The European Commission has formally identified North Korea as a high-risk third country with strategic deficiencies in anti-money laundering and counter-terrorist financing, according to EU documents published Thursday.
North Korea is one of 11 countries listed by the EU’s executive body in a document published supplementary to EU Directive 2015/849 – and if the listing is accepted – will be subject to further financial scrutiny.
“Today, the European Commission has formally adopted a list of third countries having strategic deficiencies in their regimes on Anti-Money Laundering (AML) and Countering Terrorist Financing (CFT),” a press release read.
“This completes the package of stronger transparency rules to tackle terrorism financing and money laundering brought forward last week. Banks will have to carry out additional checks (‘enhanced due diligence measures’) on financial flows from these 11 countries.”
Afghanistan, Bosnia and Herzegovina, Guyana, Iraq, Lao PDR, Syria, Uganda, Vanuatu, Yemen and Iran are the other countries along with the DPRK that populate the list.
“Identifying the high-risk countries was done in relation to the legal and institutional framework of AML and counter terrorist finance,” Christian Wigand, a European Commission spokesperson told NK News..
Wigand also said the process also involved a review of existing Financial Action Task Force public statements and evaluations of the countries involved as well as the commissions own in-depth evaluation of their legal regimes.
The FATF is an inter-governmental body developing and promoting policies to combat money laundering and terrorist financing.
While the countries listed have already been identified as risks under FATF assessments, the commission’s listing “ensures uniform, binding effects at EU level, completing the EU framework in that context”, according to the document.
North Korea has recently been subjected to unilateral and multilateral sanctions and financial measures, following its fourth underground nuclear test in January and a satellite launch in February.
On June 1 the United States also designated North Korea a “primary money laundering concern” under Section 311 of the Patriot Act.
The designation – which puts at risk of sanctions any bank which does business with the DPRK – applies further financial measures against North Korea with the aim of isolating the country from the U.S. and international banking systems.
Repeat financial measures against the country relating to AML concerns continue despite North Korean state media claims that it is implementing its own AML measures including the adoption of its own anti-money laundering laws in May of this year.
However, in the annex of the commission’s listing document, all of the countries, except for North Korea and Iran, were identified as having made a “high-level political commitment to address the identified deficiencies and have developed an action plan with FATF”.
Iran was listed as a country which is also making high-level political commitments in addition to seeking seeking technical assistance in order to implement an FATF Action Plan.
North Korea however was listed as a state which presents, “ongoing and substantial money laundering and terrorist financing risks, having repeatedly failed to address the identified deficiencies and which are identified by FATF Public Statement”.
The latest list will now need to go to the European Parliament, and in the absence of any objections, will enter into force three days following its publication in the Official Journal of the European Commission.
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Featured Image: The European Commission - Berlaymont Building by Glyn Lowe Photoworks. on 2014-08-15 18:28:22