The US Department of the Treasury’s Financial Crimes Enforcement Network (‘FinCEN’) has issued a final rule under s311 of the USA Patriot Act that severs the Chinese Bank of Dandong from the US financial system. The bank has been deemed to act as a gateway through which North Korea (‘DPRK’) has accessed both the US and international financial markets, contrary to US and UN sanctions. The Bank of Dandong was highlighted as a ‘primary money laundering concern’ by FinCEN back in the summer, and has now been found to have illicitly laundered millions of dollars for companies involved in financing DPRK’s ballistic and nuclear weapons programme.
FinCEN has banned US financial institutions from opening or maintaining correspondent accounts for or on behalf of the Bank of Dandong. It has also issued advice aimed at risk and compliance officers in financial institutions to aid the identification and reporting of illicit North Korean schemes.
‘Today’s actions will protect the US financial system from illicit schemes used by North Korea to evade sanctions and finance its weapons programs,’ said Treasury Secretary Steven Mnuchin. ‘Banks and businesses worldwide should take note that they must be vigilant against attempts by North Korea to conduct illicit financing and trade.’
The US has recently pushed for more action from China to curb the development of DPRK’s nuclear and ballistics weapons programme. The targeting of the Bank of Dandong by the US authorities indicates a stepping up of secondary sanctions against those who still facilitate trade with DPRK, such as China.
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