08/14/2009

News / Banks Increasing Scrutiny of North Korean Transactions

U.N. resolutions are having an effect on North Korea, U.S. says
By Stephen Kaufman
Staff Writer

Washington — A U.S. official in charge of coordinating United Nations sanctions against North Korea says international cooperation and financial information sharing are having an effect on North Korea’s nuclear ambitions, impeding its proliferation efforts.

Speaking to reporters at the State Department August 13, Ambassador Philip Goldberg, who coordinates implementation of U.N. Security Council Resolution 1874 for the United States, said banks around the world are looking out for transactions that might involve North Korean entities involved in illicit activities.

“We think it's having an effect. We think that the word is out to banks. We think that there is a heightened sense of scrutiny and, hopefully, transparency in these transactions,” Goldberg said.

The ambassador said Resolution 1874 and its predecessor, Security Council Resolution 1718, are aimed at achieving the elimination of nuclear programs from the Korean Peninsula and halting North Korea’s missile proliferation efforts. “The resolutions are not aimed at punishing the North Korean people, and these [resolutions] are not aimed at the humanitarian efforts under way, which we support,” Goldberg said. “It’s in order to look for and to give heightened scrutiny to any transaction that may be coming through with a North Korean label on it.”

He also said the United States is not adding additional sanctions to those already in place. “What we have done is to designate additional entities under U.S. law and executive orders. But at the moment, we're concentrated only on implementing the current resolutions,” he said.

Soon after Resolution 1874 passed in June, the Obama administration sent American banks an additional advisory about their dealings with North Korean entities, which Goldberg said “put up a warning signal to banks about those activities.” Other countries are doing the same using the shared information, he said.

Banks are scrutinizing transactions to make sure they are directed toward legal economic activity and not toward nuclear, missile or proliferation programs, Goldberg said. They are looking for ties to corporations, banks and other entities that have already been designated as proliferators of weapons of mass destruction and their supporters by the United Nations, and connections to new entities continue to be discovered.

For example, Goldberg mentioned the U.S. Treasury Department’s August 11 designation of the North Korea–based Korea Kwangson Banking Corporation (KKBC) for providing services to support both Tanchon Commercial Bank (Tanchon) and Korea Hyoksin Trading Corporation (Hyoksin), a subordinate of Ryonbong General Corporation.

“The information was that they were having dealings with entities already designated at the United Nations, entities known to be in the business of military supplies and so forth,” he said.

Both Tanchon and Ryonbong already had been identified in June 2005 as being proliferators of weapons of mass destruction through their financial transfers. In July 2009, Hyoksin was designated as being under the control or ownership of Ryonbong.

Under Secretary of the Treasury for Terrorism and Financial Intelligence Stuart Levey said August 11 that "North Korea’s use of a little-known bank, KKBC, to mask the international financial business of sanctioned proliferators demonstrates the lengths to which the regime will go to continue its proliferation activities and the high risk that any business with North Korea may well be illicit."

Goldberg said China, South Korea, Russia, Japan, and the United States, North Korea’s partners in the Six-Party Talks, are all sending Pyongyang the message that “that there is a path open to North Korea through the Six-Party Talks, through a process of denuclearization, a process that they have already committed themselves to.”

The multilateral process “does not exclude within that context bilateral exchanges as well,” he said, referring to North Korea’s requests for bilateral talks with the United States.

But the goal, Goldberg said, is irreversible denuclearization. “It's the end of the missile program and of proliferation activities. It's not just to get back to talks; it's also with that goal in mind,” he said.

Otherwise, in the absence of talks, “these measures continue, and they continue until there are those irreversible steps,” he said.

Goldberg visited Moscow earlier in August to consult with Russian officials on the implementation of the U.N. resolutions and said August 3 that Russia supports both. In his August 13 remarks, Goldberg announced that he will lead a delegation of U.S. Treasury, Defense and National Security Council officials to visit Singapore, Thailand, South Korea and Japan the week of August 17.

“In all of these countries, we'll share thoughts, ideas and our impressions on inspections of air, sea and land cargo. We'll review the financial provisions of the resolutions, and we'll share information, when possible, on specific cases,” he said.

The ambassador added that a follow-up to his July visit to China has been agreed upon with Chinese officials, and the trip could happen as early as this month.

In all of these talks, the ambassador said, the overall goal is clear: The United States, its allies and its partners want to “achieve denuclearization of North Korea through irreversible steps and to implement U.N. Security Council resolutions on North Korea.”

http://www.america.gov/st/peacesec-english/2009/August/20090813171040esnamfuak0.5206415.html?CP.rss=true

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