On 13th February, the US Treasury published the speech given by Treasury Under-Secretary Sigal Mandelker at the Securities Industry & Financial Markets Association AML and Financial Crimes Conference.  In this speech, in the context of North Korean sanctions, she commended efforts for institutions to delve deeper, to seek to identify shell and front companies used in sanctions violations, money laundering etc.  The sort of information that might be sought, and passed to authorities included –

  • If you find transactions involving entities listed on UN, OFAC, or other public lists, who are the counterparties to those transactions?
  • Who are the beneficial owners of these entities? And what other accounts have they set up?
  • Where do these entities bank?
  • What are some common physical or email addresses associated with these entities?
  • What other characteristics do they share? And can you identify other entities that share those same characteristics or engage in similar activities or typologies?
  • When you exit a customer because of these or other risks, where do those customers go?  Do you see them try to access the financial system in some other way, such as indirectly through other financial institutions?

She also recommend a review of the FinCEN advisory of November, which describes how North Korea uses complicated trade-based payment schemes to launder funds, and ensure that the institution is working to identify these schemes, typologies, and the actors behind them.
Being proactive, answering these types of questions, and then conducting additional analysis is, she said, where compliance programmes can add additional value to our efforts to disrupt North Korea’s illicit financial networks.

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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