Maldives has denied accusations that the country has illegally traded with black-listed North Korea.

Japan has reported spotting a North Korean-flagged tanker lying alongside Maldivian-flagged oil tanker“Xin Yuan 18” in the East China Sea.

A statement released by Japan's Ministry of Foreign Affairs, on Tuesday, reads, "judging from the fact that the two vessels lay alongside each other with their lights turned on at night, both vessels could have been engaged in some type of activity. Following a comprehensive assessment, the Government of Japan strongly suspects that they conducted ship-to-ship transfers banned by UNSCR [United Nations Security Council Resolutions]". Japan added that the Security Council Committee has been informed of the matter.

Maldives' Ministry of Foreign Affairs issued a statement that said the tanker “Xin Yuan 18” is not registered to the Maldives Transport Authority.

The ministry said the tanker's use of the Maldivian flag is a violation of the Maldivian laws and regulations, as the island nation do not allow flag of convenience to foreign owned vessels to operate outside Maldivian waters.

It said the Maldives government is taking the issue seriously and is investigating the matter.

It added that Maldives does not register foreign vessels that travel outside Maldivian territory, and that therefore it is not legal for the tanker to be carrying a Maldivian flag.

Since the end of 2017, Japan's Maritime Self-Defense Force and Coast Guard have been conducting surveillance activities for such ship-to-ship transfers in the Yellow Sea, between China and the Korean Peninsula, and the neighboring East China Sea.

The reports on multiple Japanese government website include photographs of the ship-to-ship transfer taking place on February 24, which has been prohibited by the United Nations Security Council.