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U.S. bill calls for blocking N. Korea's access to global banking network

All News 05:30 September 30, 2016

By Chang Jae-soon

WASHINGTON, Sept. 29 (Yonhap) -- A U.S. House lawmaker has introduced a bill designed to completely cut off North Korea from the international banking system in what could be one of the most powerful sanctions on the communist nation defiantly forging ahead with nuclear and missile programs.

Rep. Matt Salmon (R-AZ) submitted the legislation (H.R.6281) with the stated goal of curbing Pyongyang's nuclear program "by preventing specialized financial messaging services to, or direct or indirect access to such messaging services" for the North's central bank and other financial institutions.

Specialized financial messaging services are essential for international financial transactions. Without such services, wire transfers and other global transactions are impossible. The most representative of such services is the Society for Worldwide Interbank Financial Telecommunication or SWIFT.

The legislation, a copy of which was obtained by Yonhap News Agency, requires that after 90 days of its enactment, the president should sanction those knowingly providing such services for the Central Bank of the Democratic People's Republic of Korea, other financial institutions assisting the North with its nuclear programs and other entities blacklisted for links to the nuclear program.

That means that SWIFT could be sanctioned if it provides its services to the North.

"North Korea continues to develop a ballistic missile and nuclear weapons program, despite numerous United States and international sanctions," the legislation said. "By its actions and continued investments in its nuclear program, it is clear that the government of North Korea has no intention to reduce or eliminate its nuclear program."

It also said that specialized financial messaging services allow for messaging and contact, including the transfer of funds, between financial institutions, and the North's central bank and other institutions "are currently able to avail themselves to financial messaging systems which could be used in funding the North Korean nuclear program."

The legislation also said that experts link the North to the hacking of SWIFT that resulted in the theft of $81 million from the central bank of Bangladesh.

Should the legislation be enacted, it would have powerful impacts on the North, possibly similar or even greater than the 2005 U.S. blacklisting of a Macau bank for doing business with Pyongyang.

By designating the bank in the Chinese territory, Banco Delta Asia (BDA), the U.S. not only froze $24 million in North Korean money held in the bank, but also scared away other financial institutions from dealing with Pyongyang for fear they would also be blacklisted.

The measure hit Pyongyang hard, and reports at the time said North Korean officials had to carry around bags of cash for financial transactions because they were not able to use the international banking system. The sanctions were later lifted in exchange for a denuclearization agreement that later fell apart.

The measure has been considered the most effective U.S. sanction on the North yet.

This week's legislation is the latest in a series of measures that the U.S. has been taking to punish and isolate the North in the wake of its fifth nuclear test earlier this month.

Earlier this week, the Treasury Department imposed sanctions on a Chinese firm accused of exporting to the North "dual-use" items that can be used in the country's nuclear and missile programs. It was the first time the U.S. has sanctioned a Chinese entity in connection with Pyongyang's nuclear and missile programs.

U.S. officials have said that they are investigating more Chinese firms over dealings with the North.

The U.S. has also asked countries around the world to "downgrade or sever" their diplomatic and economic relations with the North.

jschang@yna.co.kr
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