Protecting a financial system requires identifying the channel a rule actually restricts. FinCEN's November 9, 2016 final measure prohibits covered institutions from opening or maintaining U.S. correspondent accounts for or on behalf of North Korean banking institutions. It also addresses transactions involving North Korean financial institutions through foreign banks' U.S. correspondent accounts. The rule takes effect December 9. [2016-27049]

The indirect route is important: a prohibited institution need not have its own account with a U.S. bank to be involved in a payment. The final rule requires reasonable steps to identify use through transactional records kept in the ordinary course of business, alongside risk-based additional diligence. FinCEN's concern is institutional access through those relationships, not a presumption about every person of North Korean nationality. [2016-27049]

The June 3 proposal already described the same basic account mechanism and anticipated using existing screening systems, with notices to certain foreign correspondent-account holders. It expected limited additional burden in light of existing controls. That expectation is an agency assessment, not an observation that compliance proved inexpensive. Proposal and final rule share one evidentiary origin. [2016-27049][2016-13037]

The public-interest question is consequently narrower than whether a broad sanctions policy is desirable: can institutions detect and prevent the specified use without confusing a financial connection with an individual's identity? The documents establish the adopted safeguards and implementation date, not their success at stopping laundering. They also describe a sanctions environment already in place, rather than the creation of every restriction relating to North Korea. [2016-27049][2016-13037]

Source documents

  1. Imposition of Special Measure Against North Korea as a Jurisdiction of Primary Money Laundering Concernhttps://www.govinfo.gov/content/pkg/FR-2016-11-09/html/2016-27049.htm
  2. Imposition of Special Measure Against North Korea as a Jurisdiction of Primary Money Laundering Concernhttps://www.govinfo.gov/content/pkg/FR-2016-06-03/html/2016-13037.htm