- Here are the Treasury Department’s FAQs and overview of North Korea sanctions, as of 2016. U.S. and U.N. sanctions against North Korea are relatively strong on paper today, but implementation of the new authorities has been uneven, and has only just begun.
- Although there is much more that we can do to close sanctions loopholes, the most important priority now is to enforce the U.N. and U.S. sanctions that already exist, through a combination of law enforcement and diplomacy.
- North Korea continues to do most of its business through offshore dollar accounts that flow through the U.S. financial system. These dollars pay North Korea’s army and security forces, buy materials and parts for its military and WMD programs, and maintain the luxurious lifestyle of Kim Jong-un and his ruling elite.
- Most of those North Korean accounts are in Chinese banks; others are in Europe. It’s often said that China is the key to sanctions enforcement. U.N. reports prove that China has violated sanctions for years — so flagrantly that the violations could only be the result of Chinese government policy. The NKSPEA mandates secondary sanctions on third-country (including Chinese) banks and companies that violate U.N. sanctions and U.S. law. It forces them to choose between access to the U.S. economy and the North Korean economy.
- The U.S. has jurisdiction over dollar transactions between non-U.S. persons and banks. The Justice Department explained this in a recent North Korea-related civil forfeiture complaint. For an explanation of how the financial system works, see this, and focus on the correspondent banks, which are usually in the United States and subject to Treasury Department regulation.
- This isn’t a partisan issue. Although the administration has hesitated to fully enforce the NKSPEA, there is strong bi-partisan support for this approach in both houses of Congress. As of October 2016, the Obama administration was under intense pressure to impose secondary sanctions on Chinese banks that launder Kim Jong-un’s money.