit procurement efforts areconducted through multiple intermediary compa -nies or trading agents, including brokers, shippers,and freight forwarders. They can also be instru-mental in altering shipping documents at the lastmoment, to conceal the actual destination in Iranor an Iranian recipient abroad. Finally, ex-factoryor ex-works orders serve as the most basic way ofconcealing the recipient of an order, since theordered goods are pre-packaged for pick up fromthe supplier.IRAN AS SUPPLIER OF CONVENTIONALARMS

Using various combinations of the above tactics,Iran and its agents act as suppliers of conventionalarms and military materiel to buyers abroad.Examples of these types of embargo violations are:• 122-mm rockets, fuses, and ammunition disco -

vered in southern Afghanistan;23

• nineteen crates containing assault rifles, machineguns, ammunition and mortar shells seized inMarch 2011 by Turkey from an Ilyushin-76 cargoaircraft operated by Yas Air and destined for theSyrian Arab Republic;

• a truck-load of explosives in Southern Turkeybound for the Syrian Arab Republic wasintercepted in February 2011;

• forty spare parts for a Fokker 27 aircraft,including seals, valves, and related parts trans-shipped in November 2010 via Bahrain by air toAna Trading, a front company for the Iranianmilitary forces;

• shipment of boxes with ammunition and arms,some also containing other military and non-military items and materials, including man-portable air defence systems marked “Ministry of

23 Reported by the United Nations Office on Drugs and Crime, The Global Afghan Opium Trade: A Threat Assessment (Vienna, July 2011).


Sepah” were found both on Yas Air and in Israel,as the UN Panel reported in June 2012;

• 122-mm rockets, rocket-propelled grenadelaunchers, C-4 plastic explosive blocks, andelectrical equipment that can be used tomanufacture improvised explosive devices onboard the Jihan in April 2013, which wasintercepted by the Yemeni Coast Guard and theUnited States Navy; the seized items wereconcealed in four compartments hidden in dieselfuel tanks, which could not be accessed from thedeck unless the tanks were emptied;

• explosives to Kenya for what authorities believe

were terrorist activities and for which the Panelof Experts received indications from a state forinvolvement of the Qods Force of the IslamicRevolutionary Guard Corps.24

IRAN’S DRIVE FOR HIGH-QUALITYWMD ITEMS

At the same time, the procurement and salesnetworks serve Iran in its relentless acquisitiondrive for high-quality prohibited WMD items inmany highly industrialized states. The followingtable of reported attempts or successful acquisi-tions during 2013 illustrates the broad collectionefforts by Iran’s procurement networks.

24 UN Security Council, Final Report of the Panel of Experts Established Pursuant to Resolution 1929 (2010) (June 5, 2013), UN Doc. S/2013/331, para. 103; and BBC,“Iranians Jailed for Life in Kenya over Terror Charges,” May 6, 2013.

COUNTRY ITEM

Spain Export of machine toolsGermany Technical equipment for satellite technologyUnited States Vacuum equipment for test stands, pressure transducers, vacuum pumps,

materials for the fabrication of centrifuge machine components, magnetic tape,maraging steel, aluminum alloys

United States Specialized metals for possible use with ballistic missile programFrance Request for fiber optic gyroscopeUndisclosed High-quality valves for use in the IR-40 Arak heavy water research reactorUndisclosed Process control equipment, pressure transducers, electro-pneumatic positioners,

programmable logic controller, related equipment and software for nuclearreactor or centrifuge cascade

Undisclosed Stainless steel bellows that may have dual-use value in a prohibited applicationVarious undisclosed Significant quantities of high-strength carbon fiber, possible counterfeits ofstates products by a well-known manufacturer; may have been intended for the

construction of centrifuge rotors,Undisclosed Ring magnets for top bearing and suspension assembly of gas centrifugesUndisclosed Stainless steel tubes and piping, varying from very small to larger diameter, to

connect gas centrifuges to form cascadesUndisclosed High strength aluminum bellows (7000er series) for centrifuge rotors, baffles,

and end caps; medium strength alloys (6000er series) for centrifuge vacuumcasings

Undisclosed Inverters or frequency changers to supply high frequency electrical power for thedrive motors of gas centrifuges

Undisclosed Semi-hard magnetic alloy, cobalt-iron-vanadium magnetic alloy for hysteresistype motors

Undisclosed High-quality data transmission cables, possibly for prohibited missile activities

Table 2. Summary of the UN Panel of Experts report (S/2013/331) concerning Iran’sprocurement of high-quality items.

Case Histories

THE ILLEGAL TRADE OF RESTRICTEDNUCLEAR ITEMS

According to the UN Panel of Experts on theDPRK, the North Korean leadership has decidedthat the acquisition of computer numericallycontrolled (CNC) technology for the country’satomic energy industry is a top priority. It isassumed that this order extends also to the nuclearweapons proliferation effort as CNC technologyhas applications in shaping solid propellant motornozzles or re-entry vehicle nose tips.

The panel’s report provides informationregarding how the DPRK successfully solicitedCNC machine tools and related equipment fromcompanies based in the Taiwan Province ofChina.25 This includes reports about deliveries ofindustrial computers, exported by Royal TeamCorporation, a horizontal machining centersupplied by Ching Hwee International TradingCompany Limited to Ryonha Machinery JointVenture Corporation (a DPRK entity listed undertargeted UN sanctions), and three CNC controlledmachine tools exported by Ho Li EnterprisesLimited.

Iran’s procurement effort for nuclear weaponstechnology is even more focused on obtaining thehighest quality versions of valves, high-strengthcarbon fibers, process control equipment, stainlesssteel components, and cables. Examples of relevantreports by UN member states or the UN Panel ofExperts on Iran, include the following cases:• It was discovered that Iran had attempted to

obtain German-made valves on behalf of ModernIndustries Technique Company for the IR-40heavy water reactor in Arak. The technicalspecifications of the orders, including thematerial specified for valve-body constructionand other characteristics, are consistent with thestandards for nuclear power generating stations.Owing to these and other specificities, the orderscaught the attention of export control authoritieswho denied the permits. There are indications

that the valves were provided by suppliers from athird country. The scheme succeeded in partthanks to the use of front companies in thirdcountries and false end-user documentation,disguising Pentane Chemistry Industries as theactual procurer.26

• A naturalized Swedish citizen of Iranian originhad established Petro instrument HB in Swedenin order to procure eighteen valves. He came tothe attention of Swedish authorities because ofhis lack of credible engineering background andemployment history, while two Swedish bankshad previously filed suspicious transactionreports about his company’s financial activities inlate 2010 and early 2011. To evade controls, falseend-user documentation was furnished, and thedelivery was to take place via a third countrytrans-shipment point where the air waybillwould be changed at the last minute to reflect theactual recipient in Iran.27

• A shipment of twenty-eight boxes of carbon fiberfrom an unnamed country was interdicted inBahrain.28 The consignee was the Science andTechnology Park in Iran. According to theBahraini authorities, the carbon fiber met thecontrol thresholds established in the UN list ofprohibited items.

• An unidentified country intercepted two courierpackages, one containing components of aprogrammable logic controller and relatedprocess control equipment and software; theother shipment included two hundred stainlesssteel bellows. The packages were intended forIran’s nuclear weapons projects but were caughtin transit to an individual who fronted for theactual receiver, Kalaye Electric (already listedunder the targeted UN sanctions on Iran).29

ILLEGAL TRADE OF RESTRICTEDBALLISTIC MISSILE ITEMS

Interceptions of the DPRK’s procurement as well assales efforts for ballistic missile technologies to andfrom third states have significantly increased inrecent years.


25 UN Security Council, Report of the Panel of Experts Established Pursuant to Resolution 1874 (2009) (June 11, 2013), UN Doc. S/2013/337, paras. 64 and others.26 UN Security Council, Final Report of the Panel of Experts Established Pursuant to Resolution 1929 (2010) (June 5, 2013), UN Doc. S/2013/331, para. 18–22.27 Ibid., para. 26–27.28 Ibid., para. 28–31.29 Ibid., para. 36–38.

The Republic of Korea inspected and seized anillicit shipment of missile-related items on boardthe China Shipping Container Lines ship, Xin YanTai, while in transit at the Port of Busan in May2010. This case is particularly relevant given thatthe actual shipper, Korea Tangun TradingCorporation, was at the time of this incidentalready under targeted UN sanctions. To evadedetection, it enlisted Dalian HaichengInternational Freight Agency Co. Ltd. and ElectricParts Company, an affiliate of Megatrade, acompany that acts frequently as agent for theSyrian Scientific Studies and Research Centre,which is subject to EU and unilateral sanctionsregimes, but not UN sanctions. Originating fromTianjin, China, the container, with a consignmentof lead pipes was destined for Lattakia in the SyrianArab Republic according to the manifest. However,the Korean inspection and subsequent laboratorytests revealed this to be about ten metric tons of“fine grain graphite” suitable for strengtheningrocket and re-entry vehicle nozzles.30

The Ukrainian Security Services intervened inJuly 2012 against Ryu Song-Chol and Ri Thae-Gil,both members of DPRK’s Trade RepresentativeOffice in Belarus, and their attempt to obtain classi-fied missile design data. Their target was theUkrainian parastatal Yuzhnoye Design Office,specifically, the company’s proprietary data anddesigns of missile systems, liquid-propellantengines, spacecraft, missile fuel supply systems andassociated computer program.31

The Panel reported allegations by the govern-ment of Japan about shipments that took place in2008 and 2009. In order to manufacture agyroscope system for missiles, Beijing-based NewEast International Trading Ltd., an alleged DPRKfront company, arranged illegal shipments of threecylindrical grinding machines, and an LCR Meter,and attempted also to obtain an automatic directcurrent magnetization characteristic recorder. Thesame buyer also ordered four large air-conditioning units for tunnels, four power shovels,

and two tanker trucks. Upon inquiries by anunrelated state, the identified end-user wasindicated to be the Directorate of DefenceIndustries in Myanmar. However, the DPRK’sShinfung Trading Company, Ltd. and KoreaPaekho 7 Trading appear to be the true buyer.

The UN Panel of Experts on the DPRK identifiedvisual evidence of new 8-axle transporter-erector-launchers displayed during an April 2012 militaryparade based on information that originated withWanshan Special Vehicle Company. According toan end-user certificate, six very similarly lookingvehicles were sold from Wuhan Sanjiang Importand Export Company, Limited (China) to serve asoff-road vehicles for transporting timber. BothWuhan Sanjiang Import and Export Company andWanshan Special Vehicle Company aresubsidiaries of the China Sanjiang Space Group.According to the report of the Panel of Experts,China has stated that this case does not represent aviolation of UN sanctions.32 At the very least, thiscase clearly demonstrates the challenges faced withdual-use of civilian equipment.

Of note are the designations announced on May2, 2012, of two DPRK entities, the Korea HeungjinTrading Company, which the committee suspectshas been involved in supplying missile-relatedgoods to the Shahid Hemmat Industrial Group ofthe Islamic Republic of Iran, and AmroggangDevelopment Banking Corporation, which hasbeen involved in ballistic missile transactions fromthe Korea Mining Development TradingCorporation to the Shahid Hemmat IndustrialGroup.33 The Security Council designated theShahid Hemmat Industrial Group in Resolution1737 (2006) as an entity involved in the Iranianballistic missile program.

In contrast to the trade of restricted nuclear orballistic missile items, there is no availableinformation concerning the attempted prolifera-tion of chemical or biological weapons orcompounds by Iran or the DPRK.


30 Ibid., para. 44–46.31 Ibid., para. 47.32 UN Security Council, Report of the Panel of Experts Established Pursuant to Resolution 1874 (2009) (June 11, 2013), UN Doc. S/2013/337, para. 53.33 UN Security Council, Report of the Security Council Committee Established Pursuant to Resolution 1718 (2006) Submitted in Accordance with the Statement of the

President of the Security Council Dated 16 April 2012 (May 2, 2012), UN Doc. S/2012/287.

Best Practices andRecommendations

Compliance with UN sanctions requires thecoordination and guidance of state authoritieseither by issuing regulations or adopting laws. Assuch, best practices for the implementation of UNsanctions are always related to nationalmechanisms and instruments, state regulations,and law enforcement agencies. However, interna-tional organizations play an importantharmonizing function in global standardization.For these reasons, the following section firstexplains the enabling international regulatory andlegal context, and secondly, the actual bestpractices. These best practices are directed to: • government regulators as priorities for their

guidance to and oversight of their private sectorpartners;

• private sector compliance officers as a list ofpriority compliance concerns.

1. STATE IMPLEMENTATION OFFICERS

The quality of reporting by states under the 1718and 1737 sanctions regimes, as with other sanctionsregimes, varies widely. For the purpose of thismanual the authors devised a rating scheme withscores from 1 to 3, with 3 being the best score.34

EU states tend to report in more detail than moststates, including referencing EU regulations. Ofninety-seven states that have reported to the DPRKcommittee, forty-five received an average score of1; forty-three received an average score of 2; tenreceived an average score of 2+. One state wasassigned a score of 3. Five states among the 2+group, besides EU states, submitted reports withelements considered “best practices.”

For the Iran sanctions regime, of 101 states thatreported, fifty-nine received an average score of 1;thirty-five received an average score of 2; sevenreceived an average score of 2+, and one received

an average score of 3. Seven states among the 2+group, besides EU states, submitted reports withelements considered “best practices.”RecommendationsFollowing this analysis, and taking into account the1718 Committee’s “Implementation AssistanceNotice” dated October 22, 2013,35 and the“Handout on Implementation” issued by the 1737Committee on March 18, 2013,36 the following bestpractices for state implementation are recom -mended: • Carefully follow all provisions of the 1718 and

1737 sanctions regimes, and interact wherenecessary with the relevant committees andpanels.

• Enable implementation of the 1718 and 1737sanctions either by issuing specific regulatorydirectives or by adopting laws.

• Ensure that national legislation captures not onlydesignated entities (on the UN list) but also anyentity owned by, controlled by, or operating onbehalf of such designated entities.

• Identify institutional contact points bearingresponsibility and having the necessary expertiserequired for the implementation of sanctions.

• Establish an Inter-Ministerial Task Forcecomprising ministries and government agencies,convening on a regular basis to collect informa-tion on the measures being taken and to identifyloopholes in the implementation system.

• Provide criminal penalties including for anybreaches that take place in respect of dealingwith, or making funds available, within the stateand/or by citizens of the state, without prejudiceto reporting obligations to the committee.

• Promulgate regulations with extraterritorialreach regarding persons or entities violatingsanctions.

• Apply catch-all controls regulating the exportand transfer, within and outside of the state’s


34 The authors assigned the scores to each state implementation report, from inception of the regime to the present, according to the following criteria (most statessubmitted multiple reports, hence the average score):

1 – basic acknowledgment of unspecified implementation obligations; 2 – implementation reporting, that includes references to specific documents through which agencies are tasked and mandated to carry out implementation; 3 – in addition to an elaborated implementation report, references with some detail about specific discoveries of or efforts to intercept illegal proliferation

attempts.35 See 1718 Committee, "Implementation Assistance Notice No. 2: Guidelines on the Preparation and Submission of National Implementation Reports," available at

www.un.org/sc/committees/1718/pdf/implementation_assistance_notice_2.pdf .36 See “Hand-out Describing Implementation by States of Security Council Resolutions 1737 (2006), 1747(2007), 1803(2008) and 1929(2010),” available at

www.un.org/sc/committees/1737/pdf/Handout_Mar2013.pdf .

www.un.org/sc/committees/1737/pdf/Handout_Mar2013.pdf

www.un.org/sc/committees/1718/pdf/implementation_assistance_notice_2.pdf

territory, of otherwise uncontrolled technologiesif there is a reasonable suspicion or belief thatsuch export or transfer may assist a WMD-related activity.

• Conduct industry outreach and public awarenessprograms and training programs for customs andother officials.

• Customs authorities should make use of a rangeof technologies in the inspection processes,including X-ray content examination facilities,radiation detection devices, and chemical andexplosive trained detection dogs.It should be noted that the Panel of Experts on

the DPRK included among its recommendations inits latest report, that “Some States lack sufficientresources and trained and experienced officials togive proper priority to the effective implementationof sanctions. Such States would benefit fromsupport, including training and the development oftechnical expertise.”37

Finally, state implementation officers may finduseful the following indicators of suspicious activi-ties as identified by companies to the Panel ofExperts on Iran:38

• reluctance by the customer to share informationon end-use and end-user;

• inconsistency between inquiries and thecustomer’s business activities;

• inconsistency between the technical properties ofthe items of interest and the technical capabilityof their country of destination;

• potential purchasers with little or no relevantbusiness background;

• offers of abnormally favorable terms of payment;• purchasers’ eagerness to acquire products despite

unfamiliarity with the products’ properties;• purchasers’ refusal to accept standard post-sales

services, such as installation, maintenance, ortraining;

• inquiries that lack specific dates by when deliveryis necessary;

• trading or transportation companies named asconsignees;

• unusual transportation routes for export, or

unusually remote destination; and• use of postal address by purchaser.

2. CUSTOMS AND BORDER CONTROLPRACTITIONERS

The World Customs Organization

The effective implementation of UN sanctionsdepends in large measure on national customsagencies to exercise their absolute prerogatives tocontrol goods and commodities traveling acrossinternational borders. In practical terms, customsand border controls benefit from the fact that anoverwhelming percentage of goods and commodi-ties travels by sea, rail, and air:• in containerized or bulk form;• through a comparatively small number of the

world’s major ports, or megaports; and• are subject to information exchanges, high-tech

scanning, and surveillance.

The World Customs Organization (WCO) isanswering this call with its SAFE Framework ofStandards to Secure and Facilitate Global Trade. Bythe end of July 2013 it was formally adopted by 168States. The framework is built around customs-to-customs and customs-to-business partnerships toenable four key requirements:1. harmonization of advance electronic informa-

tion requirements on inbound, outbound, andtransit shipments;

2. commitment to a consistent risk managementapproach by each country participating in theSAFE Framework;

3. commitment to undertake outbound inspec-tions of high-risk shipments with large-scale X-ray machines or radiation detectors on reason-


37 UN Security Council, Report of the Panel of Experts Established Pursuant to Resolution 1874 (2009) (June 11, 2013), UN Doc. S/2013/337, para. 36.38 See also UN Security Council, Final Report of the Panel of Experts Established Pursuant to Resolution 1929 (2010) (June 5, 2013), UN Doc. S/2013/331, Annex VIII.

For customs and border control the challengeto successful interdiction of WMD embargoviolations comes down to a basic decision:which container should be referred tosecondary inspection and its contents madesubject to possible investigation.

able requests of receiving ports/states; and4. enjoyment of preferences by private sector

parties who meet minimal supply chain securitystandards and best practices.

Harmonized Commodity Description andCoding System

One of the foundations on which these initiativesare built, is the Harmonized CommodityDescription and Coding System. Developed byexperts of the WCO, the “Harmonized System”(HS) describes in six-digit codes about 5,000commodity groups. Each code reflects a tightlydefined set of rules to form a legal and uniformclassification structure. Because the system is usedby more than 200 jurisdictions around the worldfor their customs tariffs and border controlsystems, virtually all international trade falls underits regulation.

Unfortunately, no register of HS codes for itemsprohibited under the UN non-proliferation listsexists. However, WCO has drafted a comprehen-sive Strategic Trade Control Enforcement Imple -mentation Guide that may become available in thefirst half of 2014. The section for operationalcustoms officers discusses techniques used to carryout the major functions that comprise the overallstrategic trade control process and several relatedactivities. In the context of WMD sanctionsimplementation, an annex to the implementationguide profiling many strategic goods and organizedfollowing the chapters of the HS will provide usefulreferences from a customs and border controlperspective.

Until this tool is approved and made publiclyavailable, only broad descriptive guidance can beprovided for the best use of the HarmonizedSystem. Grouped by their initial four digits, the HS


Harmonized System Code Groups

2801 to 2942, 3601 to 3606, 3801 to 3824: inorganic and organic chemicals, biological, explosives andpyrotechnic products;3901 to 4017: various plastics and rubber products that may often qualify under dual-use restrictions;6902, 6906, 6909 to 6910: ceramic products;7007 to 7008, 7012, 7014, 7017: glassware;7608 to 7614: aluminum and aluminum alloy products;8101 to 8113: many specialty metals that may be restricted outright or as part of the dual-use prohibitions;8401 to 8418: nuclear reactors, fuel elements, boilers, turbines, engines, jets, pumps, air-conditioning, andfurnaces;8421: centrifuges;8422: washing machinery;8423: weighing equipment;8459 to 8468: machine tools, machines;8471: data process and computer equipment;8480 to 8485: molding machines, valves, ball and roller bearings, transmissions, gaskets, and othermachinery parts;8501 to 8548: (most subgroups) electrical machinery, telecommunication and recording equipment thatare either banned or are of significant dual-use interest;8701 to 8716: vehicles and elements of vehicles;8801 to 8805: aircrafts and space vehicles and subcomponents;9001 and 9002: optical fibers and mounting devices;9005 to 9033: sensitive photographic and other optical technical equipment, as well as measuring andnavigation devices and their components;9101 to 9114: time-measuring devices;9301 to 9307: conventional arms, ammunition, and their components.

code groups in the box below can have WMD-sanctions relevance as they describe equipment,chemical and biological substances, and softwareidentified under the official UN prohibition lists(See Annexes III, IV, and V).Identifying Mismatches

The HS Coding offers a primary opportunity forflagging potential contraventions of UN sanctions.Sanctions violators by their nature will attempt tosubvert, falsify, or betray this classification systemin order to avoid detection. In a proper application,documentation for all international trade transac-tions reference the correct HS code for goods andcommodities shipped. Customs officials around theworld are therefore able to quickly identify possibleproblems, in particular by checking for mismatchesbetween the HS code with information containedon other trade documentation, such as invoices,customs declarations, safety and health disclosureforms, or pre-shipping inspection reports.Technological Solutions

In addition to the World Customs Organization’sapproach, highly advanced technological solutionsmay eventually assist in container screeningsystems at ports and port facilities, coupled withthe use of smart seals for containers, that are alsoequipped with transponders and detection systems.However, with hundreds of millions of containersbacking up in international trading lanes, it is clearthat for the foreseeable future, even very effectivetechnological detection and surveillance method-ologies will cover only a fraction of the tradevolume. Successful WMD proliferation networkswill of course adjust to the buildup of detectionsystems at megaports and in the containertechnology by seeking alternative ports anddetection-resistant strategies.Diversion Strategies

As described under “Lessons Learned,” sanctionsviolators take advantage of the following:• the fact that restricted items and technologies are

barely distinguishable from almost identical non-embargoed items;

• substituting restricted with unrestricted itemsand frequent use of transshipments to subvertcatch-all provisions;

• false declarations;• concealment of restricted items within legitimate

bulk or containerized cargo; • exploitation of weaker jurisdictions;• transfers from ship to ship on the high seas;• renaming or reflagging vessels during transit;• and many other evolving methods and typolo-

gies.RecommendationsCustoms and border control practitioners, regard-less of whether they represent governmentalservices or private sector compliance, shouldimplement the following practices:• Ensure that personnel dealing with customs and

border control issues understand UN sanctions,know the UN lists of restricted items, and haveadequate prohibited commodity identificationtools, portable metal and alloy analyzers, andtechnical resources experts at their disposal, aswell as an updated and accurate national “stoplist” referencing all individuals currently underUN travel bans.

• Ensure that front-line customs and bordercontrol personnel have real-time access tocompetent WMD-proliferation expertise.

• Develop typology for likely illegal WMD prolif-erators and shippers of restricted items.

• Under the catch-all provision, consult exportlicensing authorities before allowing transport ofpotentially sensitive items if other red flags exist.

• Maintain accurate information about individualsand entities who have a history of declined exportlicenses for restricted items and equipment,except in cases involving dual-use technologiesor items.

• Ensure timely receipt of advanced cargoinformation for all goods entering a destinationor transit station to allow adequate time for riskanalysis and assessments.

• Allow no mismatch in data reconciliationbetween customs declaration data with manifestdetails, load list, carrier list, discharge list, andcargo release document, commercial invoices,with matching harmonized codes, and withrequired data for each document as accurate aspossible.

• Create trusted business partner programs to pre-screen frequent shippers of legitimate goods andcommodities.


• Acquire the minimal set of WCO-recommendeddetection technologies and other capacityenhancements, and request, where required,assistance from the WCO, or from the UN’s1540, 1718, and 1737 panels of experts.

• Ensure operators of detection devices and WMDtechnical resource experts are well trained andsubject to periodical competency and integrityvetting.In case of an attempted or successful effort to

subvert UN sanctions against WMD, contactrelevant national authorities—usually law-enforce-ment agency—to report the identity of sender andrecipient, shipping and customs broker, actualtransport company, all payment-relevant informa-tion, documentation and nature of goods,commodities shipped, including identification andcharacteristics of packaging.3. REGULATORS OF THE TRANSPOR -TATION SECTOR AND COMPLIANCEOFFICERS OF THE TRANSPORTATIONINDUSTRY

First Line of Compliance: The Captain

In principle, a ship’s or an aircraft’s captain isresponsible for the vessel, its cargo, and forensuring that all operations on board comply withnational and international laws, including UNsanctions. In practical terms, however, a captainoften serves unwittingly at the pleasure of theconsignors of cargo or ship owners who are farmore difficult to identify and hold legally respon-sible. For maritime vessels, frequent changes ofregistrations under different flags, or for airplanesand ships, transfers of ownership to companiesdomiciled in jurisdictions that permit concealmentof beneficial ownership, assist in subverting legaland financial liability. For these reasons, it is notrealistic to expect a vessel’s captain to ensurecompliance with UN sanctions.Identifying At-Risk Ships and Aircrafts

A different approach must be found to identifytransport vehicles and vessels and transportationproviders with a higher proneness to involvementwith sanctions and embargo violations, as well asother illegal activities. Studies show how certaincharacteristics can offer useful risk categories:• reliability of the official identification of a

maritime or aviation vessel;


Reliability of the OfficialIdentification of Maritime or AviationVessels

The lack of verifiable identification for a ship oran aircraft tends to signal a willingness by theowners/operators to engage in illicit activities,including the contravention of UN sanctions.

The international norm for ship and ship-owner identification is based on regulationsadopted by the International MaritimeOrganization (IMO) according to which eachvessel and owner and registered ship owner isassigned a permanent IMO identificationnumber. The ship IMO identification numberconsists of the abbreviation “IMO” and a six-digit sequential number followed by one check-digit (see page 25 for public access to authenti-cation system). The system permits authenticityverifications by multiplying each digit of theIMO in sequential order by 7, 6, 5, 4, 3, and 2.The last number of the result is added to the sixcore IMO numbers. Example: the Monchegorskhas IMO ID number 9404015; checking thisnumber, one calculates 9x7, plus 4x6, plus 0x5,plus 4x4, plus 0x3, plus 1x2 equals 105.Therefore, to the core IMO ID number 940401,number 5 is added, making the complete IMOID number 9404015.

The registration of airplanes functions alongsimilar principles. In accordance with theConvention on International Civil Aviation andwith Article 20 of the Chicago Convention onInternational Civil Aviation, unique alpha -numeric identifiers issued by national aviationauthorities must be affixed on all civil aircraft.The number, colloquially referred to as “tailnumber,” is composed of a prefix, which is theissuing country’s call sign, and the registrationsuffix. The registration must be used for allfinancial transactions, flight plans, requests foroverflight permission, maintenance, andtransfer of ownership documents. Mostjurisdictions maintain open registers that allowthe identification of the owner of an aircraftbased on the registration of the aircraft with thenational civil aviation authority.

• compliance with international safety standards;• national registration; • type of ship; or• distinction between regularly scheduled versus

special use charters.Compliance with International SafetyStandards

Information gathered over many years of sanctionscompliance monitoring, shows that airplanes andships that frequently violate, disregard, or operateoutside international safety standards tend to bemore likely involved in UN sanctions violations.

The primary authority to monitor compliancewith operational safety standards for both maritimevessels and airplanes lies with the registrant govern-ment. Often, the manufacturers of airplanesmaintain maintenance logs as well. For the maritimeindustry, the International Maritime OrganizationVoluntary Member State Audit Scheme offersmember states an assessment of how effectively theyadminister and implement mandatory IMO instru-ments. Jurisdictions that do not offer verifiableinformation about specific vessels’ safety perform-ance should be viewed as at-risk.

For the civilian airline industry, the InternationalAir Transport Association (IATA) imposes period-ical operational safety audits as a precondition formembership in this standard-setting internationalindustry association. If an aircraft operator doesnot pass the audit, the IATA membership can berevoked. The consequences are that operating anairline outside of the IATA umbrella raises serioussafety concerns and represents a significantcompliance risk. National Registration and Flags

A large percentage of maritime vessels areregistered under so-called flags of convenience. Astudy by Stockholm International Peace ResearchInstitute (SIPRI) indicates that ships sailing undersuch flags are disproportionately more likely to be transporting “destabilizing commodities,”including embargoed equipment and goods.39Because of the high use of flags of convenience,their presence alone cannot be accepted as a riskfactor more significant than for any other flaggedvessel. Similarly, the national registration of an

airplane may indicate heightened risks only in thepresence of additional factors. For example, thelack of detailed ownership/operator informationshould be accepted as a risk factor if it coincideswith the owner taking full advantage of corporateshields provided by the registrant state.Type of Ship

Following a SIPRI case study and analysis ofinterception reports, certain types of vessels aremuch more likely to be commissioned for thetransport of sanctioned items. Container, refrigera-tion, and general cargo vessels appear to be themost likely carriers of embargoed items.Distinction Between RegularlyScheduled Versus Special-Use Charters

State authorities license aircrafts or maritimevessels to operate as common carriers to offerspecific and scheduled services to the public andprivate sector. In contrast, a contract carrier mayrefuse service to the public as it provides individualand unscheduled transportation services undercontract to specific clients. According to theirlicenses, vessels operating as common or publiccarriers are usually subject to special laws andregulations. Monitors and investigators observethat common carriers are far less likely to beinvolved in the contravention of UN sanctions. Recommendations For captains, owners, and operators of airplanes,maritime vessels, and cargo brokers:• Perform adequate due diligence for each

consignor before entering into a shippingagreement. At a minimum, the due diligencesteps should include the following:1) Ensure that all passengers are vetted against

the UN list of individuals designated pursuantto UN Resolutions 1718 (2006) and 1737(2006).

2) Ensure that ultimate origin, destination, ortrans-shipment points for consignment donot match with any of the states under UNWMD sanctions.

3) Check identity of consignor, including vettingfor being subject to any type of sanctions.

4) Conduct verification of goods and commodi-


39 Hugh Griffiths and Michael Jenks, “Maritime Transport and Destabilizing Commodity Flows,” Stockholm: Stockholm International Peace Research Institute,January 2012, p. 15.


40 Ibid., p. 23.41 The sample size is 512 ships. For each vessel type, the figure on the right is the ratio of its share of reported incidents in 1991–2011 to its share of the world fleet in

2000–2009.

Container vessel Cargo is transported in 20- or 40-foot containers and 6.7may include refrigerated containers, if appropriatelyconfigured. These vessels sail usually according toschedules and serve as “common carriers.”

Refrigeration cargo Usually multi-deck cargo ship for the carriage of 3.8vessel non-containerized refrigerated cargoes at various

temperatures.

General cargo Carrier of various packaged goods and commodities 2.2vessel including chemicals, foods, furniture, civilian and

military machinery, engines and other components,which can operate with or without a fixed schedule,either as common or contract carriers.

Bulk carrier Cargo vessel built for the carriage of bulk dry goods 0.9such as coal, grain, and ore and may be able to carrycontainerized liquids after the installation ofadditional external equipment.

Roll-on roll-off Single or multi-deck cargo vessel for the carriage of 0.8vessel vehicles that are loaded via ramps.

Product tanker Tanker for the bulk carriage of refined petroleum 0.5products.

Tanker For the bulk carriage of chemical cargoes, lubricant 0.3oils, vegetable or animal oils, and other chemicals.

Fishing vessel IMO-numbered fishing vessel over 100 tons. 0.3

Offshore support Single- or multi-functional offshore support vessel. 0.3vessel Functions can include the transport of goods, stores,

and crew to offshore facilities.

Tug Vessel equipped with a towing winch to tow other 0.2vessels.

VesselConfiguration Cargo

SIPRI Assessment of share ofall ships over 100 gross tonsreported as involved in desta -bilizing military equipment,dual-use goods and narcotics,averages for year 2000-200941

Table 3. Vessel configurations according to their likelihood of sanctionable and criminalinvolvement.40

ties by at least matching Harmonized Codeswith all other available and properly furnishedcustoms, shipping, insurance, and commer-cial documentation.

5) Verify whether dimensions, weight, and othervisible characteristics of goods and commodi-ties match with common sense assumptions,and do not appear to qualify for a dual-useconsideration.

6) In case of doubt, request an inspection ofgoods and commodities and perform a visualverification, using reference for restricteditems (see Annexes III, IV, and V).

• In applicable jurisdictions, be aware of theidentity of individuals and entities whoseapplications to licensing authorities for exportlicenses for WMD-relevant and dual-useequipment were denied in the past. While thisinformation in itself may not be a red flag—thereare many innocent causes for denial of exportlicenses—it should be part of an appropriate duediligence prior to contracting shipping services.

For consignor:• Verify the identity, history, and regulatory

matters of the aircraft or maritime vessel andregistered owner/company intended to be hired.

• For airplanes, authenticating the ownership andflightworthiness of an aircraft should beconducted prior to each transaction by requiringvalid and current documentation issued by therelevant registering national agency.The IMO site, www.imonumbers.lrfairplay.com,

gives access to basic authentication data about theIMO Registered Owner or Company (DOC)number, and IMO Ship number. Alternatively, thenon-profit organization, Equasis, financiallysupported by the maritime authorities of Japan,Singapore, Spain, and the United Kingdomoperates a free website where the identity,ownership, history, inspection records of vessels,and registered ship owner can be verified, availableat www.equasis.org .

4. REGULATORS OF FINANCIALSERVICES, COMPLIANCE OFFICERSOF BANKS, AND FINANCIALINTERMEDIARIES

Financial sanctions under the 1718 and 1737regimes apply in two forms:• An asset freeze for all individuals and entities that

are listed under the DPRK Consolidated List ofentities and individuals and under the Iransanctions regime.41

• Another aspect of the financial sanctions appliesagainst financial transactions, insurance services,or brokering of related services. If such economicactivities enable the acquisition, supply, sale,manufacture, maintenance, use, or transfer andtransportation of WMD-related items, materials,technologies, or services, they are not permittedunder the 1718 and 1737 sanctions regimes.Large international banks and financial service

providers tend to be proficient in complying withthe first aspect of the financial sanctions. This taskis substantially supported with publicly availabletargeted sanctions lists and automated compliancetools that flag transactions involving a listedindividual or entity. Government authorities,private sector compliance service providers, and tosome extent Financial Action Task Force (FATF)recommendations offer competent guidance to theprivate sector to avert due diligence failures.

Compliance with the second aspect of financialsanctions is less well understood. In a nutshell:providers of insurance and financial servicesshould have an understanding of whether theirtransactions and services facilitate the proliferationof WMD, in particular trade in restricted items.

The operative theory is that transactions will besuspicious because they take place involving at leastone entity of an organization that is already underUN sanctions; or that they involve high-riskjurisdictions, such as Iran or the DPRK. Obviously,for these circumstances, the published UN-listsoffer adequate information to any financial serviceprovider to avoid transactions that might assistsanctions violators.


42 For the DPRK see “Consolidated List of Entities and Individuals,” available at www.un.org/sc/committees/1718/pdf/List_Entities_and_Individuals_English.pdfand for Iran see "Individuals and Entities Designated as Subject to the Travel Ban and Assets Freeze Pursuant to Resolutions 1737 (20060, 1747 (2007), 1803(2008), and 1929 (2010) and to the Committee Decisions of 18 April 2012 and 20 December 2012," available atwww.un.org/sc/committees/1737/pdf/1737ConsolidatedList.pdf .

www.un.org/sc/committees/1737/pdf/1737ConsolidatedList.pdf

www.un.org/sc/committees/1718/pdf/List_Entities_and_Individuals_English.pdf

www.equasis.org

www.imonumbers.lrfairplay.com

43 Financial Action Task Force, "The Implementation of Financial Provisions of United Nations Security Council Resolutions to Counter the Proliferation ofWeapons of Mass Destruction," Paris, June 2013, available at www.fatf-gafi.org/media/fatf/documents/recommendations/Guidance-UNSCRS-Prolif-WMD.pdf .

44 Ibid., pp. 11-12.

Lists of Restricted Commodities, Goods,and Technologies

The question of what are the compliance obliga-tions arises if none of these recognized risk factors,or restricted WMD-relevant items, appears in atransaction. The FATF recommends that providersof financial services be familiar with the “nature ofthe trade,” which has to include the lists ofrestricted components, equipment, and technolo-gies (see Annexes III, IV, and V). Financial servicesfor such transactions may involve the issuance of aletter of credit and other forms of trade financing,export guarantees, insurances, or other indemnifi-cations. Financial instruments might include cash,equities, debt financing, even derivatives to financemanufacturing, trading, or transportation ofWMD-relevant items. Activity-Based Sanctions

In support of sanctions against the financing ofproliferation of WMD, FATF has adopted“Recommendation 7” and developed supportingguidelines in which the operational consequences ofthe term “activity-based sanctions” are explained.43Paragraphs 21–23 of the section entitled,“Enhanced Scrutiny of High-Risk Customers andTransactions,” provide important guidanceregarding the obligation to understand not only thetrading partners, but the nature of the trade:

21. Countries should encourage financialinstitutions to use a risk-based approach toapply enhanced scrutiny to high-riskcustomers and transactions to determinewhether a transaction is prohibited. Suchenhanced scrutiny may include the collectionof additional information as described inparagraph 22 below, as well as ongoingmonitoring as described in paragraph 23below. If a financial institution has a reasonablebasis to suspect or believe that a high-riskcustomer is involved with and/or a transactionis related to an activity-based financial prohibi-tion, then the financial institution should takeappropriate follow-up action as described inparagraphs 24 through 27 below. Enhancedmonitoring should be consistent with OP 21 of

resolution 1929(2010), OP 18 of resolution1874(2009), and OP 11 of resolution2094(2013) that call upon countries to apply“enhanced monitoring to prevent all suchtransactions [described above] in accordancewith their national authorities and legislation.”22. Countries should encourage their financialinstitutions to collect additional informationon high-risk customers and transactions inorder to identify, and avoid engaging in,prohibited activities, and to enable follow-upactions. The ability of a financial institution tocollect such additional information maydepend in part on whether the financial institu-tion has a direct relationship with thecustomer, the mechanisms or instrumentsbeing used to finance the transaction, and thefinancial institution’s role in the financialtransaction. Depending on these factors, afinancial institution may or may not haveaccess to additional information that may beuseful in determining whether a high-riskcustomer is involved with and/or a transactionis related to an activity-based financial prohibi-tion. Such additional information may include:(a) details about the nature, end use, or enduser of the item;(b) export control information, such as copiesof export-control or other licenses issued bythe national export control authorities, andend-user certification;(c) in the case of a financial institutionhandling incoming wire transfers, informationin accordance with Recommendation 16 (Wiretransfers); and(d) the purpose of the transaction.23. Financial institutions should conduct on-going monitoring of high-risk customeraccount activity. Such monitoring should beconducted in accordance with the financialinstitution’s assessment of risk associated withthe account. Such monitoring should alsoensure that the activity in the account is consis-tent with the documentation associated withthe transactions in the account.44


www.fatf-gafi.org/media/fatf/documents/recommendations/Guidance-UNSCRS-Prolif-WMD.pdf

Recommendations • Be aware of individuals and entities that are

currently listed for targeted financial sanctions(e.g., asset freeze) and travel restrictions (e.g.,travel ban) under the 1718 and 1737 UNsanctions regimes.

• Identify monetary transactions, financial servicesor the rendering of fiduciary, brokerage, orinsurance services on behalf of investors, benefi-ciaries, payees, or payers that are located in Iranor the DPRK.

• Identify any financial flow that involvesrestricted items or dual-use equipment under the1718 and 1737 UN sanctions regimes, and priorto approving transactions, verify export licensesand end-use certifications.

• Consider individuals or entities who have beengranted or denied export licenses of prohibitedWMD and dual-use equipment to any and alldestinations as a pertinent signal for increaseddue diligence before allowing financial services.

• Insist that clients furnish all required informa-tion or documents leading to financial transac-tions with adequate detail and accuracy.

• Maintain vigilant due diligence in relation to allclient requests for transactions involving individ-uals with appointments to positions in govern-ment, military, security, state-research facilitiesof Iran or the DPRK and consider any residentindividual or entity of these states as a heightened

risk.• File suspicious financial activity reports for all

transactions involving Iran and the DPRK forprohibited and restricted items.

SOURCES FOR FURTHER INFORMATION

Some users of this manual may find themselvesconfronted with a sanctions implementationchallenge that is not addressed here. For those withsanctions implementation responsibilities, includ -ing state regulators, representatives of internationalorganizations, or compliance officers of the privatesector, a primary source for information is theircorresponding national focal point for UNsanctions.

Government officials may in some instancesobtain guidance from the relevant sanctionscommittee or Panel directly or via the UNSecretariat. For this purpose, the UN publishes alist of contacts on its website, available atwww.un.org/sc/committees/pdf/SCSOB_Secretariat_Contacts.pdf .

Some actors with sanctions implementationobligations may seek advice from specialized legalcounselors and other private sector advisors. Itshould be noted that many international law firmsthat offer generalized sanctions advisory servicesare fluent only in the implementation policies ofunilateral and EU sanctions. Careful vetting of suchservice providers should be conducted to ensurecompetent and up-to-date advice.


www.un.org/sc/committees/pdf/SCSOB_Secretariat_Contacts.pdf

www.un.org/sc/committees/pdf/SCSOB_Secretariat_Contacts.pdf

Annex

I. UN Sanctions and Exemption Procedures: Iran

http://ipinst.org/images/pdfs/Annex1-UN_sanctions_on_Iran.pdf

II. UN Sanctions and Exemption Procedures: DPRK

http://ipinst.org/images/pdfs/Annex2-Sanctions_on_the_DPRK.pdf

III. Restricted Nuclear Goods, Commodities, and Technologies

http://ipinst.org/images/pdfs/Annex3-nuclear.pdf

IV. Nuclear-Related Dual-Use Equipment, Material, Software, and Related Technology

http://ipinst.org/images/pdfs/Annex4-nuclear_dual_use.pdf

V. List of Items, Materials, Equipment, Goods, and Technology Related to BallisticMissile Programs

http://ipinst.org/images/pdfs/Annex5-Ballistic_Missile.pdf

VI. List of Chemical and Biological Items, Materials, Equipment, Goods, andTechnologies Related to Other Weapons of Mass Destruction Programs

http://ipinst.org/images/pdfs/Annex6-chem_bio.pdf

28

http://ipinst.org/images/pdfs/Annex6-chem_bio.pdf

http://ipinst.org/images/pdfs/Annex5-Ballistic_Missile.pdf

http://ipinst.org/images/pdfs/Annex4-nuclear_dual_use.pdf

http://ipinst.org/images/pdfs/Annex3-nuclear.pdf

http://ipinst.org/images/pdfs/Annex2-Sanctions_on_the_DPRK.pdf

http://ipinst.org/images/pdfs/Annex1-UN_sanctions_on_Iran.pdf

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The INTERNATIONAL PEACE INSTITUTE (IPI) is an independent,international not-for-profit think tank with a staff representing more than twenty nationalities, with offices in New York, facing United Nations headquarters, and in Vienna. IPI is dedicated to promoting the prevention and settlement of conflicts between and within states by strengthening international peace and security institutions. To achieve its purpose, IPI employs a mix of policy research, convening, publishing, and outreach.

The INTERNATIONAL PEACE INSTITUTE (IPI) is an independent,

international not-for-profit think tank with a staff representing

more than twenty nationalities. It has offices facing United Nations

Headquarters in New York and offices in Vienna and Manama. IPI is

dedicated to promoting the prevention and settlement of conflicts

between and within states by strengthening international peace

and security institutions. To achieve its purpose, IPI employs a mix

of policy research, convening, publishing, and outreach.

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Documents

United Nations Sanctions on Iran and North Korea: An