Title: FinCEN Warns U.S. Financial Institutions Against Providing Services to North Korean Agencies and Front Companies
Issued Date: December 1, 2005
The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, has issued a warning to American financial institutions regarding the potential risks of providing banking services to North Korean government agencies and associated front companies. The advisory was published following the designation of Macau’s Banco Delta Asia as a financial institution of “primary money laundering concern” under Section 311 of the USA PATRIOT Act.
Subject: North Korean Government Agencies and Associated Front Companies
FinCEN’s advisory highlights the concerns of the U.S. government over North Korea’s use of financial institutions for money laundering activities. These activities include:
- Currency counterfeiting
- Narcotics trafficking
- Counterfeit cigarette smuggling
- Financing of weapons of mass destruction and missile proliferation
Banco Delta Asia: A Case Study
Banco Delta Asia, headquartered in the Macau Special Administrative Region of China, was designated a financial institution of “primary money laundering concern” in a notice published in the Federal Register on September 20, 2005. The bank had reportedly provided financial services to North Korean government entities and known front companies for over 20 years, some of which were linked to:
- Drug trafficking
- Counterfeit cigarettes
- Money laundering schemes
Implications for Financial Institutions
The designation of Banco Delta Asia as a financial institution of “primary money laundering concern” authorizes the Secretary of the Treasury to take additional steps to protect the U.S. financial system from the threat posed by the institution. These steps may include:
- Requiring U.S. financial institutions to terminate correspondent account relationships with Banco Delta Asia
Financial institutions with concerns or questions about this advisory are encouraged to contact FinCEN’s regulatory helpline at 1-800-949-2732. The Department of the Treasury will provide updated information to the financial industry as warranted.