North Korea Deemed “Primary Money Laundering Concern”
The U.S. Department of the Treasury recently announced a Notice of Finding that the Democratic People’s Republic of Korea (“North Korea”) is a jurisdiction of “primary money laundering concern” under Section 311 of the USA PATRIOT Act. The Department of Financial Services (“DFS”) shares the Treasury Department’s concerns that North Korea, acting through government agencies and associated front companies, is engaged in illicit activities and may be seeking banking services in other jurisdictions. Also, the Treasury Department, through its Financial Crimes Enforcement Network (“FinCEN”) released a notice of proposed rulemaking (“NPRM”) recommending a special measure to further isolate North Korea from the international financial system by prohibiting covered U.S. financial institutions from opening or maintaining correspondent accounts with North Korean financial institutions, and prohibiting the use of U.S. correspondent accounts to process transactions for North Korean financial institutions.
DFS directs that financial institutions take all necessary 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.
Section 311 of the USA Patriot Act authorizes 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”. Once identified, the Secretary can require U.S. financial institutions to take appropriate counter measures. In addition, DFS will take all necessary measures, including use of its enforcement powers, to ensure compliance with this Notice of Finding.