Australia and Japan to Join U.S.-led Crackdown on Foreign Trade Bank of North Korea

The United States has led a crackdown on the Foreign Trade Bank of North Korea, a foreign exchange bank that Washington says plays a major part in the nuclear program of Pyongyang. The resolution was released on March 7 after the United Nations passed a resolution against the said bank. Australia and Japan are planning to join the sanction. Tokyo could act within two to three weeks while Australia is set to unveil their sanction plans soon. The Obama administration is busy convincing other governments to join the crackdown on the bank. Washington is urging China and the European Union as well. The issue has been raised with Chinese officials last week by the U.S. Treasury Undersecretary David Cohen, who is in-charge of financial and terrorism intelligence. He did not say if China had given its response.

Why the crackdown

A senior U.S. official who wanted to remain anonymous said that the bank is the prime key to the funding and financing of North Korea’s ballistic missile and nuclear programs. The sanctions are being put into place to prevent their development efforts to build weapons of mass destruction. This is designed to prevent foreign banks that operate in the U.S. on making deals with this North Korean Foreign Trade Bank. It also prohibits U.S. individuals and entities to have dealings with this bank.

Only a few details about the bank are known publicly. It is said to handle legitimate investment and trade activities in China according to a South Korean expert. The U.S. State department said that it is being used for embassy business by some EU member countries with embassies in the North Korean capital, Pyongyang. So far Russia and China have opposed the U.N. sanction although their reasons were not revealed.

Sanctions

Japan is set to announce their sanctions as soon as the preparation for the legal documents is done. The Foreign Trade Bank of North Korea does not have branch in Japan, so they are planning to start with reputational damage on institutions that deal with the bank in question. Canberra on the other hand says it will prevent its operation in Australia although it is not yet known if there is a branch in Australia. Information is still scarce at this point. Japan does not have diplomatic ties with North Korea unlike Australia.

Challenges ahead

A difficult challenge faces the international community – how to stop bulk cash from being transferred. It is one of the preferred methods of North Korea. Its diplomats carry loads of cash inside their briefcases. On the other hand if the sanctions are imposed on the bank, these diplomats will be forced to carry more cash with them and run the risk of being captured.

The success of the U.N. sanctions lies with China, which is North Korea’s trading partner as well as its only diplomatic ally. North Korea’s recent actions against South Korea and the United States frustrate China. However, according to an expert on North Korean economy, Cho Byung-hyun of Seoul’s IBK Economic Institute, China might take actions against the bank but it will not shut the bank down. It could limit the activities of the bank to prevent cash transmittal.