US amends North Korean Sanctions Regulations, imposes secondary sanctions
Last week, the US Department of the Treasury's Office of Foreign Assets Control amended the North Korea Sanctions Regulations (31 CFR part 510, "the Regulations"). The revised Regulations implement the Treasury-administered provisions of the North Korea Sanctions and Policy Enhancement Act as amended by Countering America's Adversaries Through Sanctions Act and the National Defense Authorization Act for Fiscal Year 2020. The amendments include certain secondary sanctions, and took effect on 10 April 2020.
Among noteworthy amendments is the imposition of secondary sanctions on foreign financial institutions determined by the Secretary of the Treasury to knowingly have provided "significant financial services" to individuals or entities designated under US or UN sanctions, on or after 18 April 2020. Such foreign financial institutions may face blocking and correspondent or payable-through account sanctions.
Further, §510.201(a) of the Regulations now lists several activities relating to North Korea for which "any person", i.e. a US or a foreign individual or entity, may be subject to sanction. Notably, such secondary sanctions may be applied to inter alia any individual or entity determined to have:
- Directly or indirectly engaged in import from/export to North Korea of significant quantities of coal, textiles, seafood, iron/iron ore, as well as certain quantities of refined petroleum products or crude oil. Import/export of services or technology related to these goods is also encompassed.
- Directly or indirectly engaged in exportation or employment of North Korean workers in a manner that generates significant revenues for the North Korean regime.
- Directly or indirectly sold or transferred a significant number of vessels to North Korea, or engaged in significant activity to charter, ensure or register a vessel owned, controlled, commanded, or crewed by a North Korean person.
In this way, the US has widened the scope of its secondary and financial sanctions on North Korea, and it remains to be seen how the changes will be followed up in practice. As was already the case before the amendments took effect, financial institutions and companies should carefully screen counterparties to avoid doing business with individuals or entities subject to North Korea-related sanctions.
Other key amendments to the Regulations include a revised definition of the term "Luxury Goods" that inter alia includes items designated as such by the UN Security Council. Further, section §510.413 of the Regulations provides updated interpretative guidance for determining whether inter alia a transaction is "significant" for the purpose of the Regulations' §§510.201(a) and 510.210.
An overview of these amendments to the North Korea Sanctions Regulations can be found here.
WR Sanctions Alerts provide you with updates on material developments in the country-specific sanctions programs implemented by the US, the UN, the UK, the EU and Norway. We will not provide updates on mere prolongations, without material changes, of existing sanctions programs, nor on any listings or de-listings of individuals/entities placed on implemented sanctions lists . Please note that the WR Sanctions Alerts are provided as general information and do not constitute legal advice.