2nd June 2020
North Korea Sanctions Regulations
What Have The US Imposed on North Korea?
In order to pursue the United States’ foreign policy objectives, the US Treasury has imposed sanctions regulations against North Korea in some form since 1950. The sanctions have the broad goal of pressuring North Korea to denuclearize but have also been imposed to punish a range of transgressions and violations of international law by the North Korean government, including human rights abuses, cyberattacks and financial crimes such as money laundering and terrorism financing.
In order to implement an effective AML/CFT program and spot transactions that potentially violate compliance requirements, firms should be familiar with the North Korea sanctions regulations imposed by the United States.
The US imposes its own unilateral North Korea sanctions regulations (NKSR) in addition to those put in place by the United Nations Security Council (UNSC). US sanctions are issued by the US Treasury and enforced by the Office of Foreign Assets Control (OFAC). The US measures target a broader range of businesses and individuals than those imposed by the UN.
Since they were introduced, NKSR have been partially lifted or rolled back several times in exchange for North Korean concessions and progress towards denuclearization. However, recent incidents, such as the assassination of Kim Jong-Un’s half brother, Kim Jong-nam, and the death of US citizen Otto Warmbier, have prompted a harder stance from the US government.
The US Treasury issues an overview of sanctions currently in place against North Korea. Implemented via presidential executive orders, the measures broadly prohibit US persons from engaging in the following types of transactions:
- Transactions involving property, or interests in property, of North Korea or North Korean nationals.
- Imports and exports of goods, services and technology to and from North Korea (although OFAC may grant a license for exceptions in certain circumstances).
- New investments in North Korea (without a license or exception granted by OFAC).
- Any approval, financing, facilitation or guarantee of a transaction involving North Korea by a US person for a foreign person.
- Transactions involving North Korean vessels, including the registration of vessels or the authorization for vessels to fly the North Korean flag.
Certain transactions are exempt from NKSR, including those covered by the Treasury’s International Emergency Economic Powers Act (IEEPA). Exempt transactions might include those related to travel, personal communication and the import or export of information. US persons should consult OFAC guidance to determine the legal status of any proposed transactions related to North Korea.
OFAC may issue general and specific licenses to US persons in order to authorize certain categories of transactions that would otherwise be prohibited under NKSR. A list of general licenses for transaction exemptions is set out in the NKSR, and firms may apply for a license via OFAC’s online portal.