The process of interagency coordination is actually very well structured. An interagency task force employs a unique model to coordinate all actors’ actions: private and public, foreign and domestic, strategic and operational.
Illegal activity not linked to DPRK makes it harder to detect anomalies and generates a lot of (wasteful and costly) false positives.
The seemingly only area that is not mapped well enough is DPRK’s illegal extraction, laundering and spending of cryptocurrencies (mainly Bitcoin).
The operators on the ground distrust the intelligence passed down to them.
Nothing on the sea meters if China opens another pipeline.
The DPRK, faced with increased international pressure along their physical transportation routes (maritime and land) has reverted to circumventing the sanctions by:
Employing state-sponsored security professionals, including the Lazarus Group, refereed to commonly as APT (Advanced Persistent Threat) 38 to extract cryptocurrency from wallets, exchanges etc.
Rerouting the stolen currency through a mixture of commonly used (US-Based) and more obscure (mainly East-Asian) exchanges and clearing houses and gradually converting it to hard currency (USD, EUR, CNY)
Spending the illegally-obtained currency on luxury items, refined petroleum, industrial machines etc.
Currently, the sanction-enforcement authorities have little tools available to tackle this stream of DRPK financing.
If you are my private think tank, I want you to figure out a way to stop NK from making money using cyber tools. I want a mechanism that rivals in the cyberspace what we can already do in the physical space.
An individual experienced with the Interagency Task Force
Researching the policy vectors that could be applied along with the ways DPRK currently performs their operations will form the bedrock of the policy recommendations we will be presenting as our deliverable.
Where we stood and where we stand. How we chose our major.
Throughout the past weeks we have explored several different MVP ideas. Most of them have been abandoned, before we committed to the predictive modelling approach.
Improved blacklists have been proven to give negative value due to inability to fine-tune the pressure after inclusion on the list.
Flag state approval reform was ineffective as interdictions don’t actually happen (the US ships come close and photograph suspicious assets).
Process Improvement turns out to be ineffective due to the presence and efficiency of the interagency task force.
The Internal Wiki would overlap with solutions currently in existence.
Improved negotiation toolkit (providing better materials to negotiators) has proven to require access to information beyond our grasp.
Next week we’re intending to continue working to get a better understanding of the new problem space. We will be trying to learn:
What the most common vectors of cryptocurrency-related crime are in general and whether there are some distinguishing features DPRK employs.
How do nation-states currently regulate cryptocurrency security and if there are any mechanisms in use to tackle this kind of crimes.
Who are the individuals responsible for enforcement on the US side (and hopefully talk to them as well)
The key action items are listed below:
The main interviewees are going to be: Stanford Faculty, private sector security professionals, and people with relevant intelligence experience.
Interviews this week
This week’s interviews have been largely divided into three categories:
Military personnel and analysts who would validate our predictive modelling MVP
Specialists in cybercrime and cryptocurrencies-based money laundering who would help us better explore this new field
Process coordination insiders who helped us validate hypotheses from last week.
What channels does North Korea use to bypass sanctions?
No cars on North Korea’s main highway Ships coming in and out the Wonsan port
Ensuring that the sponsor-provided problem is a key component in the wider issue of enforcing sanctions
(Dis)proving our ideas as to who are the actors relevant to the problem
Forming a hypothesis as to what form should our solution take
This week’s goals
Overall, while in the previous week our focus was largely on who we should serve, this week we were trying to get closer to establishing what they need.
Illegal maritime trade in hydrocarbons is crucial to the DPRK sanctioned weapons programme
The hypothesis has been proven
“Devoiding North Korea of illegally smuggled petroleum would metaphorically and literally deprive the DPRK war machine of fuel.”
EU Office of the High Representative for Foreign Affairs and Security
“North Korea has a $3.4 billion dollar total import economy. When we stop a $1 million dollar refined petroleum shipment, that has a major impact.”
North Korea Policy Expert
The two interviews have strongly indicated that illegal maritime imports of refined petroleum are a key part of the problem. It is furthermore the only one that would seem to be under at least partial control of US and allied assets, as opposed to DPRK’s other suspected revenue sources.
The key obstacle towards efficient interdictions is the diplomatic/legal procedure involved (taking upwards of a day
The hypothesis has not yet been proven despite strong indications
The interviews have provided us with a thorough overview of the marine interdiction process and the legal/diplomatic aspects behind it. In further weeks, we will try to look for possible improvements in the procedure and look for potential time gains which would allow US/allied assets to increase their interdiction efficiency.
The team has conducted 11 interviews with relevant actors and contacted another 36. The noteworthy conversations were:
Allen Weiner (Professor, International law, Former State Dept Legal Office)
Tess Bridgeman (Professor, Sanctions Expert, Former State Dept)
Andrzej Sikorski (Current Acting Polish Ambassador to DPRK)
Matthew Kaseman (OSD Korea Policy Team)
Richard Nephew (Former State Dept)
Cliff Johnson (Former State Dept Legal Office)
Newell Highsmith (Former State Dept Legal Office)
Greg Terryn (Center for Arms Control and Non-Proliferation)
Jennifer Chalmers (Department of State)
Matthew Kaseman (Office of the Secretary of Defense)
Official (preferred not to be identified), (EU Office of the High Representative for Foreign Affairs and Security)
Interdiction of illicit importation of refined petroleum likely has significant impact on North Korean leadership decision making.
Maritime interdiction often requires extensive diplomatic clearance, even when pursuant to a Chapter 7 UNSCR.