2011/03/22 09:02 KST

http://english.yonhapnews.co.kr/national/2011/03/22/17/0301000000AEN20110322000900315F.HTML

WASHINGTON, March 21 (Yonhap) -- The Treasury Department on Monday advised U.S. financial institutions to take enhanced precautions against North Korea and Iran trying to launder money and engage in other illicit financial transactions.

   In an advisory, the department's Financial Crimes Enforcement Network (FinCEN) called on U.S. financial institutions to "continue to consult existing FinCEN and Treasury guidance on engaging in financial transactions with Iran and the DPRK." DPRK is the acronym of North Korea's official name, the Democratic People's Republic of Korea.

   "Enhanced due diligence is required for any correspondent account maintained for a foreign bank that operates under a banking license issued by a foreign country that has been designated as non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization of which the United States is a member and with which designation of the U.S. representative to the group or organization concurs," it said.

   The advisory was issued in line with a similar one by the 36-member Financial Action Task Force (FATF) on Feb. 25 that called on 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."

   The FATF statement denounced North Korea for its failure to "address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system."

   The FATF issued a similar statement in February last year in response to a call by the leaders of the Group of 20 (G-20) economic summit for the FATF to reinvigorate its process for assessing the compliance of its member countries with international AML/CFT standards and to identify high-risk jurisdictions.

   North Korea has been under U.N. financial sanctions, slapped after its nuclear and missile tests in 2009.

   The resolutions call for an overall arms embargo on North Korea, except for light weapons or small arms, and imposes financial sanctions to prevent the flow of funds that could benefit North Korea's missile, nuclear or any other proliferation activities.

   Under the resolutions, U.N. member states are also required to reduce or refrain from providing any further financial aid to North Korea unless the aid is related to humanitarian activity.

   The Treasury Department has since blacklisted scores of North Korean banks, companies and individuals for their involvement in the proliferation of ballistic missiles, freezing the assets of designated proliferators of weapons of mass destruction and their supporters and prohibiting U.S. people from engaging in any transactions with them.

   In the most recent case, the department in November blacklisted two more North Korean firms for their involvement in managing slush funds for the North Korean leadership and other economic activities banned under U.N. resolutions and U.S. domestic laws.

   Korea Daesong Bank and Korea Daesong General Trading Corporation were accused of "being owned or controlled by Office 39 of the Korean Workers' Party," which "provides critical support to North Korean leadership in part through engaging in illicit economic activities and managing slush funds and generating revenues for the leadership."