Countries/Jurisdictions of Primary Concern - Korea, Democratic People's Republic of
The Democratic People’s Republic of Korea (DPRK or North Korea) has a history of involvement in currency counterfeiting, drug trafficking, and the laundering of related proceeds, as well as the use of deceptive financial practices in the international financial system. The DPRK regime continues to present a range of challenges for the international community through its pursuit of nuclear weapons, weapons trafficking and proliferation, and human rights abuses.
Access to current information on the financial and other dealings of the DPRK is hampered by the extremely closed nature of its society. The economic practice of juche, a constitutionally enshrined ideology in North Korea characterized by the goals of independence and self-reliance, has contributed to minimizing transparency and international trade relations and discouraging foreign investment.
In October 2013, the FATF again stated its concerns about the DPRK’s failure to address the significant deficiencies in its AML/CFT regime and reiterated the serious threat this poses to the integrity of the international financial system. The FATF reaffirmed its earlier call upon its members 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 called upon its members and urged all jurisdictions to apply effective countermeasures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from the DPRK. The FATF likewise called on jurisdictions to protect against correspondent relationships used to bypass or evade countermeasures and risk mitigation practices, and to take into account ML/FT risks when considering requests from DPRK financial institutions to open branches and subsidiaries in their jurisdictions. The FATF also urges jurisdictions to undertake additional measures and safeguards to ensure that sanctions related to proliferation-related UNSCRs are implemented effectively and robustly.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR ILLEGAL DRUG SALES THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate crimes: Not available
Are legal persons covered: criminally: Not available civilly: Not available
KNOW-YOUR-CUSTOMER (KYC) RULES:
Enhanced due diligence procedures for PEPs: Foreign: Not available Domestic: Not available
KYC covered entities: Not available
Number of STRs received and time frame: Not available
Number of CTRs received and time frame: Not available
STR covered entities: Not available
MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:
Prosecutions: Not available
Convictions: Not available
RECORDS EXCHANGE MECHANISM:
With U.S.: MLAT: NO Other mechanism: NO
With other governments/jurisdictions: NO
The DPRK is not a member of a FATF-style regional body.
ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:
There is little available information on the DPRK’s financial system. The DPRK has never undertaken a review of its AML/CFT regime based on the international standards, and calls for the DPRK government to be involved in the mutual evaluation process have been unsuccessful.
In 2006, the DPRK adopted the Law on the Prevention of Money Laundering, which states that the DPRK has a “consistent policy to prohibit money laundering,” but it is impossible to determine what standing this law has in the DPRK. The law is significantly deficient in most respects, and there is no evidence of an AML/CFT infrastructure in the DPRK capable of implementing the law. Lacking any type of sufficient AML/CFT regulatory authority, the DPRK cannot effectively supervise its financial institutions and enforce AML/CFT practices. Moreover, although the law mentions effective monitoring and supervisory mechanisms, including powers to sanction financial institutions and other businesses and professions that do not comply with AML/CFT requirements, there is neither explanation for how this is achieved nor evidence of any established framework to implement sanctions.
The DPRK is party to a number of international conventions, including the 1988 UN Drug Convention. There is no evidence, however, that the DPRK has taken sufficient steps to properly implement provisions contained in the conventions. The DPRK became a party to the UN Convention for the Suppression of the Financing of Terrorism on July 25, 2013. There is no evidence of efforts to implement the UN resolutions relating to the prevention and suppression of the financing of terrorist acts, particularly UNSCRs 1267 and 1373.