U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) Advisory: North Korean Illicit Finance and Money Laundering Activities

Summary

This advisory outlines various red flags, warning signs, and suspicious activity indicators that financial institutions should be aware of to prevent and detect North Korean-related illicit activities.

Key Points from the Advisory

Red Flags

Financial institutions should be aware of several red flags related to North Korean illicit finance, including:

• Lack of a legitimate business or commercial purpose: Transactions without a clear business or commercial purpose may indicate illicit activity.
• Unusual or complex transactions involving third-party countries: Transactions that involve multiple countries or complex payment structures may be indicative of money laundering or other illicit activities.
• Involvement with known or suspected North Korean entities: Financial institutions should be cautious when dealing with entities known to have ties to North Korea.
• Use of fake or stolen identities: Transactions involving fake or stolen identities may indicate identity theft or other forms of fraud.
• Transactions involving cash-intensive businesses: Businesses that handle large amounts of cash, such as casinos or retail stores, may be more susceptible to money laundering.

Regulatory Obligations

U.S. financial institutions are prohibited from opening or maintaining correspondent accounts for North Korean banking institutions and the Bank of Dandong.

Special Due Diligence

Financial institutions must apply special due diligence to their foreign correspondent accounts, including:

• Notifying account holders that may provide services to North Korean financial institutions
• Taking reasonable steps to identify any use of these accounts by North Korean entities

Suspicious Activity Reporting

Financial institutions should file a Suspicious Activity Report (SAR) if they know, suspect, or have reason to suspect that a transaction has no business or apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage.

Additional Guidance

Financial institutions are encouraged to use previous FinCEN advisories and guidance related to North Korean illicit finance as a reference when evaluating potential suspicious activity. They may also want to consider the specifics of their own risk profiles and business models as those relate to the guidance and red flags outlined in this advisory.