North Korea Issues New Anti-Money Laundering Law


(No, I’m not kidding.)



Earlier this week I commented on legislation newly introduced in the US House of Representatives designed to pressure the State Department to relist North Korea as a state sponsor of terror. The legislation is unlikely to pass in this session of Congress, but its introduction lays down a marker in case circumstances change, as happened with the Royce sanctions bill. Today’s post has a similar vibe: it describes legislation which is unlikely to have any impact now and possibly ever. Steph Haggard suggested that I label this post “not satire.”

On 20 April 2016 the Presidium of the Supreme People’s Assembly promulgated a decree on adoption of the Law on Anti-Money Laundering and Combatting Financial Terrorism. It replaces the previous AML law adopted in 2006. The government of North Korea has been signaling for some time that it was interested in joining the Financial Action Task Force, the multilateral body that addresses the use of the international financial system for criminal and terrorist purposes. North Korea joined FATF’s Asian regional body as an observer in 2014. Currently North Korea is on FATF’s “watch list” of “high risk and non-cooperative jurisdictions” due to “failure to address the significant deficiencies in its anti-money laundering and combatting the financing of terrorism” and that failure poses “serious threat…to the integrity of the international financial system.” In this light, the new law could be interpreted as North Korea’s attempt to remedy these deficiencies (at least on paper) and get back into FATF’s good graces which would in turn ease the country’s access to the international financial system.

Hard to see the rest of the world welcoming you into the international banking system when you are threatening them with nukes.

But to what purpose? With the country subject to increasingly stringent financial sanctions imposed by the UN Security Council in response to the country’s missile and nuclear tests, and the expectation of many that the country will engage in further tests which are likely to elicit even more severe sanctions, who’s kidding who? Maybe enactment of this law will mean something someday, but it’s hard to see when that will be.

(Alternatively, as my colleague Ted Truman, one of the world’s experts on AML activities and co-author of the widely praised Chasing Dirty Money observed, a cynic might think that getting into the tent or close to it provides intelligence on how to evade the controls, so maybe that’s the real motivation.)  

“Not satire” joking and speculation about motives aside, this development makes manifest the contradiction at the heart of the byungjin policy of parallel development of the economy and of nuclear weapons. Hard to see the rest of the world welcoming you into the international banking system when you are threatening them with nukes.

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