Financial Crime World

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Guidance on Preventing North Korean-Related Illicit Financial Activities

Introduction

The Financial Crimes Enforcement Network (FinCEN) has issued a guidance document for financial institutions to detect and prevent transactions related to North Korea. This document outlines specific requirements and best practices to help prevent money laundering and other illicit financial activities.

Key Requirements and Best Practices

Identifying and Reporting Suspicious Activity

  • Financial institutions are required to report any transactions that appear suspicious or have no apparent lawful purpose.
  • Institutions must maintain a risk-based approach when identifying and reporting suspicious activity.

Due Diligence Measures

  • Covered financial institutions must take due diligence measures to guard against the use of their foreign correspondent accounts for North Korean-related transactions.
  • The scope and extent of these measures will depend on the level of risk associated with each account holder or customer.

Terminating Correspondent Relationships

  • Financial institutions are required to terminate any correspondent relationship with a foreign bank if they know or have reason to believe that the account has been or is being used for North Korean-related transactions.

Importance of Information Sharing

Financial institutions should share information about potential suspicious activity with one another, either through joint SAR filings or under Section 314(b) of the USA PATRIOT Act. This can help prevent North Korean-related illicit financial activities and improve overall compliance efforts.

Additional Considerations

  • When evaluating potential DPRK-related illicit activity, institutions should consider various indicators in combination with other red flags and factors.
  • The presence or absence of a red flag is not by itself determinative of whether a transaction is suspicious.
  • Institutions may want to share information with one another for the purposes of filing a joint SAR or under Section 314(b) of the USA PATRIOT Act.

Conclusion

This guidance document provides valuable insights and best practices for financial institutions to help prevent North Korean-related illicit financial activities. By following these guidelines, institutions can improve their compliance efforts and reduce the risk of money laundering and other illicit financial crimes.