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Weaponizing US Courts Against North Korean Proliferators

| Aug. 01, 2017

How civil asset forfeiture could be used to target North Korean funds in Chinese banks.

In July, North Korea test fired a ballistic missile said to be capable of reaching the United States. Not surprisingly, Kim Jong-un’s provocations have been met with increased calls by congressional leadership and policymakers to ratchet up the pressure on China — North Korea’s lifeline to the international financial system, according to a recent UN report. A difficult question for policymakers now is how far should the United States go to increase pressure against China?

In recent months, the U.S. Department of the Treasury has ramped up its efforts to identify and exclude North Korean entities from the U.S. financial system. The Treasury Department’s Office of Foreign Asset Control has designated 36 North Korea-related individuals and entities since January. Most recently, the U.S. Treasury Department issued a finding that that Bank of Dandong, a Chinese bank, is a “foreign financial institution of primary money laundering concern,” under Section 311 of the USA PATRIOT Act, for its role in facilitating North Korean access to U.S. banks. The proposed rule would require U.S. banks to ensure that Bank of Dandong does not directly or indirectly access the U.S. financial system.

Amid calls for increasing pressure on China to respond to North Korea’s provocations by imposing secondary sanctions against Chinese banks, the U.S. Department of Justice (DoJ) has taken a different course of action — using civil courts. Recently, the DoJ has sued Chinese entities, in civil court, for sanctions violations. While a novel approach, is this too little, too late?

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For Academic Citation: Arnold, Aaron.“Weaponizing US Courts Against North Korean Proliferators.” The Diplomat, August 1, 2017.

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