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Financial Institutions Warned Over North Korea Ties
SEOUL, DEMOCRATIC PEOPLE’S REPUBLIC OF KOREA - In a move to strengthen security protocols in the region, the U.S. Department of the Treasury has issued an advisory to financial institutions worldwide warning them of potential risks associated with providing banking services to North Korean government agencies and front companies engaged in illicit activities.
Advisory Issued by U.S. Department of the Treasury
According to the advisory, the Democratic People’s Republic of Korea (DPRK) is believed to be seeking banking services elsewhere following the finding of Banco Delta Asia SARL to be a financial institution of “primary money laundering concern” pursuant to Section 311 of the USA PATRIOT Act.
“We urge all financial institutions to take reasonable steps to guard against the abuse of their financial services by North Korea, which may be seeking to establish new or exploit existing account relationships for the purpose of conducting illicit activities,” said a spokesperson for the U.S. Department of the Treasury.
Illicit Activities Associated with North Korean Government Agencies
The advisory is consistent with the U.S. Department of the Treasury’s efforts to ensure that U.S. financial institutions are not used as a conduit for the laundering of proceeds from illicit activities such as:
- Currency counterfeiting
- Narcotics trafficking
- Counterfeit cigarette smuggling
- Financing and involvement in weapons of mass destruction and missile proliferation
Background on Section 311 of the USA PATRIOT Act
Section 311 of the USA PATRIOT Act added Section 5318A to the Bank Secrecy Act, authorizing the Secretary of the Treasury to find a foreign financial institution, jurisdiction, class of transactions or type of account to be of “primary money laundering concern”. Upon such finding and following a rulemaking process, the Secretary is authorized to take additional steps to further protect the U.S. financial system by requiring U.S. financial institutions to take certain “special measures” with respect to the specified entity.
Action Required by Financial Institutions
Financial institutions worldwide are being encouraged to take similar precautions to those taken by U.S. financial institutions, including:
- Terminating correspondent account relationships with entities deemed to be of “primary money laundering concern”
Financial institutions with questions about this advisory may contact the Financial Crimes Enforcement Network’s regulatory helpline at 1-800-949-2732.
Monitoring and Further Action
The U.S. Department of the Treasury is actively monitoring this situation and will take any further action as appropriate.