Yesterday, the United States Department of the Treasury Office of Foreign Assets Control (“OFAC”) announced the issuance of a new executive order aimed at leveling sanctions against North Korea. As part of this executive order a number of individuals under of individuals and entities were designated as Specially Designated Nationals (“SDN”).

The new sanctions are instituted pursuant to a new Executive Order issued by President Obama. These new sanctions freeze the assets of certain persons with respect to the Democratic People’s Republic of Korea (“North Korea”). The new executive order also expands the scope of the national emergency declared on June 26, 2008 by targeting the government of North Korea’s alleged involvement in a wide range of proliferation and other illicit activities. These activities, if found to be true, would be in defiance of UN Security Council Resolutions (“UNSCRs”) 1718 and 1874.

This new program calls for the designation of individuals and entities believed to be involved in facilitating North Korean trafficking in arms and related materiel; procurement of luxury goods; and engagement in illicit economic activities, such as money laundering, the counterfeiting of goods and currency, bulk cash smuggling and narcotics trafficking. Furthermore, the executive order supplements existing U.S. sanctions targeting proliferators of weapons of mass destruction and those who provide them with material support.

The following entities and individuals were designated as part of the executive order: The Reconnaissance General Bureau (“RGB”), RGB commander Lieutenant General Kim Yong Chol, Green Pine Associated Corporation, and Office 39 of the Korean Workers’ Party.

The U.S. government has long expressed concerns surrounding North Korea’s possible involvement in illicit activities carried out through government agencies and associated front companies. According to the U.S. these activities violate international norms and destabilize the Korean Peninsula, as well as, the rest of the region.

In regards to arms proliferation, North Korea is thought to be involved in the sale of conventional arms to Middle Eastern, Southeast Asian, and African countries. Since the adoption of UNSCR 1874, a resolution banning arms transfers from North Korea, authorities have seized numerous North Korean shipments suspected of carrying prohibited arms.

U.S. authorities also contend that North Korea has been involved in narcotics trafficking, whether through their citizens, diplomats, or government officials. Officials in Turkey, Egypt, Taiwan and Japan have corroborated claims of North Korean officials being linked to narcotics possession, distribution and smuggling.

Counterfeiting currency by North Korea is another area of investigation for the United States, which claims that North Korea has been manufacturing and distributing counterfeit U.S. $100 and $50 bills. The United States Secret Service has claimed to have made definitive connections between counterfeiting and the government of North Korea.

Furthermore, North Korea is believed to have violated UNSCR 1718 by obtaining through direct or indirect supply, luxury goods. It is claimed that the North Korean government uses these items to secure the loyalty of elites and the military. Last year, Italian authorities stopped the sale of luxury yachts to an Austrian company because it was believed that the yachts were ultimately destined for North Korea.

Finally, it is alleged that all of the aforementioned conduct is facilitated by deceptive financial practices by North Korea which are designed to disguise the true nature of its transactions.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC litigation. If you have any questions please contact him at 202-280-6370 at 202-351-6161 or ferrari@ferrari-legal.com.