U.S. Government shows its teeth: China-based Bank of Dandong hit for North Korean sanctions violations
On 29 June 2017, the U.S. Department of the Treasury announced that the Bank of Dandong, a Chinese bank, is a foreign bank of primary money laundering concern. This announcement is based on the fact that the Bank of Dandong acts as a conduit for illicit North Korean financial activity. The Treasury’s Financial Crimes Enforcement Network (FinCEN) has proposed to sever the bank from the U.S. financial system.
Furthermore, the Treasury’s Office of Foreign Assets Control (OFAC) blacklisted two Chinese individuals and one Chinese company in response to North Korea’s ongoing WMD development and continued violations of UN Security Council resolutions.
Proposed FinCEN Section 311 Measure
Based on a Notice of Proposed Rule making (NPRM), which FinCen issued pursuant to Section 311 of the USA PATRIOT Act, FinCEN is proposing to prohibit U.S. financial institutions from maintaining correspondent accounts for, or on behalf of, Bank of Dandong.
FinCEN is taking steps to prevent the Bank of Dandong from continuing to serve as a gateway for North Korea to access the U.S. and international financial systems – given its facilitation to support activities that evade U.S. and UN sanctions.
According to FinCen, the Bank of Dandong acted as a conduit for North Korea to access the U.S. and international financial systems, including facilitating millions of dollars of transactions for companies involved in North Korea’s WMD and ballistic missile programs. Furthermore, FinCEN also alleges that the Bank of Dandong also facilitates financial activity for North Korean entities blacklisted by the U.S. and the United Nations for proliferation of WMD’s, as well as for front companies acting on their behalf.
Further, the OFAC sanctions are designed to increase the pressure against North Korea to stop it’s continuing ballistic missile program in violation of U.S. and United Nations sanctions.
OFAC sanctions blacklisting were made pursuant to Executive Order (E.O.) 13382, which targets WMD proliferators and their supporters, and E.O. 13722, which targets, in part, North Korea’s transportation and financial services industries.
As a result of this action, any property or interests in property of the designated persons in the possession or control of U.S. persons or within the United States must be blocked, and U.S. persons are generally prohibited from doing business with them.
The identifying information on the individuals and entity blacklisted can be found here.