The Office of Foreign Assets Control (OFAC)’s new North Korea Sanctions Regulations become effective today.  In addition to making certain technical and conforming changes, the newly updated Part 510 incorporates recent changes to the sanctions program under Executive Orders (E.O.) 13687, 13722, and 13810, the North Korea Sanctions and Policy Enhancement Act of 2016, and the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA).  The new rules incorporate general licenses that were previously exclusively on OFAC’s website and make changes to those general licenses, including a new $5,000 cap on authorized remittances to North Korea and the elimination of the general license authorizing certain educational activities.  OFAC also issued four new general licenses authorizing certain transactions relating to the investment and reinvestment of funds, payments of certain legal fees, and the activities of the U.S. government and international organizations.

Continue Reading New North Korea Sanctions Regulations Become Effective Today

Today the U.S. Office of Foreign Assets Control (OFAC) issued new sanctions targeting the shipping industry for dealings involving North Korea.  The sanctions include the designation of 56 companies and vessels involved in conducting illegal trade with North Korea.

OFAC also issued new guidance for the global shipping and finance industries, describing common methods used

The AP recently reported that North Koreans are working in China as forced labor and their products are being imported into the U.S.  The AP followed the production of seafood from Chinese facilities to U.S. retailers, but stated that there other affected product categories, including apparel and wood flooring.

While it has been known that North Korea sends workers abroad, this report is the first time the supply chain has been documented to show North Korean forced labor products entering the U.S., which is a federal crime.  It has been reported that North Korea sends tens of thousands abroad, bringing in revenue estimated at $200-$500 million per year as Kim Jong Un keeps a large percentage of the salaries.  According to the AP, the North Korean workers in China remain under constant surveillance and live in forced labor conditions.
Continue Reading Importers Beware: U.S. Customs Targets Imports Made in China by North Korean Workers

Last week the U.S. government announced new sanctions on North Korea designed to target non-U.S. persons, aircraft, vessels, and financial institutions that facilitate trade and transactions with the country.  The Executive Order contained four elements: new authority to designate persons as Specially Designated Nationals (SDNs), sanctions on certain aircraft and vessels that visit North Korea, blocking bank accounts used by North Koreans, and secondary sanctions on foreign financial institutions that conduct or facilitate certain transactions involving North Korea.

New SDN Designation Authority: The Office of Foreign Assets Control (OFAC) has the power to blacklist the following persons as SDNs:
Continue Reading New U.S. Sanctions on North Korea – What You Need To Know

Treasury Secretary Mnuchin announced Wednesday that the Trump Administration was considering sanctioning any country that continues trade with North Korea if the United Nations does not approve additional sanctions against the country.  At an emergency UN meeting in the wake of an additional North Korean nuclear test over the weekend, the U.S. proposed stricter sanctions

Senate Minority Leader Charles Schumer wants President Trump to take a stand against China for its kids-gloves response to North Korea’s nuclear missile activity by using the Committee on Foreign Investment in the United States (CFIUS) to deny all pending requests involving Chinese acquisition of U.S. companies.  President Trump has been critical of China for not using leverage within its means to pressure North Korea, and Schumer’s request, which would block Chinese company efforts to establish control of U.S. companies presently being reviewed by the Committee, aims to drive Beijing to take stronger action by wielding its perceived influence over North Korea.
Continue Reading Schumer Urges Trump to Suspend All China-Related Mergers Pending Before CFIUS to Exact Tougher Approach on North Korea

A recent suit filed by the U.S. Department of Justice (DOJ) for the forfeiture of nearly $2 million highlights the broad extraterritorial reach of U.S. sanctions laws.  On June 14, DOJ filed a complaint to seize funds associated with transactions between several Chinese companies, including Mingzheng International Trading Limited (Mingzheng).  Mingzheng and the other companies had been set up as a front and were conducting transactions in U.S. dollars on behalf of North Korea’s Foreign Trade Bank (FTB), a blacklisted Specially Designated National (SDN).  The case has two noteworthy lessons, with the latter lesson hopefully more relevant to your company:

Lesson One: Don’t launder money for North Korean SDNs engaged in proliferation schemes.  If you want to know more about how North Korea attempts to launder funds, check out this detailed and fascinating report on the topic.

Lesson Two: If you conduct a transaction in U.S. dollars, even if all other aspects of the transaction occur outside of the United States, the U.S. government will likely claim jurisdiction over the transaction.
Continue Reading US Govt Seeks $1.9 Million In North Korea Sanctions and Money Laundering Case