Financial Crime World

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Financial Institutions in Korea, Democratic People’s Republic of Under Scrutiny for Proliferation Financing Risk

Buenos Aires, November 3, 2017

The Financial Action Task Force (FATF) has issued a stern warning to countries around the world, including those with operations in the Democratic People’s Republic of Korea (DPRK), to take robust measures to combat proliferation financing risk emanating from the country.

Targeted Financial Sanctions a Must

The FATF emphasized that countries must robustly implement targeted financial sanctions against individuals and entities associated with DPRK’s nuclear or ballistic missile programs. This includes extending such sanctions to DPRK government entities, as required under UN Security Council Resolution 2270. Countries are also encouraged to propose new listings of individuals and entities meeting the designation criteria.

Key Provisions in Recent UN Security Council Resolutions

The FATF highlighted several key provisions in recent UN Security Council Resolutions related to DPRK, including:

  • Prohibiting the opening and operation of new branches, subsidiaries, and representative offices of DPRK banks in their territories
  • Closing existing branches, subsidiaries, and representative offices, as well as terminating correspondent banking relationships with DPRK banks
  • Prohibiting financial institutions from opening new representative offices or subsidiaries, branches, or banking accounts in the DPRK

Cooperation and Coordination Key

In addition, countries need to cooperate and coordinate between relevant authorities on developing and implementing policies and activities to combat proliferation financing. This includes sharing relevant information and ensuring that person and entities designated by UN Security Council Resolutions on WMD proliferation are identified, deprived of resources, and prevented from raising, moving, or using funds for the financing of proliferation.

FATF Calls for Countermeasures

For six years, the FATF has called upon its members and urged all jurisdictions to apply effective countermeasures to protect their financial systems from the ML/TF and PF threat emanating from DPRK. The organization emphasizes that compliance with AML/CFT standards is essential to disrupting the DPRK’s illicit financial activities.

Financial Institutions Must Act

The FATF warning serves as a reminder to financial institutions in Korea, Democratic People’s Republic of to take immediate action to ensure they are compliant with international AML/CFT standards. Failure to do so may result in reputational damage and potential regulatory consequences.