The U.S. Treasury Department Office of Foreign Assets Control ("OFAC") imposed sanctions on a Russian bank for allegedly facilitating transactions for individuals acting on behalf of a banned North Korean banking institution.
According to OFAC, Russian-based Agrosoyuz Commercial Bank ("Agrosoyuz") provided banking services to representatives of North Korea's Foreign Trade Bank ("FTB"), violating UN Security Council obligations, and making Agrosoyuz subject to U.S. sanctions under Executive Order 13810. In addition to Agrosoyuz, OFAC imposed sanctions on the Moscow-based deputy representative of FTB, as well as two alleged FTB "front companies," one of which – Dandong Zhongsheng Industry & Trade Co., Ltd. – is based in China. (The second sanctioned company, Korea Ungum Corporation, is based in North Korea.) OFAC noted that, in accordance with UN sanctions, all identified FTB representatives should have been expelled from Russia but, instead, Agrosoyuz continued to do business with them.
Under the newly imposed sanctions, U.S. persons are generally prohibited from conducting business with Agrosoyuz and the designated representatives and front companies of FTB. In addition, all property and interests in property of designated representatives that are within the possession or control of any U.S. person are blocked, and may not be transferred, paid, exported, withdrawn or otherwise dealt in.
Commentary / James Treanor
As diplomatic talks related to North Korea's nuclear weapons programs continue, OFAC's designations remind the North Korean regime that the United States will continue to exert economic and political pressure on Pyongyang through its strict economic sanctions program. As Treasury Secretary Steven Mnuchin said: "The United States will continue to enforce UN and U.S. sanctions and shut down illicit revenue streams to North Korea. Our sanctions will remain in place until we have achieved the final, fully-verified denuclearization of North Korea." OFAC's designations send a similar message to Pyongyang's neighbors in Russia and China: that the United States will seek to punish and isolate foreign companies and individuals who do not uphold UN (or U.S.) sanctions against North Korea. For financial institutions, the clear message is to heed U.S. government warnings – including those issued in November 2017, in February 2018, and, most recently, on July 23, 2018 – regarding North Korea's illicit activities and efforts to evade international sanctions, and to remain vigilant for signs of potential indirect or disguised dealings with North Korea.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.