Guidance Document: Reporting Suspicious Activity Involving North Korea

Introduction

This document outlines the requirements and recommendations for covered financial institutions regarding suspicious activity reporting related to North Korean illicit finance.

Due Diligence Requirements

• Risk-Based Approach: Covered financial institutions must take a risk-based approach when deciding what due diligence measures are necessary to guard against the use of their foreign correspondent accounts for transactions involving North Korean financial institutions or Bank of Dandong.
• Regular Review: Financial institutions should regularly review and update their due diligence procedures to ensure they remain effective.

Suspicious Activity Reporting

• SAR Filings: If a financial institution knows, suspects, or has reason to suspect that a transaction is suspicious, it should file a Suspicious Activity Report (SAR).
• Joint SARs: Financial institutions may want to consider filing joint SARs when they have reason to suspect that a transaction is suspicious.
• Section 314(b): This section establishes a voluntary information sharing mechanism allowing financial institutions to share information with one another regarding possible terrorist activity or money laundering.

Red Flags and Indicators

• Presence of Red Flags: The presence or absence of a red flag in any given transaction is not determinative of whether a transaction is suspicious.
• Evaluation of Indicators: Financial institutions may want to consider evaluating indicators of potential North Korean-related illicit activity in combination with other red flags and factors.

Information Sharing

• Sharing Information: Financial institutions are encouraged to share information with one another, as appropriate, either for the purposes of filing a joint SAR or under Section 314(b) of the USA PATRIOT Act.
• Section 314(b): This section establishes a voluntary information sharing mechanism allowing financial institutions to share information with one another regarding possible terrorist activity or money laundering.

Additional Guidance and Resources

• FinCEN Advisories: The document references several FinCEN advisories related to North Korean illicit finance, including FIN-2013-A005, FIN-2009-A002, and FinCEN Advisory – Issue 40.
• SAR Sharing: Financial institutions may want to consider filing joint SARs when they have reason to suspect that a transaction is suspicious.

Conclusion

This document provides guidance for covered financial institutions regarding the reporting of suspicious activity related to North Korean illicit finance. Financial institutions are encouraged to regularly review and update their due diligence procedures, file Suspicious Activity Reports (SAR) as necessary, and consider sharing information with one another to prevent and detect money laundering and terrorist financing activities involving North Korea.