Not Satire: US Concerned About DPRK Money Laundering

Yonhap News Agency. 8/1/12 By Lee Chi-dong

By Lee Chi-dong
WASHINGTON, July 31 (Yonhap) -- The U.S. government expressed concern Tuesday about North Korea's refusal to improve its regulatory system against money laundering and terrorism financing.

"The Financial Action Task Force (FATF) remained concerned about the DPRK's failure to address the significant deficiencies in its regulatory regimes," the State Department said in its annual report on terrorism. DPRK is the acronym for North Korea's formal name, the Democratic People's Republic of Korea.

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There is a little more to it than this, actually. The Financial Action Task Force (FATF) is a global standard setting body for anti-money laundering and combating terrorist financing (AML/CFT). Periodically, the FATF identifies jurisdictions that have “substantial deficiencies” in addressing these issues and warrant “countermeasures.” Two countries, the DPRK and Iran, were identified in a recent FATF statement as meeting this threshhold. We reproduce it here in full:

“The FATF remains concerned by the DPRK’s failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. The FATF urges the DPRK to immediately and meaningfully address its AML/CFT deficiencies.

The FATF reaffirms its 25 February 2011 call on its members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with the DPRK, including DPRK companies and financial institutions. In addition to enhanced scrutiny, the FATF further calls on its members and urges all jurisdictions to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from the DPRK. Jurisdictions should also protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices, and take into account ML/FT risks when considering requests by DPRK financial institutions to open branches and subsidiaries in their jurisdiction.

The FATF acknowledges the latest outreach from DPRK to FATF and remains prepared to engage directly in assisting the DPRK to address its AML/CFT deficiencies.”

What is perhaps most interesting is that the DPRK has made an effort to engage with the FATF, perhaps an indication that various financial counter-measures and sanctions are having noticeable effects.

Other countries singled out for concern were Bolivia, Cuba, Ecuador, Ethiopia, Ghana, Indonesia, Nigeria, Pakistan, São Tomé and Príncipe, Sri Lanka, Syria, Tanzania, Thailand, Vietnam and Yemen. Three countries--Kenya, Myanmar and Turkey--or on a kind of watch list and risk countermeasures if not moving to address FATF concerns.