Banks told to tighten screws on North Korea

National Post (Latest Edition) - - FINANCIAL POST - Le Be er thia u me

OT­TAWA• Cana­dian fi­nan­cial in­sti­tu­tions have been or­dered to treat what few trans­ac­tions they con­duct with North Korea with even greater dili­gence as the fed­eral govern­ment tries to in­crease pres­sure on the nu­clear-armed na­tion.

Fi­nance Min­is­ter Bill Morneau qui­etly is­sued the di­rec­tive last month fol­low­ing con­cerns that the North Korean govern­ment was skirt­ing in­ter­na­tional sanc­tions through money- laun­der­ing and other il­licit fi­nan­cial ac­tiv­ity.

The num­ber of fi­nan­cial trans­ac­tions be­tween Canada and North Korea is ex­tremely small be­cause of those sanc­tions, im­posed in Au­gust 2011. But fi­nan­cial in­sti­tu­tions will now have to treat even those few that are al­lowed, which in­clude re­mit­tances worth less than $1,000 and hu­man­i­tar­ian aid, as po­ten­tial cases of money-laun­der­ing and re­port them.

The move comes as Canada pre­pares for a meeting with al­lies in Van­cou­ver next week, where the main topic will be find­ing ways to fur­ther squeeze the North Korean govern­ment and get it to give up its nu­clear pro­gram.

The dis­cus­sions will put a heavy em­pha­sis on stop­ping North Korean money- laun­der­ing as well as smug­gling by sea, which U. S. of­fi­cials have sug­gested could in­volve tak­ing ac­tion against North Korean ship­ping.

Fi­nance Canada spokes­woman Jo­ce­lyn Sweet said the di­rec­tive came af­ter the Fi­nan­cial Ac­tion Task Force raised con­cerns about, and urged a harder line against, North Korean money- laun­der­ing in Novem­ber.

The task force is an in­ter­na­tional body of 35 coun­tries, in­clud­ing Canada, the U. S., China and Rus­sia, that is tasked with ex­am­in­ing and de­vel­op­ing mea­sures to com­bat money- laun­der­ing and ter­ror­ist fi­nanc­ing.

“The di­rec­tive com­ple­ments Canada’s ro­bust sanc­tions regime al­ready in place against ( North Korea) and re­in­forces Canada’s pub­lic state­ments iden­ti­fy­ing North Korea as a ju­ris­dic­tion of con­cern,” Sweet said in an email.

Morneau’s or­der is largely sym­bolic, said Garry Cle­ment, a re­tired RCMP of­fi­cer and cur­rent vice-pres­i­dent of the As­so­ci­a­tion of Cer­ti­fied Fi­nan­cial Crime Spe­cial­ists, and ap­pears de­signed to get other coun­tries on board.

Not only does Canada have lim­ited fi­nan­cial ties to North Korea, Cle­ment said, but Cana­dian banks and other in­sti­tu­tions have been closely scru­ti­niz­ing any trans­ac­tions with the Asian na­tion for years.

The prob­lem there­fore isn’t with Canada, but coun­tries like China that have been much less strin­gent — and in some cases al­ready im­pli­cated — in money-laun­der­ing with North Korea.

“That’ s the only way you’re ever go­ing to tighten this up,” Cle­ment said. “So un­less coun­tries like China, like Iran and ev­ery­body came on the same page, it’s re­ally hard to shut down in­ter­na­tional flows.”

The U.S. re­cently sanc­tioned sev­eral com­pa­nies and in­di­vid­u­als in China, fol­low­ing years of com­plaints about money-laun­der­ing and il­licit trade with North Korea.

China has started to crack down on il­licit North Korean fi­nanc­ing and smug­gling, Brian Hook, direc­tor of pol­icy for U.S. Sec­re­tary of State Rex Tiller­son, told re­porters on Thurs­day, but more is ex­pected.

“We have been very clear with them about the ac­tion that we need them to take against in­di­vid­u­als or en­ti­ties un­der Chi­nese con­trol that are . . . help­ing or fa­cil­i­tat­ing or sup­port­ing North Korea’s nu­clear and mis­sile pro­gram,” he said. “We’ve asked them to take ac­tion. They have taken ac­tion in some ar­eas.”

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