With North Korea top of mind more so now than in years past, it makes sense that they—and their allies—are under additional scrutiny by U.S. federal agencies. So it should come as little surprise that the United States Treasury Department announced back in June that the Office of Foreign Assets Control (OFAC) identified and designated four Chinese entities for their ties to the government of North Korea, effectively severing them from the U.S. financial system entirely.[i] This incident demonstrates the necessity of always fully screening your business partners, as well as the effectiveness of the OFAC, and the potential consequences of running afoul of them.
The four targeted parties in question are Chinese citizens Sun Wei and Li Hong Ri, along with Dalian Global Unity Shipping Co. and the Bank of Dandong, a small bank on the Chinese mainland. All four entities have been debarred from the U.S. financial system—although the Bank of Dandong’s debarring is subject to review over the next 60 days—for offering financial services and assistance to North Korea, with the money possibly being rerouted to North Korea’s missiles and WMD development programs.
Speaking about the sanctions, Treasury Secretary Steven Mnuchin stressed that while the four targeted parties are all Chinese national, the actions are neither politically motivated, nor are they meant to be posturing for China.[ii] Instead, OFAC remains committed to penalizing entities that work with North Korea, a country there have been serious talks about re-designating as a state sponsor of terrorism in past months.[iii]
“We are in no way targeting China with these actions,” Mr. Mnuchin said of the actions taken by OFAC. “This is about North Korea and how serious we are taking this.”
The end takeaway from this is that OFAC remains vigilant in trying to crack down on anyone who might be involved in a money trail that leads to North Korea. As always, companies and businesses need to exercise due diligence, and always screen and rescreen every entity they do business with, to ensure that they do not unwittingly end up in a transaction with a person, business, or country that might be on an OFAC watch list.
[i] U.S. Blacklists Small Chinese Bank Over North Korea Dealings, Announces New Sanctions. CBS News, June 29, 2017. (http://www.cbsnews.com/news/u-s-blacklists-small-chinese-bank-over-north-korea-dealings/) Accessed July 5, 2017
[ii] Treasury Announces New Sanctions Aimed At North Korea. The Hill, June 29 2017. (http://thehill.com/policy/finance/340105-treasury-announces-new-sanctions-against-north-korea) Accessed July 5, 2017
[iii] House Votes To Move Toward Designating North Korea As State Sponsor of Terror. The Hill, April 3, 2017. (http://thehill.com/blogs/floor-action/house/327106-house-votes-to-move-toward-designating-north-korea-as-state-sponsor) Accessed July 5, 2017