The Strategist

The US disconnecs Chinese banks from its financial system

11/06/2017 - 06:44

The Department of the US Treasury Department for Combating Financial Crimes (FinCEN) announced disconnection of the Chinese Bank of Dandong from the US financial system for cooperation with North Korea.

U.S. Department of Agriculture via flickr
U.S. Department of Agriculture via flickr
"The actions will improve protection of the US financial system from illegal schemes used by North Korea to evade sanctions and finance its weapons programs," Finance Minister Steven Mnuchin said in a statement on behalf of FinCEN.

The bank’s head office is located near the border with the DPRK.

FinCEN prohibited US financial institutions from opening or maintaining correspondent accounts on behalf of the Bank of Dandong. "Banks and companies around the world should become vigilant when North Korea tries to illegally finance and trade," Mnuchin said.

June 29, 2017, FinCEN called Bank of Dandong the main problem in money laundering and North Korea's gateway for access to US and international financial systems, despite US and UN sanctions.

As described in the notice, the Bank of Dandong acts as a channel of access to US and international financial systems for North Korea, including by facilitating millions of dollars’ worth transactions for companies involved in production and distribution of North Korean weapons of mass destruction (WMD), ballistic missiles.

The Bank of Dandong also facilitates the financial activities of North Korean organizations for WMD proliferation, as well as for front companies operating on their behalf.

In September 2017, US President Donald Trump announced strengthening of sanctions against "individual companies and financial institutions that provide and finance trade with North Korea."

Donald Trump said that he signed a new presidential decree on sanctions against the DPRK. He reported on the new US sanctions after a tripartite meeting with South Korean President Moon Jae-in and Japanese Prime Minister Shinzo Abe.

The US Treasury Department is going to apply sanctions against any foreign bank that conducts business or "facilitates transactions" related to trade with North Korea. The US authorities are going to apply sanctions against companies cooperating with North Korean firms engaged in shipping and trade.

The US also plans to introduce sanctions against companies that supply North Korea with technology and information.

At the same time, the US increased pressure on China, a longtime partner of the DPRK in the region. North Korea has about 90% of its trade with China.