South Korea imposes sanctions on Hong Kong company, North Korean ship over illegal coal transfer

South Korea imposed unilateral sanctions on Thursday on a Hong Kong-based shipping company and a North Korean-flagged vessel for their involvement in the illegal transfer of North Korean coal, which is banned under international sanctions.

The stateless 3,000-ton ship De Yi is forced to dock in waters off Gamcheon Port in Busan on April 3, 2023. South Korean authorities reportedly seized the ship recently in territorial waters, suspecting it of violating U.N. sanctions on North Korea. [YONHAP]

South Korea imposed unilateral sanctions on Thursday on a Hong Kong-based shipping company and a North Korean-flagged vessel for their involvement in the illegal transfer of North Korean coal, which is banned under international sanctions.

The country imposed sanctions on HK Yilin Shipping — a Hong Kong-based company that owns the stateless vessel De Yi — and the North Korean-flagged vessel Tok Song, according to a collective announcement by the Foreign Ministry, Finance Ministry, Financial Services Commission and Oceans Ministry. The move will be effective from Friday.

The government received intelligence in March indicating that the De Yi, while passing through waters off the country's south coast near Yeosu, was involved in violating UN Security Council resolutions against North Korea. It then seized the vessel and moved it to Busan Port for investigation.

The investigation found that the De Yi had departed from China on March 18, turned off its automatic identification system, and transferred 4,500 tons of North Korean anthracite coal from the Tok Song in waters off North Korea's west coast.

"After conducting investigations by boarding on the De Yi several times, we came to a definitive conclusion that it had loaded coal in North Korea," a Foreign Ministry official told reporters Thursday, speaking on condition of anonymity.

The latest sanctions designation is part of Korea's efforts to discourage the North's continued illicit procurement of materials and funds for its nuclear and missile development through ship-to-ship transfers and trading prohibited goods at sea to evade UN sanctions, the Foreign Ministry said.

UN Security Council Resolution 2375, adopted in 2017, prohibits ship-to-ship transfers with North Korean vessels, while Resolution 2371 bans the export of North Korean coal. The Tok Song was imported by North Korea in late March last year, violating Resolution 2397, which prohibits supplying used vessels to North Korea.

Although the De Yi is stateless, it is owned by a Hong Kong-based company, and its captain is reportedly Chinese.

The De Yi, loaded with North Korean anthracite coal, was initially bound for Vladivostok, Russia.

Authorities believe the vessel transferred electronics and machinery to another North Korean vessel before transferring the coal, which is also prohibited under UN resolutions.

The Foreign Ministry described the sanctions as demonstrating South Korea's "strong commitment to thwarting North Korea's illegal maritime activities and deterring its illicit nuclear and missile development."

"The government will continue to enforce strong and consistent legal measures against ships and shipping companies involved in transporting prohibited items and violating UN sanctions and will work closely with our allies in this process," the ministry said.

Financial and foreign exchange transactions with individuals and institutions designated under these sanctions require prior approval from the Financial Services Commission or the Governor of the Bank of Korea.

Vessels designated under these sanctions must obtain permission from relevant authorities to enter a port in the country.

Despite violating the UN sanctions, De Yi's captain and most of the crew left the country after being investigated, according to the Foreign Ministry official.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]