North Korean Flag Now Prohibited for U.S. Owners

A move by the Treasury Department's Office of Foreign Assets Control last month requires all U.S. incorporated shipping companies to cease the use of the North Korean flag registry for their ships. Intelligence reports have indicated that Pyongyang was making money from selling its flag at inflated prices, and that some of the ships may be engaged in illegal activities.

The Bush-administration sanctions reversed Clinton administration rules that loosened Korean War-era economic sanctions in an effort to induce the communist regime to halt long-range missile testing. The measures are also said to be aimed at punishing North Korea for illegal activities that include counterfeiting U.S. currency, drug trafficking and human smuggling. Soon after imposing these sanctions, there were signals that North Korea is again gearing up for more missile tests.

Although a Syrian-based shipping company operates one such North Korean-flagged freighter, that vessel is also owned by one of nine Delaware-based companies. This practice was banned last month by U.S. government sanctions that prohibit U.S. firms from flying the North Korean flags on their owned vessels. The deadline for these vessels to convert from the North Korean flag was May 8, but there was no word on whether any of the vessels were in compliance as of that date.

There are a total of nine ships that are owned or operated by companies incorporated in Delaware which are listed in the well-respected industry reference Fairplay World Shipping Encyclopedia. But, the United States is not alone in this practice. Industry observers also say that North Korean-flagged vessels are either owned or operated by companies in Belize, Greece, Iraq, Lebanon, Liberia, the Marshall Islands, Panama, Pakistan, Romania, St. Vincent and the Grenadines, Singapore, Syria, Turkey, Ukraine, the United Arab Emirates and Yemen.