On September 21, 2017, the White House issued an Executive Order imposing new economic sanctions against North Korea. According to the Trump Administration, the expanded sanctions are in response to the "provocative, destabilizing, and repressive actions and policies of the Government of North Korea," including recent missile launches, nuclear tests and human rights abuses, as well as its use of proceeds from international trade to facilitate these actions.

As highlighted in a White House Fact Sheet on the Executive Order, the sanctions target North Korean shipping and trade activities. Specifically, the Order empowers the Secretary of the Treasury, in consultation with the Secretary of State, to impose sanctions against individuals who are involved in the following:

  • North Korean industries, including construction, energy, financial services, technology, textiles, manufacturing and transportation;
  • ownership, control or operation of any North Korean land ports, seaports or airports; or
  • at least one significant export or import of goods or services to or from North Korea.

The Order grants the authority to levy sanctions against foreign financial institutions that are found to have (i) conducted or facilitated transactions on behalf of individuals blocked by previous Executive Orders, or (ii) conducted or facilitated transactions related to North Korean trade. These sanctions can involve a prohibition or restriction on U.S. correspondent and payable-through accounts or the blocking of property and interests in property.

The Order also provides authority to block funds transiting accounts linked to North Korea that come within the United States or within the possession of a U.S. individual or entity, including U.S. financial institutions.

Finally, the Order bars entry into the United States for (i) aircraft that have landed in North Korea within the previous 180 days, and in which a foreign person has an interest, and (ii) vessels that have called at a port in North Korea within the previous 180 days or engaged in a ship-to-ship transfer with such a vessel within the previous 180 days, and in which a foreign person has an interest.

Secretary of the Treasury Steven T. Mnuchin said that the sanctions will be "forward looking," adding that "[f]oreign financial institutions are now on notice that, going forward, they can choose to do business with the United States or with North Korea, but not both."

Commentary / James Treanor



The Trump Administration's September 21 Executive Order lays the groundwork for it to impose significant costs on foreign persons (including companies and financial institutions) who have dealings with North Korea. If these new authorities are utilized, it is likely that China - North Korea's most important trading partner - will be impacted the greatest.

In the event that Chinese or other firms are targeted, look for knock-on effects to be felt immediately in the United States as financial institutions that have dealings with parties affected by the Order may be required to take action to freeze accounts and block transactions.

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