U.S. warns of N. Korea relying on cash transactions to avoid financial sanctions

By Hwang Doo-hyong
WASHINGTON, June 18 (Yonhap) -- The U.S. Treasury Department Thursday advised
financial institutions to take precautions against North Korea trying to do cash
transactions to circumvent financial sanctions under a U.N. resolution adopted
after the North's nuclear test last month.

"Treasury is concerned that, in an attempt to evade U.N. Security Council
Resolution provisions, North Korea may increasingly rely on cash transactions,"
the Financial Crimes Enforcement Network (FinCEN) of the department said in an
advisory. "All financial institutions should remain vigilant regarding attempts
by North Korean customers to make large cash deposits into new or existing
accounts, as well as the associated risk of the passing of counterfeit currency."
The 34-point resolution calls for an overall arms embargo on North Korea except
for light weapons or small arms, and imposes financial sanctions to prevent the
flow of funds that could benefit North Korea's missile, nuclear or any other
proliferation activities.
The resolution also advises U.N. member states to reduce or refrain from
providing any further financial aid to North Korea unless the aid is related to
humanitarian activity.
U.S. officials have also said they were considering seeking their own financial
sanctions against North Korea aside from the U.N. sanctions.
Washington slapped financial sanctions on a Macau bank in 2005 to freeze US$25
million worth of North Korean assets, effectively cutting off Pyongyang's access
to the international financial system. Banco Delta Asia had been accused of
helping North Korea launder money from circulating sophisticated counterfeit
US$100 bills called "supernotes."
The advisory said the U.S. government "remains concerned about North Korean
production and distribution of high-quality counterfeit U.S. currency."
"The U.S. government is ready to assist with the investigation of North Korean
counterfeiting of U.S. currency wherever it is detected," it said.
Reports said that the U.S. recently found that North Korea circulated about US$1
million worth of supernotes at a South Korean port late last year.
The FinCEN advisory asked "all U.S. financial institutions to take commensurate
risk mitigation measures."
"FinCEN notes that with respect to correspondent accounts held for North Korean
financial institutions, as well as their foreign branches and subsidiaries, there
is now an increased likelihood that such vehicles may be used to hide illicit
conduct and related financial proceeds in an attempt to circumvent existing
sanctions," it said. "Financial institutions should also continue to ensure that
they are not providing financial services for North Korea's procurement of luxury
goods."
The advisory listed 17 North Korean banks to help "assist in applying enhanced
scrutiny" by U.S. and overseas financial institutions.
They are Amroggang Development Bank, Bank of East Land, Central Bank of the
Democratic People's Republic of Korea, Credit Bank of Korea, Dae-Dong Credit
Bank, First Credit Bank, Foreign Trade Bank of the Democratic People's Republic
of Korea, Hana Banking Corp. Ltd., The International Industrial Development Bank,
Korea Joint Bank (KBJ), Korea Daesong Bank, Korea Kwangson Banking Corp., Korea
United Development Bank, Koryo Commercial Bank Ltd., Koryo Credit Development
Bank, North East Asia Bank and Tanchon Commercial Bank.
hdh@yna.co.kr
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