Obama administration sanctions everyone except Kim Jong Un

The boys at Treasury have been busy sanctioning nasty people lately … just not nasty North Korean people. In the last 30 days, they’ve imposed sanctions on new targets in Syria, the Central African Republic, South Sudan, and the Ukraine, and put a shiny new Executive Order on the President’s desk blocking the assets of human rights violators in Democratic Republic of Congo. Really? We do that sort of thing? Yes, we do that sort of thing — just not to Kim Jong Un.

(They’ve also substantially weakened U.S. sanctions on Burma, just as it’s becoming increasingly obvious that the Burmese government is going back on many of its promises of democratic reform, and that its generals are still engaging in arms trafficking with North Korea.)

Yet this still isn’t our greatest lost opportunity. Recently, Treasury and French parastatal bank BNP Paribas concluded a settlement under which BNP Paribas will pay an absolutely colossal amount — $8.9 billion, which is a record for sanctions violations. BNP Paribas’s M.O. was to strip data from transactions that had to be reported to Treasury, thus avoiding the burden of obtaining licenses to trade with sanctioned countries, or perhaps to evade a requirement to obtain a license that OFAC wouldn’t grant.

Today’s settlement resolves OFAC’s investigation into BNPP’s systemic practice of concealing, removing, omitting, or obscuring references to information about U.S.-sanctioned parties in 3,897 financial and trade transactions routed to or through banks in the United States between 2005 and 2012 in apparent violation of the Sudanese Sanctions Regulations, 31 C.F.R. part 538; the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560; the Cuban Assets Control Regulations, 31 C.F.R. part 515; and the Burmese Sanctions Regulations, 31 C.F.R. part 537. [Treasury Dep’t Press Release]

Notice anyone missing from that list? In case you wonder why, it’s because of the lack of comprehensive financial sanctions against North Korea — the kind of sanctions that are in place and self-evidently effective against these other targets. (No, sanctioning the Foreign Trade Bank is not comprehensive. It in no way compares to our sanctions against Cuba, Syria, or Iran.)

North Korea alone is free to receive foreign investments and all sorts of cash payments, no questions asked, through the dollar-based financial system that uses U.S. banks, and without an OFAC license. This, despite the fact that U.N. Security Council resolutions clearly demand that investors ask questions, and that governments implement and enforce financial transparency.

BNP Paribas wasn’t fined for breaking North Korea sanctions regulations because absent proof that the transactions furthered illicit activity or proliferation, there’s nothing to break. But that’s the catch — there are special licensing requirements on Iran and Syria because that’s how we’re most likely to detect proliferation and money laundering. Instead, our North Korea sanctions are weaker than any of these other national programs. And that makes no sense at all from a strategic, humanitarian, or enforcement perspective.

“Today’s settlement is OFAC’s largest-ever and reaffirms OFAC’s determination to aggressively enforce U.S. sanctions rules and regulations,” said OFAC Director Adam J. Szubin.  [….]

The specific payment practices the bank utilized in order to process sanctions-related payments to or through the United States included omitting references to sanctioned parties; replacing the names of sanctioned parties with BNPP’s name or a code word; and structuring payments in a manner that did not identify the involvement of sanctioned parties in payments sent to U.S. financial institutions.  While these payment practices occurred throughout multiple branches and subsidiaries of the bank, BNPP’s subsidiary in Geneva and branch in Paris facilitated or conducted the overwhelming majority of the apparent violations.  

I don’t dispute the awfulness of the civil war in the DRC, but do its human rights violations equal this in terms of their scale and their drearily methodical state sponsorship? And even if so, why the DRC and not North Korea? The DRC isn’t a strategic threat to U.S. interests. Syria and Iran are, of course, but North Korea is suspected of nuclear cooperation with Iran, has a proven history of chemical weapons and nuclear cooperation with Syria, has attacked on U.S. treaty allies, and has sold arms to Hamasbollah.

On the other hand, none of these nations is suspected of state-sponsored drug trafficking, counterfeiting of U.S. currency and intellectual property, illegal gambling, or money laundering on a comparable scale. Those things represent a direct threat to the financial system on which the global economy depends. So what reason exists to sanction any of those regimes that isn’t just as good a reason to sanction North Korea, too?