The United States Department of the Treasury Office of Foreign Assets Control (“OFAC”) has designated both Korea Daesong Bank and Korea Daesong General Trading Corporation pursuant to Executive Order (E.O.) 13551. The two entities are alleged to be controlled by Office 39 of the Korean Workers’ Party. According to OFAC, Office 39 is a branch of the government of the North Korean Government alleged to have provided support to North Korean leadership by engaging in illicit economic activities, including the managing of slush funds and generating revenues for government leaders. Office 39 was already designated as a Specially Designated National (“SDN”) on August 30, 2010 due to longstanding concerns regarding North Korea’s involvement in a range of activities, through the use of government agencies and associated front companies. OFAC contends that Korea Daesong Bank is involved in facilitating North Korea’s financing projects, and Korea Daesong General Trading Corporation is facilitating foreign transactions on behalf of Office 39.

Executive Order 13551 targets individuals and entities facilitating North Korean trafficking in arms and related materiel; procurement of luxury goods; and engagement in certain illicit economic activities, such as money laundering, the counterfeiting of goods and currency, bulk cash smuggling and narcotics trafficking. As a result of the designation of these two entities, any assets of the designated entities that are within U.S. jurisdiction are frozen and U.S. persons are prohibited from conducting financial or commercial transactions with these entities.

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.