Egyptian telecommunications company Orascom announced on Sunday it will shutter its affiliate bank in North Korea due to U.S. Treasury Department sanctions, according to a note sent to the Egyptian Exchange and translated by local media.
Orabank set up shop in North Korea shortly after the setting up of Koryolink, North Korea’s wireless telecommunications provider, also run by Orascom, in 2008.
The Egyptian company’s owner Naguib Sawiris said the bank’s closure was the result of sanctions from the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC), announced on Friday.
“Sanctions prohibit a wide range of transactions and entities. But even if a foreign bank believes it is not violating the sanctions, it runs the risk of getting caught up in illicit transactions,” Daniel Pinkston, a North Korea watcher at Troy University, told NK News.
The news comes four days after NK Pro reported the unannounced arrival of an Orascom owned jet in Pyongyang. The aircraft had previously stopped in Australia with Sawiris onboard.
A February report from Finance Uncovered revealed Orabank had big plans in North Korea. A 2009 Orascom quarterly report indicated the bank was a subsidiary of Oracap Far East in Malta, which had paid North Korea $1 million to operate in the country and intended to invest a further $127 million.
But Orabank has likely had a difficult few years. The Egyptian company is a joint venture with the DPRK’s Foreign Trade Bank, which OFAC designated in 2013.
Late last year Orascom also revealed they were having difficulty repatriating profits from North Korea, even while the DPRK government was working towards setting up a competitor.
Orabank is not the only foreign bank to have done business in the DPRK in recent years. There is a number of other Chinese owned or linked banks operating in the country, a 2014 report from the UN Panel of Experts indicated, but it is unclear if they will follow in Orabank’s footsteps.
“I doubt that this will much affect the behavior of Chinese banks. I am not sure that their exposure or lack of it to the dollar will be the key factor for them. It’s more likely to be the guidance they get from their own government, and it’s not clear what that is at the moment,” a sanctions expert who wished to remain anonymous told NK News.
Orascom’s share price fell 5.3 percent in value on the news of Orabank’s closure.
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