United States: With Tensions Rising, The United States Imposes Additional Sanctions On North Korea

Last Updated: October 6 2017
Article by Sean T. Boyce, D. Grayson Yeargin, Chase D. Kaniecki, Lindsey M. Nelson, Laura Fraedrich, Michael P. Gurdak, Fahad Habib and Chad O. Dorr

Most Read Contributor in United States, September 2019

In Short

The Situation: Over the past several months, North Korea has engaged in several activities, particularly relating to missile and nuclear testing, that violate several United Nations resolutions and that threaten the national security of the United States.

The Result: President Trump issued an Executive Order expanding the sanctions in place against North Korea, as well as increasing the ability of the U.S. government to sanction third-country parties that engage in trade with North Korea.

Looking Ahead: U.S. companies must continue to exercise compliance with the sanctions against North Korea, and non-U.S. companies who want to continue to engage in business with the United States should implement policies and procedures to ensure that they do not engage in sanctionable activities involving North Korea.

In response to the "provocative, destabilizing, and repressive actions and policies of the Government of North Korea," including its July 2017 intercontinental ballistic missile tests and its September 2, 2017, nuclear test, President Trump issued Executive Order ("EO") 13810 on September 20, 2017, which further expands existing U.S. sanctions on North Korea. While existing sanctions already effectively prohibit U.S. persons from engaging in or facilitating virtually all transactions involving North Korea, the new measures expand those restrictions and implement measures with extraterritorial effect (or "secondary sanctions").

We have set out below a summary of the key provisions of EO 13810.

Expanded Designation Criteria Relating to North Korea

The United States has expanded the scope of activities or criteria for which persons may be designated on the List of Specially Designated Nationals and Blocked Persons ("SDN List"). Pursuant to the Executive Order, those criteria now include:

  • Operating in the construction, energy, financial services, fishing, information technology, manufacturing, medical, mining, textiles, or transportation industries in North Korea;
  • Owning, controlling, or operating any port in North Korea, including any seaport, airport, or land port of entry;
  • Engaging in at least one significant importation from or exportation to North Korea of any goods, services, or technology;
  • Materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to or in support of, any person designated on the SDN List under the Executive Order; and
  • Being owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, any person designated on the SDN List under the Executive Order.

The expanded scope also allows designation of any individual or entity determined to be a "North Korean person," which includes any North Korean citizen, North Korean permanent resident alien, or entity organized under the laws of North Korea or any jurisdiction within North Korea. (EO 13810 explicitly exempts United States citizens, any permanent resident alien of the United States, any alien lawfully admitted to the United States, and any alien holding a valid United States visa from this definition.) These criteria expand the reach of U.S. sanctions beyond North Korean parties, and will have implications for North Korea's few trading partners. In particular, they present the possibility of exclusion from the U.S. market as a result of even a single import or export transaction with North Korea.

U.S. persons are required to block the property and interests of property of designated persons and are prohibited from engaging in or facilitating, directly or indirectly, virtually all transactions involving designated persons. In addition, persons designated pursuant to EO 13810 will be, subject to certain limitations, denied entry into the United States—a restriction that has, pursuant to President Trump's September 24, 2017, proclamation, been extended to apply to all North Korean nationals.

Imposition of Sanctions on Foreign Financial Institutions and Accounts

Pursuant to the Executive Order, the United States has adopted two measures with extraterritorial effect intended to curtail North Korea's access to international financial markets.

First, the Secretary of the Treasury is authorized to impose certain penalties on foreign financial institutions determined to have knowingly conducted or facilitated any "significant" transaction on or after September 21, 2017: (i) on behalf of any persons designated pursuant to U.S. sanctions on North Korea; or (ii) in connection with trade with North Korea. Upon such a determination, foreign financial institutions are subject to (i) a prohibition on opening and prohibition or strict conditions on maintaining correspondent or payable-through accounts in the United States; or (ii) designation on the SDN List, including blocking the institution's property and interests in property within the United States or in the control of a U.S. person. Foreign financial institutions with any past, pending, or prospective dealings with North Korea should review their internal controls in light of the risks associated with this new category of secondary sanctions.

Second, U.S. persons are required to block and are prohibited from engaging in or facilitating any transactions involving any funds that originate from, are destined for, or pass through a foreign bank account that has been determined to be owned or controlled by a North Korean person or to have been used to transfer funds in which any North Korean person has an interest. Pursuant to this restriction, the United States will, in effect, block certain foreign bank accounts and funds associated with those accounts, which could have far-reaching implications. In the absence of any determinations identifying specific accounts, guidance regarding expectations for implementation, or notice from the relevant regulators, this restriction will not create any immediate compliance obligations. Nevertheless, all financial institutions should begin to consider how this restriction might be incorporated into standard screening and due diligence procedures.

Significantly, the United States is not alone in imposing restrictions on financial dealings with North Korea. Prior to issuance of EO 13810, the People's Bank of China, the Chinese central bank, issued a new rule to Chinese banks requiring them to: (i) fully implement the new array of UN sanctions imposed on September 11, 2017; (ii) cease providing financial services to new North Korean customers; and (iii) wind down loans with existing North Korean customers.

180-Day Rule for Aircraft and Vessels

The United States will now deny entry to any aircraft or vessel that has landed, entered, or dealt (including ship-to-ship transfers) with North Korea within the prior 180 days.

These sanctions mark a meaningful expansion of U.S. sanctions against North Korea, and, significantly, continue the use of secondary sanctions measures to accomplish U.S. policy goals. U.S. companies have long been prohibited from engaging in virtually all transactions with North Korea, but under EO 13810 foreign companies find themselves increasingly within the reach of U.S. sanctions in connection with any dealings involving North Korea. Consequently, companies dealing, directly or indirectly, with North Korea should review their internal policies and controls to ensure that they are able to respond to increasing potential risk and restrictions on those dealings.

Three Key Takeaways

  1. President Trump issued an Executive Order that strengthens and expands the sanctions against North Korea.
  2. U.S. persons already were largely prohibited from engaging in transactions with North Korea; now, under the new Executive Order, the U.S. government can sanction non-U.S. persons for engaging in certain transactions involving North Korea.
  3. Non-U.S. companies that engage in business with North Korea should carefully review the new sanctions to determine if any of the business activities could be sanctionable under the Executive Order.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Cadwalader, Wickersham & Taft LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Cadwalader, Wickersham & Taft LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions