Treasury Knocks Over Another North Korean Bank

The Korea Kwangson Banking Corporation (KKBC) was been sanctioned under Executive 13382 today, for facilitating WMD proliferation:

“North Korea’s use of a little-known bank, KKBC, to mask the international financial business of sanctioned proliferators demonstrates the lengths to which the regime will go to continue its proliferation activities and the high risk that any business with North Korea may well be illicit,” said Under Secretary for Terrorism and Financial Intelligence Stuart Levey.

Since 2008, Tanchon has been utilizing KKBC to facilitate funds transfers likely amounting to millions of dollars, including transfers involving Korea Mining Development Trading Corporation (KOMID)-related funds from Burma to China in 2009. [Treasury Dept. Press Release]

This executive order, originally signed by former President Bush, allows for a targeted entity’s assets to be frozen and for it to be cut out of the international financial system.  The former sanction will only affect KKBC to the extent it has assets or correspondent accounts in the United States (and that’s unlikely).  The latter sanction, however, could apply to banks that do business with KKBC, including banks in China that could have assets on the line.

Although this is the first time KKBC has been sanctioned by Treasury, KKBC was one of the North Korean banks listed in Treasury/OFAC’s June 18th advisory about North Korean financial institutions engaging in money laundering activities.

The main effect of the new sanction is likely to be one of deterrence to banks, businesses, and investors that are dealing with, or are considering deals with, the North Korean banks listed in Treasury’s June advisory.  This is a clear message that Treasury is willing to put steel on target, and that they’d best stay away from the impact zone.  It also sends a clear message to Kim Jong Il and the world that releasing a few hostages hasn’t changed the new administration’s determination to force his disarmament.  For once, North Korea isn’t rewarded for terrorist behavior.

The Obama Administration deserves credit for showing the kind of spine and backbone that no American president has shown Kim Jong Il before.  One wonders what provocative options Kim Jong Il still retains that he hasn’t yet exercised.  Certainly North Korea’s malice is a constant — at least when it comes to its behavior backstage — but if Kim Jong Il’s theater of provocation hasn’t worked, his next act may be to effect the Janus-faced duality reflected in his kitschy backdrop art and make some superficial gesture to attract the ovations of the unintelligent.