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Gangsters. Ghost ships. Oil traders. Casino operators. North Korean spies. A gold trader from Hong Kong. And a racing car driver from Macau.
There have been some arrests, a few suicides.
In this joint investigation with the Royal United Services Institute think-tank in London, we reveal, for the first time, some of the faces behind the organised criminal networks that have facilitated North Korean sanctions evasion.
North Korea has been using the triads and others to assist it in its operations. It’s had to procure oil illicitly. And the end result is that the weapons programme keeps going.
No matter what, they will find oil to fuel themselves.
What we found again and again were connections to the casinos, connections to Suncity.
These weaknesses in the global financial system are exploited by a whole range of illicit actors.
So the ability to launder money is critical for North Korea’s weapons programme.
This is a country whose ballistic missiles can reach halfway around the globe.
The triads and these high-level criminal organisations, they’re a strategic concern for all of us.
This is a story about how the triads facilitate the oil trade that keeps North Korea’s weapons programme alive. Without oil and without oil products like petrol and especially diesel, not only the North Korean economy, but also its very large military upon which the regime bases its power, would simply grind to a halt.
My name is James Byrne, and I’m the director of Open Source Intelligence and Analysis at the Royal United Services Institute in London. I’ve been working on this investigation for over a year. We’ve been tracking North Korea’s illicit imports of oil, trying to identify the individuals, the entities behind these imports and how North Korea is evading UN Security Council resolutions.
And this brings us to the story of a ship called the Unica.
The Unica is really one of the key parts of this story because it is the tanker that the North Koreans have been able to rely on to regularly deliver fuel to North Korea. They have continued to do it despite all of the sanctions, despite patrols, which are conducted by a range of countries.
It has been operating in the East China Sea for a long time. And it’s continued to do it from the waters of Taiwan, where it meets intermediary tankers, tankers that load oil from those ports. And then it shuttles that oil regularly to North Korea, where it is picked up by North Korean tankers and moved into the port.
They try to use other methods not to be seen. So they do the ship-to-ship transfer in the evening or midnight or the area that’s usually the ships are not supposed to anchor them.
Now these vessels can’t be tracked. They go dark. The vessels are almost ghost vessels. They live at sea without going into port for months at a time.
My name is Hugh Griffiths. For five years I was co-ordinator of the UN panel of experts monitoring the sanctions on North Korea, boarding North Korean ships. Are you the radio room operator?
Radio officer.
Where are your communication logbooks? Meeting with bank executives, inspecting seized arms from shipping containers, witnessing the destruction of North Korean weapons, that sort of thing.
Even in our early investigations we found that the foreign flagged tanker meeting with the North Korean tanker would be conducting dialogue using WeChat, and that code was used, and that you only knew you were meeting the right ship because a renminbi note, which had been torn in two, the supplier ship, the captain of that vessel would have one half of the note, and the true ship he was meant to meet to supply fuel to would have the other half of the note.
It is only by finding out who is moving the oil to North Korea that allows us to prevent them doing it.
In order to understand how North Korea procures these oil products, one first needs to understand the methods through which, over decades, it has used irregular and illicit channels to raise money.
All of our efforts to enforce sanctions to ultimately bring North Korea to the table should also focus on seeing North Korea really as a criminal organisation but with connections to high-level organised crime figures.
My name is Su Mi Terry. I previously served in the US government, a long-time CIA officer, and also at the National Security Council. North Korea in the aftermath of the Korean war actually was better off economically than South Korea. But in the ’70s its economy started performing very poorly. And after the fall of the Soviet Union in the early 1990s it really suffered economically. So there is no other way to really make money for North Korea other than to turn to illicit activities.
According to the UN and outside analysts, Kim’s regime sells weapons on the black market, uses its diplomats to move illegal drugs, like methamphetamine. They’ve trafficked in counterfeit American dollars, fake Viagra.
North Korea’s illicit activities range from producing counterfeit dollars…
Trade of arms… munitions…
Producing, making, and selling meth…
Rare animal species…
Fake cigarettes, selling ballistic missiles and weapons to countries like Iran and Syria.
And even pirated DVDs and pornography.
The less legal your activity is, the greater is your demand for interaction with the local organised crime. So say drugs. I don’t think that North Koreans have ever sold drugs themselves. They reach local criminal groups and sell their drugs through them. My name is Andrei Lankov. I’ve been doing North Korea since 1984, essentially. Visited many times.
Sometimes have been blacklisted. Sometimes not. Essentially studied how North Koreans reinvented capitalism in the last 30 years. Imagine you have a mission. Your missile engineers asked you to get some equipment. Do you expect you to fly to any country and just go to a missile factory? Not going to work. So the only way is to, again, rely on people who, for a good commission, are ready to do pretty much everything. That is criminal gangs.
This historic relationship between North Korea and east Asian organised crime groups is crucially important to understanding how Pyongyang reacted to the oil cap imposed by the UN.
…minister and I have talked about the importance of full implementation of resolution 1718.
North Korea’s number one goal is regime survival. And for that regime survival you have to have a strong military. And part of having strong military is also building nuclear weapons programme.
They will be met with fire and fury like the world has never seen.
The hope was that by putting a lot of pressure through sanctions on North Korea that it will lead to North Korea giving up nuclear weapons programme. Of course, that didn’t happen.
A problem is that North Korea doesn’t have oil. So every drop of oil consumed in North Korea is important. You need oil to move your vehicles. And if your vehicles are not moving your soldiers will not get ammunition, and ballistic missiles will not fly either.
North Korea’s oil tankers, they previously used to travel to China. They travelled to Russia to pick up refined petroleum, diesel gasoline. But after 2017 sanctions ramped up.
You’ve had quite a number of UN member states sending patrol aircraft to document all the ship-to-ship transfers that involved either North Korean tankers or vessels that had already been designated for an assets freeze or a global port entry ban by the Security Council. Some people were designated by the UN. Others are now wanted for money laundering. There have been some arrests, a few suicides.
And a lot of those people who were providing them oil ultimately got burned. It became more difficult for North Korea to import all around that time. North Korea has had to adapt.
And what are you left with? You’re really left with groups that have a high appetite for doing illegal things and who have a successful track record of not only conducting activities that were against the law, but successfully laundering those funds and staying at large and indeed flourishing. And who are those people? Well, it’s organised crime groups, such as the triads.
In Hong Kong are the local triads, which have always been quite powerful, quite willing to be engaged in, say, all kinds of trade, including oil trade, for the North Koreans, ship-to-ship transfers and whichever.
These are the groups that those people will team up with because they provide protection. And they can also physically intimidate the captains of ships and the crew of vessels because if you talk to the authorities, if you turn an informant, you really have to think about the consequences of that.
Not only does North Korea have longstanding ties to these organised criminal groups, but we know that these groups are also deeply embedded in an illicit East Asian oil trade.
That market is a multibillion dollar business. Huge volumes of oil are smuggled annually into China, and the people that are responsible for smuggling that oil make huge profits.
Many of the players involved are originally from the mainland of China. And these connections were established with the North Koreans long before the sanctions were actually implemented by the Security Council.
We believe some of the most important tankers that have been going to North Korea are operated by a network of people that live and work in Hong Kong with high-level connections to organised crime, the triads. It’s some of the first evidence that’s really ever been put out into the open sources that ever really showed this and how it works in detail.
So my name is Aaron Arnold. I’m a senior fellow at the Royal United Services Institute. I’m a former US member on the UN Panel of Experts. We often found that North Korea would rely heavily on jurisdictions like Hong Kong to facilitate its sanction evasion activities. Hong Kong’s domestic rules and regulations offer a level of privacy to North Korea that allows it to hide its activities.
The people who we believe own and operate the Unica, and we suspect a number of other tankers that have been delivering oil to North Korea, are Hong Kong nationals, including one named Gary To.
We visited his offices in the Goldin Financial Centre in Kowloon Bay. It’s a pretty normal office block.
Gary To, as well as being on documents for the ownership of the Unica, the vessel delivering oil to North Korea, he also runs one of Hong Kong’s largest gold trading shops and outfits.
It’s very much a normal part of the business district over there. So he otherwise appears to be a legitimate businessman.
That shop and that entity in Hong Kong has until recently been called Sungold Holding. It was, we believe, intimately connected to the Suncity Group. The Suncity Group was, at the time, Asia’s largest casino and junket operator. It had been in the gambling business for a very long time, and it was operated by people who were arrested in China and are alleged to be high-level members of the triads.
Suncity was headed up by a man called Alvin Chau. And Alvin Chau is pretty much notorious, not only in Hong Kong, but also within all of Asia because law enforcement have been looking at his companies and how they operate.
Macau tycoon Alvin Chau has been arrested after the authorities in the mainland city issued an arrest warrant for him. The businessman is accused of running illegal cross-border gambling rings.
It’s a really effective way of mixing legitimate money with illegitimate money. And it makes it very difficult, if not impossible, for banks to identify the real source of funds.
He was allegedly a protege of one of the most famous gangsters in Asia, Broken Tooth. Basically notorious for his role as being involved in the 14K triad, the same group that Alvin Chau is also accused of being a member of. Photographs from social occasions and important business occasions also demonstrate this quite close link between Gary To and Alvin Chau.
Regularly, we find pictures of Gary To at events with other senior members of the Suncity Group. People such as Cheng Ting Kong, who’s been identified by the Australian authorities as involved in high-level money laundering and drug smuggling.
My name is Sharon Ingrid Kwok, and my research area is triad society. And I started doing research since my PhD back in Hong Kong. There are three key triad societies operating in Hong Kong, the 14K, Sun Yee On, and also Wo Shing Wo.
Their operations are fairly vast and quite geographically spread across Asia.
They still do what we call the traditional triad businesses, like sex industry and also illegal gambling. But in addition to that there are quite a number of legitimate business that they do.
And triads are also known for their use of violence. And that violence has been helpful for some casino operators in order to enforce debts.
Suncity Group has closed all of its VIP gaming rooms in Macau after the arrest of its CEO.
What we found again and again were connections to Suncity, connections to the organised crime groups, to the people in the casinos. The Suncity Group was moving huge volumes of money out of China into Macau and even further afield.
Gambling is illegal in China. So it’s inevitable for them to use the illegal channel to take the money out from China.
Suncity was, on paper, basically a gambling promoter. But it was so much more than that. Not only did it have these listed companies, it also had these other networks of businesses across Asia. People who talk about Suncity and law enforcement in the region in fact characterised it more as a Pan-Asian underground bank, which allowed the flows of both legal and illicit money across the region.
The underground financial networks, such as those that were operated by Suncity, are ultimately key to North Korea’s abilities to operate abroad.
Oftentimes, North Korea will seek out jurisdictions that have secrecy laws that afford the country to hide its identity so that it can repatriate that illicit revenue to support the regime’s nuclear weapons and ballistic missile programme.
So the ability to launder money, the ability to move money through the international financial system without being detected, is critical for North Korea’s abilities to continue building its weapons programme.
Over the course of our investigation we also discovered a connection between Suncity Group and an emigre family in Macau. The patriarch of the family was called Suen Chuen Pun. And defector testimony and official records suggest this man, Suen Chuen Pun, was dispatched in the 1950s by North Korea to Macau as an agent charged with raising money for the regime.
Suen Chuen Pun was the head of the Son family that has since then established a wide range of companies in Macau and further afield. These companies we believe were paying for the oil that was being shipped to North Korea through the international financial system that provided a lifeline for Pyongyang.
So the only place where a North Korean merchant acting on the orders from the state or a spy could go to meet somebody and do it more or less unnoticed, it was Macau. And in the North Korean intelligence services, Macau was a dream job.
A lot of these people at the heart of this network have been operating in Hong Kong and Macau for a long time.
We believe one of the most important individuals is a person named Sun Tit Fan. According to family sources, Sun Tit Fan is the grandchild of the original patriarch that went to Macau.
And he’s been in business with a number of people who are alleged to be triads and others who are closely connected to identified triads. He’s on documents alongside, we think, the owner of the Ryugyong Corp that’s been allegedly involved in smuggling narcotics.
So Sun Tit Fan is a key part of this story. But not only does he connect to the North Korean intelligence operations and the oil smuggling operations, he’s well-known for driving a racing car in races that were sponsored by Suncity. And for years he operated a company in conjunction with Alvin Chau called the Sun International Automobile Company. He had a shopfront in Macau where it sold Ferraris, Lamborghinis, and a range of other luxury cars.
We still don’t have every last piece of the puzzle. But until now, no one has been able to stitch together such a detailed picture of these networks.
So what we have here, we think, is a person intimately connected to North Korea’s intelligence apparatus abroad in business with Alvin Chau and the Suncity Group. And Alvin Chau and the Suncity Group were also ultimately connected to the modern day oil smuggling operations to North Korea through a number of Hong Kong nationals, including Gary To.
This raises a much bigger question, which is about China. Why does China seem to allow this kind of criminal activity to go on under its nose, given that Beijing itself has signed up to these sanctions?
China’s overwhelming antipathy towards the United States and, by extension, many of the other western powers, has drawn it into close relationships with countries that are engaging in organised crime or are regarded by the west as international pariahs.
When I was on the UN Panel of Experts we would often notify China of potential breaches of the sanctions regime unfolding in their jurisdiction. This included things like ship-to-ship transfers. And it was common to not receive a response from China.
A lot of the tankers continue to take safe haven in Chinese waters. A lot of these networks continue to move money through the international financial system. But the starting off point are nearly always Chinese banks that hold accounts secretly controlled by North Koreans. So the North Koreans have a lifeline.
North Korea represents a real conundrum for China. On the one hand, China fought with North Korea in the Korean war in the 1950s, and North Korea shares a border with China. But on the other hand, North Korea’s nuclear missiles are seen by Beijing as the crucial pretext that allows America to maintain its aggressive forward posture in Asia.
In 2017, China and Russia were able to co-operate in imposing the oil cap on North Korea. But now they are pushing not only to alleviate sanctions on North Korea, but they have actually been trying to publicly excuse and justify North Korea’s more aggressive behaviour.
Since Russia’s invasion of Ukraine we know North Korea has a relationship with Russia, supplying artillery and other weapons, in return for Russia not implementing sanctions and potentially helping out this cash-strapped regime with cash or fuel.
China was quite willing until recently to co-operate with the United States, but is an ancient history now.
The reality is that those who shield the DPRK from the consequences of this escalatory missile test put the Asian region and entire world at risk of conflict.
It’s a kind of full-scale cold war with the United States. So they see no reasons why they should press North Korea, creating potential for instability near their borders. They need North Korea to be afloat. They need Korean Peninsula to be stable and divided.
90 per cent of North Korea’s trade is with China. If China really wanted to cut off trade, cut off oil, cut off fuel, cut off supplies, food, they can do that. But of course China is not willing to do that.
It’s exceedingly unlikely that Kim Jong Un will ever give up nuclear weapons. And we’ve tried almost everything short of military conflict, from bilateral negotiations to multilateral negotiations to maximum pressure to summitry and diplomacy. And yet we are here, where North Korea has up to 60 nuclear warheads.
The missile and nuclear development, these programmes themselves are already concern for Japan because it’s just neighbouring country. Any failure of the test or any fall of the debris could cause serious damage to Japan. Just imagine, who wants your kids to tell, this is a missile alert. Any time if you hear this you have find the underground shelter. Who wants to live their life like that in any area of the world?
Look, back in the 1980s they were seen as a joke. But what did happen to the ruling elite of other communist countries? They are in the proverbial waste bin of history. But North Korea is still run by the second and third generation of the same elite and likely to be run eventually by the fourth generation as well.
But of course this story is about much more than just North Korea itself.
I don’t think it’s right to blame just China and Russia for the weaknesses in the sanctions regime. You will see British criminals, French criminals, German criminals teaming up with the North Koreans where they felt they could make a buck, including white-collar criminals.
So when we see a ship-to-ship transfer that unfolds, what’s behind that is not just one point of failure, but a whole series of failures. It’s not just, let’s say, the government’s responsibility for not seizing the ship or preventing it from happening, but it’s the bank that has failed in its due diligence. It’s the insurance company that has failed to collect the proper documentation. It’s the ship registry that maybe didn’t peek behind the curtain a little bit more. So there’s this entire chain then that’s required for effective sanctions implementation.
The real problems often lie with the so-called gatekeepers, the lawyers and the accountants that set up shell companies and special purpose vehicles that enable funds to be transferred relatively anonymously.
North Korea’s sanction evasion activities are not only happening in Asia, but Africa, Middle Eastern area, or Latin Americas because North Korean activities can be easily under the radar of the authorities of these countries.
The end result is that the weapons programme keeps going. The nuclear programme keeps going. It doesn’t abate. And so we need to step the pressure back up.
We should recognise globally that this is now an organised crime problem. And we should try and defuse some of the national tensions and the blame game around sanctions and encourage international law enforcement co-operation based on solid criminal charges that would result in convictions to send a very clear message to certain high-profile individuals.
Western countries could do a lot more. At the moment the Unica continues to sail to North Korea. But the only countries to have sanctioned it are the European Union. The United States has not sanctioned it. And critically, the United Nations has not sanctioned it despite being well aware of the fact that it continues to deliver oil to North Korea. We think we should more aggressively target these networks. And we should also target the supply chains that are helping the Unica getting oil to North Korea. All of that could be done and should be done.
To get really, truly effective action, it’s going to be up to the law enforcement agencies of particular member states, including the People’s Republic of China.
There’s no question that the central authority of Beijing and of the Communist party is directed to try to clean up this type of institutionalised crime, but it certainly still exists. And the question is, will a more opaque China, such as I think we’re now going into, create more shadows and more nooks and crannies for members of organised crime groups to thrive in?
The issue of the operations of the triads of the Chinese organised crime groups is not just a criminal issue. It is a wider strategic issue, and it’s something that we should all take a lot more seriously than we’re currently doing now.
When it comes to dealing with the holes in the global financial system, there is lots that can be done to sanction individuals, companies, middlemen, even catch and arrest criminals. But the brute fact is that sanctions haven’t worked, diplomacy is going nowhere, and North Korea responds very badly to threats of force. So when Kim Jong Un appears with his young daughter and sends the message to the world that he’s not going anywhere, and neither is nuclear weapons, this raises the question: is this something that we’re going to have to learn to live with?
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