The US Financial Crimes Enforcement Network has issued a notice of proposed rulemaking that will, if unchallenged in Congress, prohibit US financial institutions covered by the USA PATRIOT Act 2001 from opening or maintaining correspondent accounts in the US on behalf of North Korean banks.

The notice, which is certain to become law, will also stop foreign banks from using their correspondent accounts at US banks to process transactions involving North Korean financial institutions. Written comments on the notice must be submitted on or before 2nd August.

Title III Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act 2001 amended the anti-money laundering provisions of the Bank Secrecy Act 1970. Section 311 grants the director of FinCEN the authority, having been told by the President (or, as the notice puts it, having found reasonable grounds) that a foreign jurisdiction, financial institution, class of transactions, or type of account is of ‘primary money laundering concern,’ to require US domestic financial institutions to take certain ‘special measures’ against the target.

The agreement that the United States has with the United Nations, alone among the nations, does not oblige it to conform to UN rules or dictates. Nevertheless, the notice bases all its justifications for the policy on UN Security Council resolutions 1718, 1874, 2087, 2094 and 2270, which seek to restrict North Korea’s financial and operational activities in relation to its efforts to build nuclear weapons and missiles and to sell conventional arms.