On June 3, 2016, the US Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) issued a notice of proposed rulemaking proposing the imposition of additional restrictions on North Korean banks and other financial institutions.  The notice follows the June 2, 2016 publication of a FinCEN finding that North Korea is a jurisdiction of primary money laundering concern under Section 311 of the USA PATRIOT Act, 31 U.S.C. 5318A. 

As detailed in a prior blog post, the United States recently imposed comprehensive sanctions against North Korea.  While US financial institutions are already generally prohibited from engaging in both direct and indirect transactions with North Korean financial institutions, the additional proposed restrictions are intended to further isolate North Korea from the international financial system.

The proposed restrictions would prohibit “covered financial institutions” from:

  • Opening or maintaining a correspondent account in the United States for or on behalf of a North Korean banking institution; and
  • Processing a transaction involving a North Korean financial institution through the United States correspondent account of a foreign banking institution.“Covered financial institutions” are generally defined to include the following: insured banks, commercial banks, agencies or branches of a foreign bank in the United States, federally insured credit unions, savings associations, certain banking corporations authorized to do foreign banking business, trust banks or trust companies, brokers or dealers in securities, futures commission merchants or an introducing broker-commodities, and mutual funds.
  • FinCEN is seeking public comments on all aspects of the notice of proposed rulemaking. Written comments on the notice of proposed rulemaking must be submitted on or before August 2, 2016.
  • In addition, covered financial institutions would be required to apply special due diligence to their foreign correspondent accounts that is reasonably designed to guard against their use to process transactions involving North Korean financial institutions.

Kathryn Anderson is an associate in Baker McKenzie's International Commercial Practice Group in San Francisco. Kathryn's practice focuses on cross-border transactions and international trade regulation, including export controls, trade and investment sanctions, anti-terrorism controls, and customs and import regulations. Her practice also covers anti-corruption rules and international corporate compliance.


Ms. Test advices clients on issues relating to licensing, regulatory interpretations, enforcement actions, internal investigations and compliance audits, as well as the design, implementation and administration of compliance programs. She also advises clients on the extra-territorial application of trade compliance-related regulations in cross-border transactions.


Ms. Contini focuses her practice on export controls, trade sanctions, and anti-boycott laws. This includes advising US and multinational companies on trade compliance programs, risk assessments, licensing, review of proposed transactions and enforcement matters. Ms. Contini works regularly with companies across a wide range of industries, including the pharmaceutical/medical device, oil and gas, and nuclear sectors.