Financial Institutions Warned to Take Action Against North Korean Illicit Finance

In an effort to combat money laundering and terrorist financing, the Financial Crimes Enforcement Network (FinCEN) has issued an advisory warning financial institutions to take action against North Korean illicit finance.

Advisory Highlights Need for Due Diligence

The advisory emphasizes the importance of covered financial institutions identifying any use of their foreign correspondent accounts by North Korean financial institutions or Bank of Dandong. Institutions are also reminded to take a risk-based approach to prevent such transactions and report suspicious activity related to North Korean illicit finance.

Key Takeaways

• Financial institutions must take reasonable steps to identify the use of their foreign correspondent accounts by North Korean financial institutions or Bank of Dandong.
• A risk-based approach should be used to determine what due diligence measures are necessary to prevent the use of correspondent accounts for North Korean transactions.
• If a financial institution knows or has reason to believe that a correspondent account is being used for North Korean transactions, it must take all appropriate steps to investigate and prevent further access.
• Suspicious activity related to North Korean illicit finance should be reported in accordance with FinCEN’s suspicious activity reporting requirements.

Best Practices

• Financial institutions are encouraged to use previous FinCEN advisories and guidance related to the Democratic People’s Republic of Korea (DPRK) as a reference when evaluating potential suspicious activity.
• Institutions may also want to consider sharing information with other financial institutions, either for the purpose of filing a joint SAR or under Section 314(b) of the USA PATRIOT Act.

Additional Resources

• For further guidance on reporting suspicious activity related to North Korean illicit finance, please see FinCEN’s Advisory FIN-2013-A005 (July 2013), FIN-2009-A002 (June 2009), and FinCEN Advisory – Issue 40 (December 2005).
• Additional information on the Section 314(b) Program can be found in FinCEN’s Fact Sheet and Guidance FIN-2009-G002.

Contact Us

Financial institutions are encouraged to contact the FinCEN Resource Center at FRC@fincen.gov with any questions or comments regarding this advisory.