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(2nd LD) S. Korea welcomes U.S. move to designate N.K. as 'primary money laundering concern'

All News 13:19 June 02, 2016

(ATTN: ADDS experts' comments in last 6 paras)
By Koh Byung-joon

SEOUL, June 2 (Yonhap) -- South Korea on Thursday welcomed the U.S.' move to designate North Korea as a "primary money laundering concern," saying that it indicates Washington's strong commitment to faithfully carry out the toughened sanctions on the communist country for its nuclear weapons program.

The foreign ministry vowed to keep working closely with the United States and the international community to seek sanctions and put pressure on the North to prod it to take a "genuine" step toward denuclearization.

"Our government highly praises the action in that it reflects the U.S.' firm commitment to faithfully carrying out the U.N. Security Council's 2270 resolution and also pursuing its own strong sanctions to induce denuclearization and tangible change," Cho June-hyuck, spokesperson for the ministry, told reporters.

On Wednesday, the U.S. Treasury Department designated North Korea as a primary money laundering concern, which is regarded as a powerful sanction designed to punish the regime for its nuclear and missile tests earlier this year.

This marked the first time that the U.S. has designated the North as such.

The designation calls for prohibiting U.S. financial institutions from opening or maintaining correspondent accounts with North Korean financial institutions and prohibiting the use of U.S. correspondent accounts to process transactions for North Korean financial institutions.

It also prohibits the use of third-country banks' U.S. correspondent accounts to process transactions for North Korean financial institutions.

The measure is similar to the 2005 blacklisting of Banco Delta Asia (BDA), a bank in Macau.

"By designating the North itself this time, it has an impact of designating all North Korean banks as a primary money laundering concern. Compared to the BDA-style sanction that focuses on a single bank, we expect that it will have a more far-reaching effect," the spokesperson said.

"Our government will continue to step up sanctions and pursue coordination to put pressure on the North going forward by closely working together with the U.S. and the international community in a way that would induce the North to take a step toward the road for genuine denuclearization," he added.

A foreign ministry official said on condition of anonymity that the latest action taken by the U.S. can be interpreted as a "warning" against any kind of financial transactions with the North and can induce a "ripple effect" that will force the country to be ejected from the international financial system.

Market experts say that the designation might be the toughest financial sanctions that the U.S. can take against the North.

"It will cost you excessive prices to do financial transactions with the North," said Choi Kang, vice president at the Asan Institute for Policy Studies. "(The North) is being cornered into a situation where it cannot carry out ordinary financial activities."

Yang Moo-jin, a professor at the University of North Korean Studies, agreed that the designation is by far Washington's toughest financial penalty but expressed doubt that it will achieve its intended results.

"The North has been faced with such sanctions since the 1960s and seems to have immunity. It also seems to have tried diverse ways to get around sanctions like the latest one since the BDA incident," he said.

"In addition, at a glimpse, the designation might be targeting North Korea, but experts see it as a way to put pressure on China. The key is whether it can induce cooperation from Beijing."


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