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Brussels, 18.9.2009

COM(2009) 497 final

Proposal for a

COUNCIL REGULATION

amending Council Regulation (EC) No 329/2007 concerning restrictive measures against the Democratic People’s Republic of Korea

EXPLANATORY MEMORANDUM

1. Pursuant to UN Security Council Resolution 1718 (2006) restrictive measures were imposed against the Democratic People's Republic of Korea by means of Common Position 2006/795/CFSP and Council Regulation (EC) No 329/2007.

2. On 12 June 2009 the UN Security Council adopted Resolution 1874 (2009), which enlarged the scope of the restrictive measures and imposed new restrictive measures against the Democratic People's Republic of Korea.

3. To implement Resolution 1874 (2009), Common Position 2009/573/CFSP amends Common Position 2006/795/CFSP and introduces additional restrictive measures concerning, in particular, the persons targeted by the freezing of assets and the activities of financial institutions which could contribute to the Democratic People's Republic of Korea's nuclear-related, other weapons of mass destruction-related or ballistic missile-related programmes, public financial support for trade with the Democratic People's Republic of Korea, including export credits, and official financial assistance to the Democratic People's Republic of Korea. Common Position 2009/573/CFSP also provides for a ban on trade in goods and technology which could contribute to the Democratic People's Republic of Korea's nuclear-related, other weapons of mass destruction-related or ballistic missile-related programmes, and for the inspection of certain cargoes to and from the Democratic People's Republic of Korea.

4. Some of these measures fall within the scope of the Treaty and Common Position 2009/573/CFSP provides for Community action to implement them.

5. The Regulation must also make provision for measures concerning the protection and processing of personal data and the handling of classified information.

6. The Commission therefore proposes to implement these restrictive measures by means of a Regulation amending Regulation (EC) No 329/2007.

Proposal for a

COUNCIL REGULATION

amending Council Regulation (EC) No 329/2007 concerning restrictive measures against the Democratic People’s Republic of Korea

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Articles 60 and 301 thereof,

Having regard to Council Common Position 2009/573/CFSP of 27 July 2009 amending Common Position 2006/795/CFSP concerning restrictive measures against the Democratic People's Republic of Korea[1],

Having regard to the proposal from the Commission,

After consulting the European Data Protection Supervisor,

Whereas:

7. In accordance with United Nations Security Council Resolution 1874 (2009), additional restrictive measures were imposed against the Democratic People's Republic of Korea (hereinafter referred to as "North Korea") by Common Position 2009/573/CFSP, including a ban on the supply, sale or transfer of certain items, materials, equipment, goods and technology which could contribute to North Korea's nuclear-related, other weapons of mass destruction-related or ballistic missile-related programmes.

8. Common Position 2009/573/CFSP provides for the inspection of certain cargoes to and from North Korea and, in the case of aircraft and vessels, additional pre-arrival or pre-departure information for goods brought into or out of the Community. This information must be provided in accordance with the provisions on entry and exit summary declarations of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code[2], and Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code[3].

9. Common Position 2009/573/CFSP also provides for a ban on bunkering services or any other services for North Korea's vessels in order to prevent the transport of items whose export is prohibited under Regulation (EC) No 329/2007.

10. Common Position 2009/573/CFSP also extends measures to freeze funds to other categories of persons and introduces due diligence measures in respect of the activities of financial institutions which could contribute to North Korea's nuclear-related, other weapons of mass destruction-related or ballistic missile-related programmes.

11. These measures fall within the scope of the Treaty establishing the European Community and, therefore, notably with a view to ensuring their uniform application by economic operators in all Member States, Community legislation is necessary in order to implement them as far as the Community is concerned.

12. Regulation (EC) No 329/2007 should therefore be amended accordingly.

13. This Regulation respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union and notably the right to an effective remedy and to a fair trial, the right to property and the right to protection of personal data. This Regulation should be applied in accordance with those rights and principles.

14. For the implementation of this Regulation some personal data concerning natural and legal persons, entities and bodies whose funds and economic resources must be frozen in accordance with Regulation (EC) No 329/2007 must be made public and treated in an appropriate manner under Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data[4] and Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data[5].

15. Provision must also be made for the handling of classified information at the Commission.

16. In order to ensure that the measures provided for in this Regulation are effective, this Regulation should enter into force immediately,

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EC) No 329/2007 is amended as follows:

1) Article 2 is replaced by the following:

" Article 2

1. It shall be prohibited:

(a) to sell, supply, transfer or export, directly or indirectly, the goods and technology, including software, listed in Annex I, whether or not originating in the Community, to any natural or legal person, entity or body in, or for use in North Korea;

(b) to participate, knowingly and intentionally, in activities the object or effect of which is to circumvent the prohibition referred to in point (a).

2. Annex I shall include any items, materials, equipment, goods and technology, including software, which are dual-use items or technology as defined in Regulation (EC) No 428/2009[6], which could contribute to North Korea's nuclear-related, other weapons of mass destruction-related or ballistic missile-related programmes. It shall not include goods and technology included in the EU Common List of Military Equipment[7].Annex I also lists certain other items, materials, equipment, goods and technology which could contribute to North Korea's nuclear-related, other weapons of mass destruction-related or ballistic missile-related programmes.

3. It shall be prohibited to purchase, import or transport the goods and technology listed in Annex I from North Korea, whether the item concerned originates or not in North Korea."

2) Article 3(1) is replaced by the following:

"1. It shall be prohibited:

(a) to provide or obtain, directly or indirectly, technical assistance related to goods and technology listed in the EU Common List of Military Equipment or in Annex I, and to the provision, manufacture, maintenance and use of goods listed in the EU Common List of Military Equipment or in Annex I to or from any natural or legal person, entity or body in, or for use in, North Korea;

(b) to provide or obtain, directly or indirectly, financing or financial assistance related to goods and technology listed in the EU Common List of Military Equipment or in Annex I, including in particular grants, loans and export credit insurance, for any sale, supply, transfer or export of such items, or for any provision of related technical assistance to or from any natural or legal person, entity or body in, or for use in, North Korea;

(c) to participate, knowingly and intentionally, in activities, the object or effect of which is to circumvent the prohibitions referred to in points (a) and (b)."

3) The following article is added:

"Article 3a

1. In order to prevent the transfer of goods and technology which could contribute to North Korea's nuclear-related, other weapons of mass destruction-related or ballistic missile-related programmes set out in Annex I or of the luxury goods listed in Annex III, freighter aircraft and merchant shipping to and from North Korea shall be required to provide pre-arrival or pre-departure information to the competent authorities of the Member State concerned for all goods brought into or out of the Community territory.

The rules governing the obligation to provide pre-arrival or pre-departure information, in particular the time limits to be respected and data to be required, shall be as determined in the relevant provisions concerning entry and exit summary declarations in Regulation (EC) No 648/2005 of the European Parliament and of the Council[8] amending Regulation (EEC) No 2913/92 establishing the Community Customs Code, and Commission Regulation (EC) No 1875/2006[9] amending Commission Regulation (EEC) No 2454/93 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92.

Furthermore, freighter aircraft and merchant shipping to and from North Korea, or their representatives, shall declare whether the goods are covered by this Regulation and, if their export is subject to authorisation, specify the particulars of the export licence granted.

Until 31 December 2010 the entry and exit summary declarations and the additional elements required as referred to above may be submitted in written form using commercial, port or transport documentation, provided that it contains the necessary particulars.

From 1 January 2011 the additional elements required, as referred to above, shall be submitted either in written form or using the entry and exit summary declarations as appropriate.

2. A prior authorisation shall be required for bunkering services, the provisioning of vessels or any other service for North Korean vessels, unless such services are necessary for humanitarian purposes.

The competent authorities of the Member States referred to on the websites listed in Annex II shall not grant any authorisation if they determine that the supply of the service in question could contribute to the transfer of goods and technologies listed in Annex I."

4) Article 6 is replaced by the following:

" Article 6

1. All funds and economic resources belonging to, owned, held or controlled by the persons, entities and bodies listed in Annex IV shall be frozen. Annex IV shall include the persons, entities and bodies designated by the Sanctions Committee or the UN Security Council in accordance with paragraph 8(d) of UNSCR 1718 (2006).

2. All funds and economic resources belonging to, owned, held or controlled by the persons, entities and bodies listed in Annex V shall be frozen. Annex V shall include persons, entities and bodies not covered by Annex IV, who, in accordance with Article 4(1)(b) and (c) of Common Position 2006/795/CFSP, have been identified by the Council:

(a) as responsible for North Korean nuclear-related, other weapons of mass destruction-related or ballistic missile-related programmes, plus persons or bodies acting in their name or on their instructions and entities owned or controlled by them; or

(b) as providing financial services or the transfer to, through, or from the territory of the Community, or involving nationals of Member States or entities organised under their laws, or persons or financial institutions in the territory of the Community, of any financial or other assets or resources that could contribute to North Korean nuclear-related, other weapons of mass destruction-related or ballistic missile-related programmes, plus persons or bodies acting in their name or on their instructions and entities owned or controlled by them.

Annex V shall be reviewed at regular intervals and at least every 12 months.

3. Annexes IV and V shall include only the following information on listed natural persons:

(a) for identification purposes: surname and given names (including alias names and titles, if any); date and place of birth; nationality; passport and identity card numbers; tax and social security numbers; sex; address or other information on whereabouts; post held or profession; date of appointment; and

(b) the grounds for listing such as occupation or other sufficient due cause.

Annexes IV and V may also include information for identification purposes as set out above for family members of the persons listed, provided that this information is necessary in a specific case for the sole purpose of verifying the identity of the listed natural person in question.

4. No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of the natural or legal persons, entities or bodies listed in Annexes IV and V.

5. The participation, knowingly and intentionally, in activities the object or effect of which is, directly or indirectly, to circumvent the measures referred to in paragraphs 1 and 2 shall be prohibited."

5) Article 8 is replaced by the following:

" Article 8

By way of derogation from Article 6, the competent authorities of the Member States, which are indicated on the websites listed in Annex II, may authorise the release of certain frozen funds or economic resources, if the following conditions are met:

(a) the funds or economic resources are the subject of a judicial, administrative or arbitral lien established prior to the date on which the person, entity or body referred to in Article 6 was designated, or of a judicial, administrative or arbitral judgment rendered prior to that date;

(b) the funds or economic resources will be used exclusively to satisfy claims secured by such a lien or recognised as valid in such a judgement, within the limits set by applicable laws and regulations governing the rights of persons having such claims;

(c) the lien or judgement is not for the benefit of a person, entity or body listed in Annex IV or V;

(d) recognising the lien or judgement is not contrary to public policy in the Member State concerned; and

(e) the lien or judgement has been notified by the Member State to the Sanctions Committee."

6) Article 9(2) is be replaced by the following:

"2. Article 6(4) shall not apply to the addition to frozen accounts of:

(a) interest or other earnings on those accounts; or

(b) payments due under contracts, agreements or obligations that were concluded or arose prior to the date on which the person, entity or body referred to in Article 6 was designated, provided that any such interest, other earnings and payments are frozen in accordance with Article 6(1) or 6(2)."

7) Article 11 is replaced by the following:

" Article 11

1. The freezing of funds and economic resources or the refusal to make funds or economic resources available, carried out in good faith on the basis that such action is in accordance with this Regulation, shall not give rise to liability of any kind on the part of the natural or legal person or entity or body implementing it, or its directors or employees, unless it is proved that the funds and economic resources were frozen or withheld as a result of negligence.

2. The prohibitions set out in Articles 3(1)(b) and 6(4) shall not give rise to liability of any kind on the part of the natural or legal persons or entities concerned, if they did not know, and had no reasonable cause to suspect, that their actions would infringe these prohibitions.”

8) The following article is added:

“ Article 11a

1. Credit and financial institutions, in the course of their activities with the credit and financial institutions referred to in paragraph 2 and in order to avoid their activities contributing to North Korea's nuclear-related, other weapons of mass destruction-related or ballistic missile-related programmes:

(a) shall exercise constant vigilance over account activity, in particular by means of their programmes on customer due diligence and pursuant to their obligations relating to money-laundering and financing of terrorism;

(b) shall require that all information fields of payment instructions which relate to the originator and beneficiary of the transaction in question be completed and, if that information is not supplied, refuse the transaction;

(c) shall maintain all records of transactions for a period of five years and make them available to national authorities on request; and

(d) if they suspect or have reasonable grounds to suspect that funds are linked to financing for the proliferation of nuclear weapons, other weapons of mass destruction or ballistic missiles, shall promptly report their suspicions to the financial intelligence unit (FIU) or another competent authority designated by the Member State concerned, as indicated in the websites listed in Annex II, without prejudice to Articles 3(1) or 6. The FIU or other such competent authority will serve as a national centre for receiving and analysing suspicious transaction reports regarding potential proliferation financing. The FIU or other such competent authority shall have timely access, directly or indirectly, to the financial, administrative and law enforcement information that it requires in order to undertake this function properly, including the analysis of suspicious transaction reports.

2. The measures set out in paragraph 1 shall apply to credit and financial institutions in their activities with:

(a) credit and financial institutions domiciled in North Korea;

(b) branches and subsidiaries falling within the scope of Article 16 of credit and financial institutions domiciled in North Korea, as listed in Annex VI;

(c) branches and subsidiaries falling outside the scope of Article 16 of credit and financial institutions domiciled in North Korea, as listed in Annex VI; and

(d) credit and financial institutions that are neither domiciled in North Korea nor fall within the scope of Article 16 but are controlled by persons or entities domiciled in North Korea that are listed in Annex VI."

9) Article 13 is replaced by the following:

"Article 13

1. The Commission shall be empowered to:

(a) amend Annex I on the basis of decisions made by either the Sanctions Committee or the United Nations Security Council and, where appropriate, add the reference numbers taken from the Combined Nomenclature in Annex I to Regulation (EEC) No 2658/87;

(b) amend Annex II on the basis of information supplied by Member States;

(c) amend Annex III in order to refine or adapt the list of goods included therein, according to any definition or guidelines that may be promulgated by the Sanctions Committee and taking into account the lists produced by other jurisdictions, or to add the reference numbers taken from the Combined Nomenclature as set out in Annex I to Regulation (EEC) No 2658/87, if necessary or appropriate;

(d) amend Annex IV on the basis of decisions made by either the Sanctions Committee or the United Nations Security Council; and

(e) amend Annexes V and VI in accordance with decisions taken concerning Annexes II, III, IV and V of Common Position 2006/795/CFSP.

2. The Commission shall process personal data in order to carry out the tasks incumbent on it under this Regulation. These tasks include:

(a) preparing amendments of Annexes IV, V and VI to this Regulation;

(b) incorporating the contents of Annexes IV and V in the electronic consolidated list of persons, groups and entities subject to EU financial sanctions available on the Commission website[10];

(c) processing of information concerning the grounds for listing; and

(d) processing of information on the impact of the measures of this Regulation such as the value of frozen funds and information on authorisations granted by the competent authorities.

3. The Commission may process relevant data about criminal offences committed by listed natural persons, and criminal convictions or security measures concerning such persons, only to the extent that such processing is necessary for the review of the views on the grounds for listing expressed by the natural person concerned, subject to appropriate specific safeguards. Such data shall not be made public or exchanged.

4. For the purposes of this Regulation, the Commission unit listed in Annex II is designated as “controller” within the meaning of Article 2(d) of Regulation (EC) No 45/2001 in order to ensure that the natural persons concerned can exercise their rights under Regulation (EC) No 45/2001.

5. When the Commission receives classified information, it shall treat such information in accordance with Commission Decision 2001/844/EC, ECSC, Euratom[11] and, where applicable, the agreement on the security of classified information concluded between the European Union and the submitting State.

6. Documents classified at a level corresponding to ‘EU Top Secret’, ‘EU Secret’ or ‘EU Confidential’ shall not be released without the consent of the originator."

10) Annex I is replaced by the text in Annex I to this Regulation.

11) Annex IV is replaced by the text in Annex II to this Regulation.

12) The text in Annex III to this Regulation shall be added as Annex V.

13) The text in Annex IV to this Regulation shall be added as Annex VI.

Article 2

This Regulation shall enter into force on the day of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, […]

For the Council

The President […]

ANNEX I

"ANNEX I

Goods and technology referred to in Articles 2 and 3

A. Dual-use goods and technologies which could contribute to North Korea's nuclear-related, other weapons of mass destruction-related or ballistic missile-related programmes, as listed in Annex I to Regulation (EC) No 428/2009[12].

All goods and technologies listed in Annex I to Regulation (EC) No 428/2009.

B. Other items, materials, equipment, goods and technology which could contribute to North Korea's nuclear-related, other weapons of mass destruction-related or ballistic missile-related programmes.

1. Graphite designed or specified for use in Electrical Discharge Machining (EDM) machines

2. Para-aramid “fibrous or filamentary materials” (Kevlar® and other Kevlar®-like fibres)"

ANNEX II

"ANNEX IV

List of persons, entities and bodies referred to in Article 6(1)

A. Natural persons:

17. Han Yu-ro. Post: Director of Korea Ryongaksan General Trading Corporation. Other information: involved in North Korea's ballistic missile programme. Date of designation: 16.7.2009.

18. Hwang Sok-hwa. Post: Director of the General Bureau of Atomic Energy (GBAE). Other information: involved in North Korea’s nuclear programme as Chief of the Scientific Guidance Bureau in the GBAE, served on the Science Committee in the Joint Institute for Nuclear Research. Date of designation: 16.7.2009.

19. Ri Hong-sop. Year of birth: 1940. Post: Former director, Yongbyon Nuclear Research Centre. Other information: oversaw three core facilities that assist in the production of weapons-grade plutonium: the Fuel Fabrication Facility, the Nuclear Reactor, and the Reprocessing Plant. Date of designation: 16.7.2009.

20. Ri Je-son (alias Ri Che-son). Year of birth: 1938. Post: Director of the General Bureau of Atomic Energy (GBAE), chief agency directing North Korea’s nuclear programme. Other information: facilitates several nuclear endeavours including GBAE’s management of Yongbyon Nuclear Research Centre and Namchongang Trading Corporation. Date of designation: 16.7.2009.

21. Yun Ho-jin (alias Yun Ho-chin). Date of birth: 13.10.1944. Post: Director of Namchongang Trading Corporation. Other information: oversees the import of items needed for the uranium enrichment programme. Date of designation: 16.7.2009.

B. Legal persons, entities and bodies

22. Korea Mining Development Trading Corporation (aka (a) CHANGGWANG SINYONG CORPORATION; (b) EXTERNAL TECHNOLOGY GENERAL CORPORATION; (c) DPRKN MINING DEVELOPMENT TRADING COOPERATION; (d) “KOMID”). Address: Central District, Pyongyang, DPRK. Other information: Leading arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons. Date of designation: 24.4.2009.

23. Korea Ryonbong General Corporation (aka (a) KOREA YONBONG GENERAL CORPORATION; (b) LYONGAKSAN GENERAL TRADING CORPORATION). Address: Pot’onggang District, Pyongyang, DPRK; Rakwon-dong, Pothonggang District, Pyongyang, DPRK. Other information: Defence conglomerate specialising in acquisition for DPRK defence industries and support to that country’s military-related sales. Date of designation: 24.4.2009.

24. Tanchon Commercial Bank (aka (a) CHANGGWANG CREDIT BANK; (b) KOREA CHANGGWANG CREDIT BANK). Address: Saemul 1-Dong Pyongchon District, Pyongyang, DPRK. Other information: Main DPRK financial entity for sales of conventional arms, ballistic missiles, and goods related to the assembly and manufacture of such weapons. Date of designation: 24.4.2009.

25. General Bureau of Atomic Energy (GBAE) (aka General Department of Atomic Energy (GDAE)). Address: Haeudong, Pyongchen District, Pyongyang, DPRK. Other information: The GBAE is responsible for North Korea’s nuclear programme, which includes the Yongbyon Nuclear Research Centre and its 5-MWe (25-MWt) plutonium production research reactor, as well as its fuel fabrication and reprocessing facilities. The GBAE has held nuclear-related meetings and discussions with the International Atomic Energy Agency. GBAE is the primary North Korean Government agency for overseeing nuclear programmes, including the operation of the Yongbyon Nuclear Research Centre. Date of designation: 16.7.2009.

26. Hong Kong Electronics (aka Hong Kong Electronics Kish Co.). Address: Sanaee St., Kish Island, Iran. Other information: (a) owned or controlled by, or acts or purports to act for or on behalf of Tanchon Commercial Bank and KOMID; (b) Hong Kong Electronics has transferred millions of dollars of proliferation-related funds on behalf of Tanchon Commercial Bank and KOMID (both designated by the UN Sanctions Committee in April 2009) since 2007. Hong Kong Electronics has facilitated the movement of money from Iran to North Korea on behalf of KOMID. Date of designation: 16.7.2009.

27. Korea Hyoksin Trading Corporation (aka Korea Hyoksin Export And Import Corporation). Address: Rakwon-dong, Pothonggang District, Pyongyang, DPRK. Other information: (a) located in Pyongyang, DPRK; (b) subordinate to Korea Ryonbong General Corporation (designated by the UN Sanctions Committee in April 2009) and is involved in the development of weapons of mass destruction. Date of designation: 16.7.2009.

28. Korean Tangun Trading Corporation . Other information: (a) located in Pyongyang, DPRK; (b) Korea Tangun Trading Corporation is subordinate to the DPRK's Second Academy of Natural Sciences and is primarily responsible for the procurement of commodities and technologies to support North Korea’s defence research and development programmes, including, but not limited to, weapons of mass destruction and delivery system programmes and procurement, including materials that are controlled or prohibited under relevant multilateral control regimes. Date of designation: 16.7.2009.

29. Namchongang Trading Corporation (aka (a) NCG, (b) Namchongang Trading, (c) Nam Chon Gang Corporation, (d) Nomchongang Trading Co., (e) Nam Chong Gan Trading Corporation). Other information: (a) located in Pyongyang, DPRK; (b) Namchongang is a North Korean trading company subordinate to the GBAE. Namchongang has been involved in the procurement of Japanese-origin vacuum pumps that were identified at a North Korean nuclear facility, as well as nuclear-related procurement associated with a German individual. It has further been involved in the purchase of aluminium tubes and other equipment specifically suitable for a uranium enrichment programme from the late 1990s. Its representative is a former diplomat who served as North Korea’s representative for the IAEA inspection of the Yongbyon nuclear facilities in 2007. Namchongang’s proliferation activities are of grave concern given North Korea’s past proliferation activities. Date of designation: 16.7.2009."

ANNEX III

“ ANNEX V

List of persons, entities and bodies referred to in Article 6(2)

(To be completed)"

ANNEX IV

" ANNEX VI

List of persons, entities and bodies referred to in Article 11a

(To be completed)"

[1] OJ L 197, 29.7.2009, p. 111.

[2] OJ L 302, 19.10.1992, p. 1.

[3] OJ L 268, 19.10.1994, p. 32.

[4] OJ L 8, 12.1.2001, p.1.

[5] OJ L 281, 23.11.1995, p.31.

[6] OJ L 134, 29.5.2009, p. 1.

[7] The current version of the list is published in OJ C 65, 19.3.2009, p.1.

[8] OJ L 117, 4.5.2005, p. 13.

[9] OJ L 360, 19.12.2006, p. 64.

[10] http://ec.europa.eu/external_relations/cfsp/sanctions/list/consol-list.htm

[11] OJ L 317, 3.12.2001, p.1.

[12] OJ L 134, 29.5.2009, p. 1.