US Treasury action on correspondent banking arrangements with North Korea spurred by illicit activities through trade

The US Treasury has declared North Korea a jurisdiction of “primary money laundering concern” under the US Patriot Act and has released a notice of proposed rulemaking (NPRM) recommending a special measure to further isolate North Korea from the international financial system.

The action has been taken because Washington believes that one way North Korea is circumventing existing sanctions is through the support of illicit activities through the trade system.

Correspondent relations

The treasury, through its Financial Crimes Enforcement Network (FinCEN), wants to prohibit US financial institutions from opening or maintaining correspondent accounts with North Korean financial institutions.

It also wants to ban the use of US correspondent accounts to process transactions for North Korean financial institutions.

Washington believes that North Korea uses state-controlled financial institutions and front companies to conduct international financial transactions that support the proliferation and development of weapons of mass destruction and ballistic missiles.

Poor supervision

The US also argues that North Korea is subject to little or no bank supervision, anti-money laundering or combating the financing of terrorism controls.

Earlier this year, the treasury said a long-standing network of front companies and North Korean embassy personnel support illicit activities through banking, bulk cash, and trade.

Further information and further links to the NPRM can be found here.

Categories: Trade Based Financial crimes News

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