Homeland Security

07 March 2006

Treasury Briefs North Korea on U.S. Financial System Protections

Regulatory action against Macau bank not meant as sanction on North Korea

Representatives of the U.S. government met with a North Korean delegation in New York March 7 to explain how regulations protect the U.S. financial system from abuse, according to a statement from the Department of the Treasury.

U.S. Treasury officials briefed the North Koreans on the U.S. government's efforts to combat illicit financial activities, specifically focusing on a regulatory action taken in September 2005 against Banco Delta Asia SARL (BDA), a financial institution located in the Macau Special Administrative Region of China.  

The Treasury Department designated BDA as a "primary money laundering concern" under Section 311 of the USA PATRIOT Act.  (See related article.)

The bank was one of nine financial institutions and three jurisdictions that have been cited under Section 311 since the passage of the USA Patriot Act in 2001.  Those designations have covered a range of corrupt activities including narcotics trafficking, currency counterfeiting and financing of terrorist groups.

"BDA was designated because its facilitation of North Korean illicit financial activity presents an unacceptable risk to the U.S. financial system," said Daniel Glaser, deputy assistant secretary of the Treasury for terrorist financing and financial crimes.

The Treasury statement says the briefing, which also was attended by representatives from the State Department and the National Security Council, provided "a useful opportunity to clarify numerous issues."

The Treasury Department stressed that the Section 311 action against BDA was not intended as a sanction against North Korea and should be considered matter completely separate from the Six-Party Talks, the ongoing negotiations on nuclear programs on the Korean Peninsula that involve the United States, North Korea, South Korea, China, Japan and Russia.  (See The U.S. and the Korean Peninsula.)

Regulatory action was taken against BDA primarily because of its extensive involvement with North Korean entities involved in criminal activities, according to the Treasury statement.

"The Treasury Department will continue to take action as necessary to protect against threats to our financial system and our institutions," Glaser said.

For additional information, see Money Laundering.

Following is the full text of the Treasury statement:

(begin text)

Department of the Treasury
March 7, 2006
JS-4099

Treasury Officials Brief North Koreans on Actions to Stem DPRK Illicit Financial Activity

New York, NEW YORK - The U.S. Department of the Treasury today briefed representatives of the Democratic People's Republic of Korea (DPRK) on the action taken against Banco Delta Asia (BDA) and measures to protect the U.S. financial system from illicit activities.  Representatives from the State Department and the National Security Council also attended.

The briefing of North Korean officials focused on the Treasury's authorities to combat illicit finance and the tools we utilize to protect the U.S. financial system, and afforded a useful opportunity to clarify numerous issues.  It specifically covered Treasury's designation of BDA in Macau as a "primary money laundering concern" under Section 311 of the USA PATRIOT Act. "BDA was designated because its facilitation of North Korean illicit financial activity presents an unacceptable risk to the U.S. financial system," said Daniel Glaser, the Treasury Deputy Assistant Secretary for Terrorist Financing and Financial Crimes.

Section 311 is a powerful tool that the U.S. uses to protect itself from corrupt finance threats worldwide. Treasury clarified that the Section 311 action against BDA was a regulatory measure to protect the U.S. financial system from abuse, and not a sanction on North Korea. Treasury further clarified that the designation of BDA was separate and unrelated to ongoing diplomatic negotiations of the Six Party Talks.

As described in the Treasury's formal notice in September, the designation of BDA was based primarily, but not exclusively, on BDA's extensive relationships with North Korean entities involved in illicit activities.

Since the Patriot Act was enacted in 2001, Treasury has designated nine financial institutions and three jurisdictions for their involvement in various types of money laundering activity, including the facilitation of narcotics trafficking, currency counterfeiting, organized crime and the financing of terrorist groups.

"The Treasury Department will continue to take action as necessary to protect against threats to our financial system and our institutions," Glaser concluded.

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(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)