Treasury Issues Alert on Another North Korean Bank

Just days after Stephen Bosworth’s mostly unproductive visit to Pyongyang (it was, despite much spin to the contrary) the Treasury Department has issued a financial advisory against one of North Korea’s largest banks, Kumgang Bank, for “[i]nvolvement in [i]llicit [f]inancial [a]ctivities,” based on “publicly available information.” You can read Treasury’s advisory in full here, but you’ll find it terse and otherwise lacking in detail about Kumgang’s transgressions. The advisory updates this broader advisory against North Korean financial institutions, issued following the passage of UNSCR 1874 (see sidebar for text). The advisory isn’t technically a sanction, but it will have the effect of driving legitimate businesses, or those which are themselves worried about being sanctioned by Treasury, away from Kumgang.

To be one of the largest banks in North Korea is a lot like being one of the largest hockey rinks in Botswana. Still, Kumgang is on most lists of North Korean banks that handle export transactions. This one, archived by Curtis at North Korean Economy Watch, is actually the text of a 1995 State Department Cable that attempts to provide a snapshot of North Korean financial institutions:

23. Kumgang bank is located in the central district, P’yongyang. Its telegraphic address is Kumgang Pyongyang; Its telephone numbers are 32029 and 32797; its telex is 5355 kgbk kp. Kumgang Bank settles accounts for export-import transactions of North Korean trading corporations, including Korea Pyongyang Trading Corporation and Korea Ponghwa General Trading Corporation.

24. According to the NUB, Kumgang bank was established in September 1978. Its subordination is not clear as the NUB says it is under the state administration council’s jurisdiction, while KDI says it is under the Central Bank’s. (Comment: to further complicate the issue, the NUB document notes in its write-up of Korea Ponghwa General Corporation (SEPTEL) that Ponghwa itself operates the Kumgang Bank.) [North Korea Economy Watch]

So what “publicly available information” leads Treasury to issue this alert? After much searching, I came up with nothing, though one line of reasonable speculation arises from the recent seizure of a 35-ton consignment of North Korean weapons in Bangkok, possibly bound for Iran and for terrorists in Gaza, Lebanon, or even Iraq. This obviously doesn’t exclude plenty of other options.

The larger story here may be that so far, the Obama Administration’s willingness to pursue talks with North Korea hasn’t interfered with its determination to follow North Korea’s illicit money trail and effectively sanction North Korean institutions involved in it.