North Korea has formed a new committee to combat money-laundering and the financing of terrorism.
In doing so, it may be seeking to escape punitive measures inflicted by the international community, but some observers believe that this may be a sincere – if self-interested – push by certain sectors of the North Korean regime.
The North had been taking steps toward launching its new National Coordinating Committee since it joined the Asia/Pacific Group on Money Laundering, the Asia-Pacific branch of the OECD’s Financial Action Task Force. A month ago the North Korean government wrote to the FATF stating its intent to implement international standards on combating money laundering.
Kim Chon Gyun, head of the Central Bank of the DPRK, told the Japanese-based pro-North Choson Sinbo newspaper that officials from the central bank and law enforcement would be joined by the foreign and finance ministries on the panel.
The North’s involvement with the FATF and the announcement of its anti-money laundering board raises eyebrows, given the North’s past reliance on money laundering, along with counterfeiting U.S. currency and other improprieties to raise hard currency.
Which leads to the question of whether the North is announcing its compliance with global money-laundering standards in order to evade sanctions, as well as other punitive measures enacted by the FATF itself, rather than in an attempt to seriously carry them out.
One expert on North Korea sanctions who declined to be identified said that how meaningful the North’s actions are cannot be learned at present because the requirements it has had to meet have not be made public.
“We don’t know exactly what FATF are asking the DPRK to do to clean up their act, so we can’t know whether establishing this committee is an important step towards compliance or just a DPRK attempt to offer FATF half a loaf,” the source said. “I am sure that in any case the main DPRK concern is to wriggle off the black list. FATF’s actions, which have caused most major banks to refuse to deal with the DPRK, are probably more damaging than any UN or national sanction on that country.”
But other regime watchers suggested that there are at least certain segments of the North Korean elite who do indeed want money laundering combated.
“There’s a cohort of DPRK businessmen who want the country to take more active steps in dealing with financial improprieties because they are losing money or opportunities,” said Michael Madden of North Korea Leadership Watch. “The DPRK leadership, particularly Foreign Minister Ri Su Yong, is thinking more long-term on this.”
And Christopher Green of the Daily NK suggested that this was an effort by the North Korean government to not only avoid sanctions, but assert its control over the domestic financial industry by cracking down on money launderers.
“The state wants to bring into its remit all those rogue financial elements that occasionally tend to fall outside the remit of the ruling coalition,” he said. “The state is in a constant battle to stay as top dog in the financial sector in a country where so much is illegal for historical and political reasons – and illegality is always exploited eventually.”
And Daniel Pinkston of the International Crisis Group suggested that the North may have its eye on its northern neighbor with this move.
“I think it will be helpful – from the DPRK perspective – if Pyongyang ever needs to plead their case with Beijing to avoid financial sanctions that include Chinese banks since they are critical for the DPRK’s international financial linkages,” Pinkston said.
Kim Chon Gyun told the Choson Sinbo that the nation’s penal code has already been revised to reflect international standards when punishing money laundering.
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