Chinese banks host massive slush funds for Kim Jong Un despite “tough” new U.N. resolution
So over the weekend, I read U.N. Security Council Resolution 2094, and I didn’t see much that deviated from the low expectations I expressed based on the press reports. (Since then, Marcus Noland has expressed a similarly pessimistic view).
For those nations that are interested in strict enforcement, there is useful material in this; for example, the reference to the recommendations of the Financial Action Task Force, which you can find on Page 13 of this document, will cause some nations to be more circumspect about letting their banks host North Korean funds. But in the end, as with previous resolutions, the effectiveness of this one will depend on how different nations interpret vague terms like “credible evidence” and “reasonable grounds to believe,” and more specifically, how strictly China is willing to enforce it.
What’s that, you ask? A timely and relevant example that could answer the critical question in the previous paragraph, thereby providing useful guidance to policy-makers? OK, I think I’ll go with this one:
12. Calls upon States to take appropriate measures to prohibit in their territories the opening of new branches, subsidiaries, or representative offices of DPRK banks, and also calls upon States to prohibit DPRK banks from establishing new joint ventures and from taking an ownership interest in or establishing or maintaining correspondent relationships with banks in their jurisdiction to prevent the provision of financial services if they have information that provides reasonable grounds to believe that these activities could contribute to the DPRK’s nuclear or ballistic missile programmes, or other activities prohibited by resolutions 1718 (2006), 1874 (2009), 2087 (2013), and this resolution, or to the evasion of measures imposed by resolutions 1718 (2006), 1874 (2009), 2087 (2013), or this resolution;
Someone play Handel’s Messiah as we enter a new world of financial due diligence, in which the regime and its key figures can no longer keep massive slush funds in offshore banks and freely repurpose them for suspicious alloys, hollow-point ammo for the border guards, and a customized Maybach electric scooter for His Porcine Majesty to ride around the Kwangbok Area Supermarket. Right?
South Korean and U.S. authorities have found dozens of accounts presumed to belong to North Korean leader Kim Jong-un in several banks in Shanghai and other parts of China. They contain hundreds of millions of dollars.
Yet for some reason the accounts were excluded from financial sanctions under the new UN Security Council Resolution 2098, which was adopted last Thursday, posing questions over the effectiveness of the measures.
A government source here said an investigation that lasted for several years led South Korea and the U.S. to the accounts. “We have located the names of the account holders and account numbers, some of them set up in the days of former North Korean leader Kim Jong-il,” the source added.
South Korean and U.S. officials urged China to include the accounts in the latest sanctions against North Korea, but Beijing apparently refused. “Following North Korea’s third nuclear test, China has demonstrated willingness to take part in sanctions against the North,” the government source said. “But Beijing is reluctant to touch North Korea’s real Achilles heel.” [Chosun Ilbo]
Hat tip to the South Korean government Strategic Leak Wire Service.
So we can already see where this is all headed, if the past isn’t sufficient to tell you. And in case you missed the point, China is making it clear publicly that it won’t “abandon” North Korea. We can see what China means. China will need “help” from the U.S. Congress and Treasury Department to enforce this resolution in a minimally effective way.