Financial Institution Customer Due Diligence Procedures in North Korea Fall Short

Global Anti-Money Laundering Watchdog Expresses Concern Over North Korean Financial Sector

Seoul, South Korea - The Financial Action Task Force (FATF), a global anti-money laundering and combating the financing of terrorism watchdog, has expressed concern over the financial institution customer due diligence procedures in North Korea.

FATF Report Highlights North Korea’s Anti-Money Laundering Deficiencies

• In its latest report, the FATF noted that North Korea’s anti-money laundering (AML) and combating the financing of terrorism (CFT) regime remains deficient.
• The organization urged North Korea to immediately and meaningfully address its AML/CFT deficiencies.

Widespread Concerns Over Illicit Activities

• The FATF also expressed concern over North Korea’s illicit activities related to the proliferation of weapons of mass destruction (WMDs) and their financing.
• As such, it reaffirmed its 2011 call on its members and urged all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with North Korean companies, financial institutions, and those acting on their behalf.

FATF Calls for Action

• The FATF further called on its members and other jurisdictions to apply effective counter-measures, including targeted financial sanctions in accordance with applicable United Nations Security Council Resolutions.
• This includes closing existing branches, subsidiaries, and representative offices of North Korean banks within their territories and terminating correspondent relationships with them.

Enhanced Due Diligence Measures

• The lack of effective customer due diligence procedures in North Korea has raised concerns among international financial institutions and governments.
• The FATF’s call for action highlights the need for enhanced due diligence measures to mitigate the risks associated with transactions involving North Korean entities.
• In related news, Iran was also placed on a list of high-risk jurisdictions by the FATF, citing its failure to fully address AML/CFT deficiencies and implement measures required to combat terrorism financing.

Importance of Robust Customer Due Diligence Procedures

• The FATF’s report serves as a reminder to financial institutions to exercise enhanced due diligence when dealing with transactions involving high-risk jurisdictions.
• This includes conducting thorough customer due diligence, monitoring suspicious transactions, and reporting any potential money laundering or terrorist financing activities to the relevant authorities.

The global community continues to grapple with the challenges of money laundering and terrorism financing. The FATF’s report underscores the importance of robust customer due diligence procedures in preventing financial crimes and maintaining the integrity of the international financial system.