Archive for the ‘Banking’ Category

FinCEN designates Latvian Bank for North Korea links

Wednesday, February 14th, 2018

UPDATE 1 (2018-2-19): According to the AFP:

The European Central Bank said Monday it has frozen payments by the third-largest bank in tiny Baltic state Latvia, as its finances have deteriorated in the wake of money laundering allegations from Washington.

“Temporarily, and until further notice, a prohibition of all payments by ABLV bank on its financial liabilities has been imposed, and is now in effect,” the ECB said in a statement.

It is the first time the ECB has used its power to impose a moratorium since taking on eurozone-wide banking supervision responsibilities in 2014.

The US Department of the Treasury last week named ABLV “an institution of primary money laundering concern” and accused it of connections to North Korea’s weapons development programme.

ABLV’s financial position, which had previously been stable, has rapidly deteriorated since as it found its access to the financial system cut off, even threatening the bank’s survival.

In late September 2017, the bank’s balance sheet stood at around 3.6 billion euros ($4.5 billion), with 1.0 billion euros of loans and 2.7 billion in deposits.

Just two days before the ECB’s moratorium, Latvian supervisor FCMC issued a statement saying the bank’s capital and liquidity ratios — key indicators of a bank’s financial health — were in good shape.

The ECB decision on Monday comes after Latvian central bank governor Ilmars Rimsevics, who sits on the ECB governing council, was arrested Saturday by the country’s Corruption Prevention Bureau (KNAB).

A source familiar with the case told AFP there was no connection between the ABLV case and the governor’s arrest.

ORIGINAL POST (2018-2-14): According to the FinCEN press release:

FinCEN Finds the Bank Orchestrates Money Laundering Schemes, Obstructs Regulatory Enforcement, and Has Conducted Activity Linked to North Korea

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) today issued a finding and notice of proposed rulemaking (NPRM), pursuant to Section 311 of the USA PATRIOT Act, seeking to prohibit the opening or maintaining of a correspondent account in the United States for, or on behalf of, ABLV Bank. FinCEN is proposing this action based on its finding set out in the NPRM that ABLV is a foreign bank of primary money laundering concern.

“FinCEN will continue to take action against foreign banks that disregard anti-money laundering safeguards and become conduits for widespread illicit activity,” said Steven T. Mnuchin, Secretary of the Treasury. “Deficient practices at banks foster a wide array of illicit conduct, including activity linked to North Korea’s weapons program and corruption connected to Russia and Ukraine. FinCEN is committed to protecting the U.S. financial system from these types of risks.”

As described in the finding, ABLV has institutionalized money laundering as a pillar of the bank’s business practices. ABLV’s management permits the bank and its employees to orchestrate money laundering schemes; solicits high-risk shell company activity that enables the bank and its customers to launder funds; maintains inadequate controls over high-risk shell company accounts; and seeks to obstruct enforcement of Latvian anti-money laundering and combating the financing of terrorism (AML/CFT) rules in order to protect these business practices.

ABLV’s failure to implement, and disregard for, effective AML/CFT and sanctions policies and procedures have made the bank attractive to a range of illicit actors engaged in organized crime, weapons proliferation, corruption, and sanctions evasion. Illicit financial activity at the bank includes transactions for parties connected to UN-designated entities, some of which are involved in North Korea’s procurement or export of ballistic missiles. In addition, ABLV has facilitated transactions for corrupt politically exposed persons and has funneled billions of dollars in public corruption and asset stripping proceeds through shell company accounts. ABLV failed to mitigate the risk stemming from these accounts, which involved large-scale illicit activity connected to Azerbaijan, Russia, and Ukraine.

Section 311 actions alert the U.S. financial sector to foreign institutions, such as ABLV, that are of primary concern and through the public rulemaking process, if necessary, cut them off from the U.S. financial sector.

Here is coverage in the Korea Herald:

Last year, an investigation by the US Federal Bureau of Investigation and Treasury found that five other Latvian banks, which mainly serve nonresident clients, violated the United Nations Security Council’s sanctions against North Korea and rules on anti-money laundering and the financing of terrorism.

Latvia’s Financial and Capital Market Commission confirmed the banks’ illicit activity and assigned it financial penalties totaling 3.5 million euros ($4.3 million).

It is the third time the US government has imposed sanctions against a foreign bank for dealing with North Korea.

In 2005, Macau-based Banco Delta Asia had some $25 million in North Korean funds frozen under US sanctions, as 24 companies including Chinese banks stopped dealing with the North, putting Pyongyang under severe financial strain. The US also blacklisted China’s Bank of Dandong in June last year for laundering money for North Korea.

“We have made clear to countries and companies around the world that they can choose to trade with North Korea or the United States, but not both,” the US Treasury’s Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker said in an anti-money laundering and financial crimes conference in New York on Tuesday.

“We will target not only companies that actually know they are being exploited, but also those that should know. We are resolved that anyone who knowingly aids North Korea faces being cut off from the US financial system.”

Read the full story here:
Latvian bank faces US sanctions for dealing with NK
Kim So-hyun
Korea Herald
2018-2-14

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Sanctioned Foreign Trade Bank can’t pay North Korea’s UN dues…

Tuesday, February 13th, 2018

Reuters reports that North Korea cannot pay its UN dues owing to sanctions on its official hard currency repository, the Foreign Trade Bank (FTB). According to the article:

North Korea’s U.N. Ambassador Ja Song Nam met with U.N. management chief Jan Beagle on Friday to ask the world body to help secure a bank transaction channel so Pyongyang could pay the nearly $184,000 it says it owes for 2018.

U.N. member states are required to pay assessed contributions to the world body’s regular and peacekeeping budgets, as well as a budget for international tribunals.

U.S. and U.N. sanctions on the Foreign Trade Bank, North Korea’s primary foreign exchange bank, were preventing the country ”from honoring its obligation as a U.N. member state by hindering even normal activities such as payment of the U.N. contribution,” the North Korean mission said in a statement late on Friday.

The United States sanctioned the Foreign Trade Bank in 2013, while the U.N. Security Council blacklisted the bank last August.

The 15-member U.N. Security Council has unanimously boosted sanctions on North Korea since 2006 in a bid to choke funding for Pyongyang’s nuclear and ballistic missile programs.

According to the U.N. Charter, countries in arrears in an amount that equals or exceeds the contributions due for two preceding years can lose their vote in the 193-member U.N. General Assembly. The General Assembly can grant an exception if a country can show that conditions beyond its control contributed to the inability to pay.

The U.N. website said that as of Jan. 28 there 12 countries in arrears of more than two years. Apart from its 2018 dues, North Korea said it is up to date with its payments.

I know that many in the diplomatic and NGO communities have been physically bringing in cash to fund their operations in Pyongyang since the FTB was sanctioned.

There was a Russian Bank, Bank Sputnik, that had maintained a financial link to the FTB to service the diplomatic community. However, this banking link was severed in September 2017 and apparently remains closed.

UPDATE (2018-2-21): A news site I was previously unaware of has some interesting information on the relationship between the DPRK’s Foreign Trade Bank and the Russian bank, Sputnik. According to Inner City News:

In the face of North Korea sanctions, the UN in December 2017 used the sanctioned Foreign Trade Bank and Russia’s Sputnik Bank to transfer EUR 3,974,920.62 into the country, documents obtained by Inner City Press show. A letter from Sputnik Bank states that “unauthorized person (I.V. Tonkih) led negotiations with Korean party on interbank correspondent relationship.” Photos here.

NK News did a better job reporting on the relationship between Sputnik and the FTB.

Read the full story here:
North Korea says unable to pay U.N. dues, blames sanctions
Reuters
2018-2-10

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North Korea opens its first toll expressway

Thursday, January 18th, 2018

 

Pictures above via @EricTalmadge (Jan 26, 2018)

Institute for Far Eastern Studies (IFES)

According to the Russian embassy in Pyongyang, starting January 20, 2018, North Korea will begin collecting tolls on the expressway between Pyongyang and Wonsan—a first time for the country to collect such tolls.

According to the Seoul-Pyongyang News, the Russian embassy explained in its Facebook on January 17 that it would be “the first time for the North Korean drivers to pay 8 euros (equivalent to 10,450 won in the South Korean currency) to take the Pyongyang-Wonsan Tourist Motorway.”

This recently resurfaced motorway first opened in September 1978, connecting Wonsan (Kangwon province) on the east and Pyongyang City on the west.

The recent photos provided by the embassy reveal an electronic payment station collecting the toll at the entrance of the expressway. They also reveal a map showing the Pyongchon Kwangmyong Technology Exchange Station, where drivers can purchase (or recharge) electronic payment cards and Mirae electronic cards issued by Mirae Bank.

In the meantime, more than one foreign diplomat in Pyongyang said that the North Korean authorities had sent a letter to the foreign missions and the representatives of international organizations in Pyongyang on January 15 to inform them of the new policy, Radio Free Asia reported.

Another Western diplomat in Pyongyang, who wanted to remain anonymous, said that the letter included the highway toll policy and detailed regulations, which explained that it would cost about 8 euros (0.02 euro per kilometer) or about USD10 for a total of 194 kilometers round trip between Pyongyang and Wonsan (or 3.88 euro for one way), if one is traveling by ordinary passenger car. However, large-sized buses will be charged a toll of about 27 euros for a roundtrip—Pyongyang to Wonsan and back—or 13.58 euros for a one-way trip.

The new tolls are expected to be applied to not only foreign residents in Pyongyang, such as diplomats and the agents of international organizations, but also the general public.

UPDATE: Here are most of the images posted by the Russian Embassy Facebook Page:

The toll fees are being managed by “Mirae Bank”. Mirae Bank Cards are available on Mirae Street.

 

This is the first toll booth outside of Pyongyang:

 

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DPRK resolves debt with Poland

Wednesday, October 25th, 2017

According to Yonhap:

North Korea cleared off its debt to Poland in 2012 after the European country signed a deal with the North to write off 61 percent of the debt the previous year, Voice of America reported Thursday.

The Polish Treasury Department told VOA’s Korean Service that Poland held talks with North Korea on a debt write-off in 2011 and the North implemented what it was required to do under the agreement the same year.

According to the contract obtained by VOA, the agreement, signed in Pyongyang on June 1, 2011, stipulates that the North’s debt amounted to roughly US$4.31 million as of the reported year, including the production and delivery costs of Mi-2 military helicopters for which the Polish communist regime struck a deal with the North in 1986.

The report also said Poland’s debt relief was linked to the North’s provision of US$1.5 million in cash to purchase a ship to a North Korea-Poland joint venture shipping firm established in 1967.

Under the debt write-off deal, the North was also required to foot the bill of $200,000 to repair the Polish Embassy in Pyongyang. The repair project was based on an agreement between representatives from the two countries’ foreign ministries and the North was obligated to transfer the money to the embassy’s account.

In case the obligations are fulfilled, the agreement says, Poland will write off 61 percent of the North’s debt that corresponds to around $2.61 million.

North Korea currently owes debts to Sweden, Switzerland and Finland. The countries earlier said they had no intention of writing off the North’s debts.

Read the full story here:
N. Korea settles bill with Poland in 2012 after 61 pct of its debt written off: report
Yonhap
2017-10-25

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China closes more RMB bank accounts linked to North Korea

Monday, September 11th, 2017

UPDATE 2 (2017-9-12): According to the Global Times/Reuters (PR China):

Large State banks halt services for North Korean clients, tellers say

The big four Chinese State-owned banks have stopped providing financial services to new North Korean clients, according to branch staff, amid US concerns that the Chinese government has not been tough enough over North Korea’s repeated nuclear tests.

Tensions between the US and North Korea have increased after the sixth nuclear test conducted by Pyongyang on September 3 prompted the United Nations Security Council to impose further sanctions on Tuesday.

Chinese banks have come under scrutiny for their role as a conduit for funds flowing to and from North Korea.

China Construction Bank (CCB) has “completely prohibited business with North Korea,” said a bank teller at a branch in Northeast China’s Liaoning Province. The ban started on August 28, the teller said.

A person answering the customer hotline at the world’s largest lender, Industrial and Commercial Bank of China (ICBC), said the bank had stopped opening accounts for North Koreans and Iranians since July 16. The person did not explain why or answer further questions.

The measures taken by the largest Chinese banks began as early as the end of last year, when the city branch of Bank of China (BOC) in Dandong, Liaoning Province, which borders North Korea, stopped allowing North Koreans to open individual or business accounts, said a BOC bank teller who declined to be identified.

Existing North Korean account holders could not deposit or remove money from their accounts, the BOC teller said.

At Agricultural Bank of China (ABC), a teller at a branch in Dandong said North Koreans could not open accounts. The teller did not provide further details.

Official representatives for BOC, ICBC, CCB and ABC could not be reached for comment.

Banks in Dandong have been under the microscope as tensions have risen, given the city’s proximity to North Korea.

In June, the US accused the Bank of Dandong, a small lender, of laundering money for North Korea.

Attempts to slowly choke off the flow of funds to and from North Korea come after the US imposed sanctions on a Chinese industrial machinery wholesaler that it said was acting on behalf of a Pyongyang bank already covered by UN sanctions for supporting the proliferation of weapons of mass destruction.

UPDATE 1 (2017-9-11): According to the Financial Times:

China’s biggest banks have banned North Koreans from opening new accounts in an unprecedented move to clamp down on financial flows with the country’s unruly neighbour.

Multiple bank branches, including those of the country’s top four lenders, told the Financial Times they had imposed a freeze on new accounts for North Korean people and companies. Some are going even further, saying they are “cleaning out” existing accounts held by North Koreans by forbidding new deposits.

Banks implementing a ban on new accounts include the country’s big five — Bank of China, China Construction Bank, Agricultural Bank of China, and Industrial and Commercial Bank of China and Bank of Communications.

Branches of each of these banks in China’s north-eastern border towns, where trade with North Korea is concentrated, said they had been instructed to stop opening new bank accounts for North Korean individuals or companies.

Branches of three of the banks said they were in the process of cleaning out existing accounts, while the remainder did not comment on procedures for existing accounts.

Although some bank branches said they had received notice of the freeze on North Korean accounts last month, others said they had been told as early as January.

“Branches didn’t implement the rule all at the same time but it started recently,” said one branch of ABC in Dandong, the border city through which roughly 70 per cent of China’s trade with North Korea flows.

“Current bank accounts held by North Koreans should be cleared out,” said a representative of a branch of ICBC in Yanji, the trading hub closest to the nuclear blast site at Punggye-ri. “We implemented the restrictions long before last month’s sanctions.”

However, traders pointed out that there were ways to get around the account ban to continue doing legal business with North Korea.

“We always use Chinese citizens living in North Korea as intermediaries when doing business,” said one groceries trader in Dandong who wished to remain anonymous because of the political sensitivity around North Korean trade.

“There’d be no reason to freeze Chinese nationals’ accounts, unless they’re sanctioning individuals,” he added.

Two Chinese businesspeople who run companies in North Korea — one of whom is based in the Chinese border town of Hunchun and one in Pyongyang — said all their transactions, such as payments to North Korean staff, were made in cash in Chinese renminbi, avoiding the need to have dealings between North Korean and Chinese banks.

Read the fulls story here:
China’s biggest banks ban new North Korean accounts
Financial Times
Yuan Yang and Xinning Liu
2017-9-11

Here is additional coverage in the BBC.

ORIGINAL POST (2017-9-9): Daily NK reports that Beijing orders banks to close accounts for North Koreans:

Chinese banks have reportedly banned North Koreans living in China from opening up new accounts, and have ordered existing accounts to be closed.
.
“The Chinese authorities have made no distinction between North Korean consular officials, laborers, or traders; all are banned from opening accounts,” a local source reported to Daily NK. “Previously, the banks were happy to open accounts for North Koreans living in China for personal reasons (mostly visiting relatives), provided they present their personal identity documents. This practice has ended as well.”

According to the source, the new order applies to the four major state banks, as well as the Construction Bank of China, and regional private banks such as Pudong Bank.

The new measures do not come without precedent. After North Korea’s third nuclear test, China implemented a provision of United Nations Security Council Resolution 2094 that involved suspension of a deal with North Korea’s Joson Trade Bank. However, the UN resolution did not address individual accounts.

Following this, the North Korean authorities began circumventing international financial sanctions by opening accounts in individuals’ names and remitting investment capital and commercial payments to and from Chinese companies.

Because the bank accounts of North Koreans residing in China are being closed, North Korean laborers are having difficulties remitting money back home.

“Under the old system, the monthly wages of North Koreans working in Chinese factories were transmitted through the bank account of the North Korean factory manager. This is no longer possible, so they are being paid in cash,” the source explained.

Also relevant to the measure is that North Korean-Chinese collaborative ventures have been banned from using bank accounts, so seed money is now required in cash.

“Normally, when North Korean merchants want to start a new business in China, they make a business plan and submit it to Pyongyang. Upon approval, they seek out cooperation and investment from Chinese investors. But now, even if the investment request is approved, it isn’t possible to open a bank account so the investor needs to use a third party to provide cash directly,” the source said.

A March 2017 Radio Free Asia (RFA) investigation reported a similar trend, noting, “Private Chinese banks are beginning to close bank accounts held by North Korean nationals. North Korean laborers earning foreign currency in China have been issued an emergency alert.”

The Chinese Ministry of Commerce announced on August 25th that it is banning new joint ventures with North Koreans in China and additional investments.

“The Chinese government is publicly announcing that they are banning business projects with North Koreans and closing North Korean bank accounts, but many loopholes remain in place. Money can be laundered on the North Korean side and passed through Southeast Asian nations,” a separate source in China with knowledge of the matter said.

Read the full story here:
Beijing orders banks to close accounts for North Koreans
Daily NK
2017-9-9

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US government seizes millions from big banks though to have dealt with North Korea

Thursday, July 6th, 2017

Benjamin Katzeff Silberstein

Reuters reports:

U.S. authorities have tried to seize millions of dollars associated with several companies that deal with North Korea, including the country’s military, from eight large international banks, according to court filings made public on Thursday.

The effort was revealed two days after North Korea tested a long-range missile capable of reaching Alaska, ratcheting up tensions with the United States and adding to worries about North Korea leader Kim Jong-un’s nuclear weapons plans.

Thursday’s filings show that Chief Judge Beryl Howell of the federal court in Washington, D.C. on May 22 granted U.S. prosecutors’ applications for “damming” seizure warrants against Bank of America Corp (BAC.N), Bank of New York Mellon Corp (BK.N), Citigroup Inc (C.N), Deutsche Bank AG (DBKGn.DE), HSBC Holdings Plc (HSBA.L), JPMorgan Chase & Co (JPM.N), Standard Chartered Plc (STAN.L) and Wells Fargo & Co (WFC.N).

Prosecutors believe the banks have processed more than $700 million of “prohibited” transactions on behalf of entities tied to North Korea since 2009, including the period after Donald Trump was elected U.S. president, the filings show.

Some of the transactions were processed for Dandong Zhicheng Metallic Material Co and four affiliated “front” companies that prosecutors said tried to evade sanctions through transactions that would benefit North Korean entities, “including the North Korea military and North Korea weapons programs,” according to the filings.

The filings did not say any of the banks knowingly violated sanctions against North Korea.

In her decision, Howell authorized warrants requiring the eight banks to accept incoming transactions but not allow outgoing transactions involving the five companies for 14 days, and thereafter to seize what they collected.

Full article:
U.S. seeks funds tied to North Korea from eight big banks
Jonathan Stempel
Reuters
2017-07-06

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US tightens sanctions against DPRK’s UN diplomats

Wednesday, December 21st, 2016

According to Reuters:

The U.S. Treasury Department tightened sanctions against North Korean diplomats to the United Nations, requiring banks to get special permission before granting them accounts, the agency said in a notice posted online Tuesday.

The United States removed an exemption in the broad economic sanctions against Pyongyang that had allowed U.S. banks to service North Korean diplomats without getting specific permission from the Treasury Department Office of Foreign Assets Control (OFAC).

Banks will now have to obtain a special license from OFAC before opening bank accounts, processing transactions or extending credit for North Korean diplomats or their family members, OFAC said. North Korea’s U.N. mission did not immediately respond to a request for comment.

U.S. officials have long said North Korea uses the bank accounts of diplomats to help Pyongyang conduct business around the world, despite economic sanctions.

A U.S. intelligence official, speaking on condition of anonymity, said North Korea “seeks to alleviate its economic isolation” by bringing back currency from overseas “using all available avenues.”

For example, said another U.S. intelligence official, North Korea sells cigarettes and illegal drugs outside the country and use diplomatic packages to send the cash back home.

Washington has been ramping up economic sanctions against Pyongyang since a nuclear test and rocket launch this year, seen as provocations by the United States and its allies.

Under new U.N. sanctions adopted last month in response to North Korea’s fifth and largest nuclear test in September, countries are required to limit the number of bank accounts to one per North Korean diplomatic mission and one per diplomat.

Here is the official statement from OFAC:

Publication of Updated North Korea-related General License
12/20/2016

The Office of Foreign Assets Control (OFAC) has amended General License 1 pursuant to E.O. 13722 of March 15, 2016, “Blocking Property of the Government of North Korea and the Workers’ Party of Korea, and Prohibiting Certain Transactions With Respect to North Korea.” General License 1-A no longer authorizes U.S. financial institutions to open and operate accounts for the diplomatic mission of North Korea and its employees and their families. It now requires that funds transfers to or from the mission or its employees be conducted through an account at a U.S. financial institution that has been specifically licensed by OFAC.

I am generally behind on blog posts this year and plan to catch up, including coverage of sanctions, in the next.

The Reuters story can be found here:
U.S. tightens sanctions against North Korea’s U.N. diplomats
Joel Schectman; Additional reporting by Michelle Nichols in New York
Reuters
2016-12-20

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Daesong Bank launches Kumgil Card

Friday, December 16th, 2016

Simon Cockerell of Koryo Tours has posted images of a new prepay card offered by Daesong Bank (대성은행/Taesong Bank) called “Kumgil” (금길) or “Gold Road”:

The front of the card contains the brand name, logo (a diamond?), sponsoring bank name, and the phrase “electronic payment card”. I spoke with James Pearson at Reuters about the 16 digit number, and based on his research it does not appear to be directly related to the Foreign Trade Bank (FTB). Mr. Cockerell reports on his Instagram page that the card uses the same retail payment equipment as the Narae Card (which is controlled by the FTB), so that means the two banks (Daesong and FTB) have an established clearing mechanism to settle electronic balances (Q: Are other NK banks using this same equipment/part of the same network?). FTB is supposedly the official repository of the state’s hard currency reserves for the purposes of managing foreign trade and domestic hard currency transactions for imported goods, though it apparently does not have a monopoly on individual/company hard currency accounts. Daesong Bank (Taesong) is has been linked to the KWP’s Office 39.

The back of the card reads:

주의사항 (Caution)
1. 카드앞면의 전자요소가 손상되지 않도록 주의하여주십시오.
Be careful not to damage the chip on the front of the card
2. 암호를 련속 3번 틀리게 입력하면 카드의 사용이 중지됩니다.
The card will stop working if you enter the wrong password 3 times.
3. 카드를 분실한 경우에는 즉시 카드발급지점에 알려주십시오.
If you lose the card, immediately notify the branch that issued the card.
4. 기타 제기되는 문제들은 카드발급지점에 문의하여주십시오.
For any other issue, consult the branch that issued the card.

This card is apparently for hard currency purchases only, and it was launched in early 2016. It is functionally the same as the Golden Triangle Bank Electronic Payment Card, Jonsong Electronic Payment Card, KoryoBank Electronic Payment Card, Narae Electronic Payment Card, Ryugyong Commercial Bank Electronic Payment Card, and Sowol Electronic Payment Card.

I should also mention that none of these are “debit cards” since they are not linked with a specific checking (demand) deposit. These are pre-pay cards only. These cards are essentially private digital currency issued by an established bank. The bank maintains control of the hard currency used to top off the cards, which it uses to generate income (float), while the card holder gains the convenience of not having to carry cash, which does offer some security from petty crime, but makes retail transactions more observable to security agencies.

Mr. Cockerell also posted the picture of a loyalty card for the Moran Shop (“Bar”):

He reports that “every time you spend money there it’s recorded on the card and when you reach $500 equivalent in total then there’s some free gift.”

I have written about some other loyalty programs here and here.

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Orascom’s Ora Bank closes

Monday, December 5th, 2016

According to the Egyptian Daily News:

Orascom Telecom Media and Technology Holding will shut down Orabank, its affiliate bank in North Korea, due to US sanctions on the nation, according to an announcement on Sunday.

The company, owned by business tycoon Naguib Sawiris, added in a note to the Egyptian Exchange that shutting down the bank in Korea is a result of force majeure due to the sanctions imposed by the US Office of Foreign Assets Control on North Korea.

Orascom noted that its subsidiary in Korea will transfer all cash and liquid assets.

The company added that its subsidiary, Koryolink, will continue operating in Korea despite the sanctions.

Shortly after the banks closing was announced, Naguib Sawiris announced his resignation as CEO of OTMT . You can read the Press Release and coverage in Forbes.

According to the Chosun Ilbo:

Naguib Sawiris resigned a day after Orascom decided to shut down a branch of its affiliate bank Orabank in Pyongyang under sanctions imposed by the UN Security Council and the U.S. Treasury Department.

“Sawiris has done brisk business in the U.S. and Europe and has much of his assets in the West,” a source said. “So he has no choice but to look for an exit in the face of the sanctions.”

Sawiris has a U.S. passport and is therefore directly affected by sanctions that penalize U.S. citizens from doing business with the North, according to investigative website Finance Uncovered.

Orabank in Pyongyang is linked to Foreign Trade Bank of North Korea, which has been blacklisted by the U.S. for serving as a funnel for the regime’s nuclear weapons development.

Here are links to previous posts on cell phones, Orascom, and Ora Bank.

Here is coverage in North Korea Tech.

 

Read the full story here:
Sawiris shuts down affiliate bank in North Korea due to US sanctions
Egyptian Daily News
2016-12-4

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US Treasury “311s” North Korea

Thursday, June 2nd, 2016

Here is the statement from the Treasury Department:

Treasury Takes Actions To Further Restrict North Korea’s Access to The U.S. Financial System

6/1/2016

Action Responds to the Threat that North Korea Poses to the Global Financial System; the United States Calls on International Partners to Similarly Takes Steps toward Severing Banking Relationships with the Dangerous Regime

WASHINGTON – Today, the U.S. Department of the Treasury 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. Treasury, through its Financial Crimes Enforcement Network (FinCEN), also 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.

Section 311 gives the Secretary of the Treasury the authority to identify a foreign jurisdiction to be a primary money laundering concern. Once identified, the Secretary can require U.S. financial institutions to take appropriate countermeasures. The special measure proposed in today’s NPRM would impose the most significant measure available to the Secretary under Section 311.

“The United States, the UN Security Council, and our partners worldwide remain clear-eyed about the significant threat that North Korea poses to the global financial system. The regime is notoriously deceitful in its financial transactions in order to continue its illicit weapons programs and other destabilizing activities,” said Adam J. Szubin, Acting Under Secretary for Terrorism and Financial Intelligence. “Today’s action is a further step toward severing banking relationships with North Korea and we expect all governments and financial authorities to do likewise pursuant to the new UN Security Council Resolution. It is essential that we all take action to prevent the regime from abusing financial institutions around the world – through their own accounts or other means.”

Reasons for This 311 Determination

Treasury is taking this action consistent with the North Korea Sanctions and Policy Enhancement Act, enacted on February 18, 2016, which requires Treasury to determine within 180 days whether reasonable grounds exist for concluding that North Korea is a jurisdiction of primary money laundering concern, and if so, to propose one or more special measures. In addition, the United Nations Security Council adopted Resolution 2270 on March 2, 2016, which in part requires UN Member States to sever correspondent banking relationships with North Korean financial institutions within 90 days of the adoption of the resolution.

North Korea is proposed for action under Section 311 because (1) North Korea uses state-controlled financial institutions and front companies to conduct international financial transactions that support the proliferation and development of WMD and ballistic missiles; (2) North Korea is subject to little or no bank supervision anti-money laundering or combating the financing of terrorism (“AML/CFT”) controls; (3) North Korea has no diplomatic relationship, and thus no mutual legal assistance treaty, with the United States and does not cooperate with U.S. law enforcement and regulatory officials in obtaining information about transactions originating in or routed through or to North Korea; and (4) North Korea relies on the illicit and corrupt activity of high-level officials to support its government.

Impact of the 311 Notice of Finding and the NPRM Special Measure

While current U.S. law already generally prohibits U.S. financial institutions from engaging in both direct and indirect transactions with North Korean financial institutions, this NPRM, if finalized, would require U.S. financial institutions to implement additional due diligence measures in order to prevent North Korean banking institutions from gaining improper indirect access to U.S. correspondent accounts. While North Korea’s financial institutions do not maintain correspondent accounts with U.S. financial institutions, North Korean financial institutions frequently conduct transactions on behalf of the North Korean government and state-controlled corporations. The NPRM, if finalized, would prohibit the use of third-country banks’ U.S. correspondent accounts to process transactions for North Korean financial institutions.

Italics added for emphasis.

The “Notice of Finding” is here, and is also worth reading.

According to the Wall Street Journal:

Treasury Department officials said they are moving to ban non-U.S. banks and entities from processing dollar transactions on behalf of North Korea, an arrangement known as a U-turn, in a move to block its international trade.

China is by far Pyongyang’s largest trading partner, and Chinese firms could be caught in the crosshairs, according to current and former U.S. officials.

Zhu Haiquan, the spokesman for China’s embassy in Washington, repeated Beijing’s warnings against what it considers “unilateral sanctions taken by any country.”

He added that “we should avoid any move that may further aggravate tensions” on the Korean peninsula, and said “the unilateral sanctions must not affect and harm the legitimate rights and interests of China.”

U.S. officials were pleased that China agreed in March to support the new U.N. sanctions, which could significantly impair North Korea’s ability to generate hard currency and ship its exports.

Still, U.S. officials have voiced skepticism that Beijing would significantly punish Pyongyang, a longtime ally. China has rebuked North Korea in the past for its nuclear and missile tests, only to increase investment and trade with the country.

The issue is likely to be among the topics discussed when Messrs. Kerry and Lew meet top Chinese officials in Beijing for the Strategic and Economic Dialogue, a series of annual bilateral meetings.

According to the New York Times:

As a practical matter, that would largely affect Chinese banks, which facilitate North Korea’s financial transactions with Beijing, its largest trading partner. It could also affect some institutions in the nominally autonomous Chinese regions of Macau and Hong Kong, as well as in Singapore, where Pyongyang has often gone to hide the true nature of its banking activities, and to pay for missiles, nuclear fuel and the huge infrastructure it has built around those programs.

It is hard to assess how much the action will hurt North Korea. Such sanctions against financial institutions doing business with Iran proved effective because Tehran had billions of dollars in monthly oil and other energy exports that could be choked off; North Korea has none. Oftentimes Pyongyang deals in cash. Until a few years ago it was one of the largest counterfeiters of $100 bills. But that once-lucrative fraud was largely cut off by the redesign of the $100 bill.

Banks in the United States are already prohibited from doing business with financial institutions in North Korea. But the recommended rules would require them to perform additional due diligence to ensure they are not inadvertently transacting with North Korean financial institutions or the Pyongyang government through shell companies or other fictitious entities.

Notice of the new rules has been published by the Federal Register. Feel free to comment if you like.

Josh also writes a walk-through of how this works.

Here is information from Choson Exchange.

Troy Stangarone writes about the sanctions for KEI.

The UK also strengthened financial sanctions against the DPRK.

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