This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.nytimes.com/2016/06/02/world/asia/treasury-imposes-sanctions-on-north-korea.html

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Treasury Imposes Sanctions on North Korea Treasury Imposes Sanctions on North Korea, Cutting Access to Banks
(about 1 hour later)
With private cybersecurity firms linking North Korea to recent computer attacks that absconded with at least $81 million, the Treasury Department moved on Wednesday to choke off Pyongyang’s remaining access to the global financial system, designating the country a “primary” money launderer.With private cybersecurity firms linking North Korea to recent computer attacks that absconded with at least $81 million, the Treasury Department moved on Wednesday to choke off Pyongyang’s remaining access to the global financial system, designating the country a “primary” money launderer.
The Treasury, employing sanctions techniques that helped pressure Iran to give up much of its nuclear program, said it would seek to impose what are known as secondary sanctions against the reclusive communist country. That means that it could cut off from the American financial system any bank or company that conducts banking transactions with Pyongyang.The Treasury, employing sanctions techniques that helped pressure Iran to give up much of its nuclear program, said it would seek to impose what are known as secondary sanctions against the reclusive communist country. That means that it could cut off from the American financial system any bank or company that conducts banking transactions with Pyongyang.
As a practical matter, that would largely affect Chinese banks, which facilitate North Korea’s financial transactions with Beijing, its largest trading partner. It could also affect some institutions in the nominally autonomous Chinese regions of Macau and Hong Kong, as well as in Singapore, where Pyongyang has often gone to hide the true nature of its banking activities, and to pay for missiles, nuclear fuel and the huge infrastructure it has built around those programs.As a practical matter, that would largely affect Chinese banks, which facilitate North Korea’s financial transactions with Beijing, its largest trading partner. It could also affect some institutions in the nominally autonomous Chinese regions of Macau and Hong Kong, as well as in Singapore, where Pyongyang has often gone to hide the true nature of its banking activities, and to pay for missiles, nuclear fuel and the huge infrastructure it has built around those programs.
The designation, officials said, was in the works long before evidence emerged linking the country’s aggressive hackers to the bank thefts, which involved stealing the credentials that banks use to access the Swift system, a global network that thousands of financial firms use to authorize payments from one account to another.The designation, officials said, was in the works long before evidence emerged linking the country’s aggressive hackers to the bank thefts, which involved stealing the credentials that banks use to access the Swift system, a global network that thousands of financial firms use to authorize payments from one account to another.
In interviews, administration officials said they were still sorting through the evidence that North Korea was involved, and left open the possibility that the thieves deliberately left evidence implicating the country to throw investigators off their trail. It could be months, the officials said, before they reach any conclusions, and in the end the perpetrators of the attack may not be definitively known.In interviews, administration officials said they were still sorting through the evidence that North Korea was involved, and left open the possibility that the thieves deliberately left evidence implicating the country to throw investigators off their trail. It could be months, the officials said, before they reach any conclusions, and in the end the perpetrators of the attack may not be definitively known.
Only once — in the case of North Korea’s attack on Sony Pictures Entertainment, which was promoting a movie depicting the assassination of Kim Jong-un, the country’s unpredictable young leader — has President Obama publicly accused another country of using computer code to wreak havoc in the United States.Only once — in the case of North Korea’s attack on Sony Pictures Entertainment, which was promoting a movie depicting the assassination of Kim Jong-un, the country’s unpredictable young leader — has President Obama publicly accused another country of using computer code to wreak havoc in the United States.
In this case, the sanctions were proposed most immediately because of a Treasury investigation that concluded North Korea uses hard currency to finance its nuclear and missile programs. The department invoked a section of the Patriot Act to ban banks from processing any banking transaction that runs through North Korea.In this case, the sanctions were proposed most immediately because of a Treasury investigation that concluded North Korea uses hard currency to finance its nuclear and missile programs. The department invoked a section of the Patriot Act to ban banks from processing any banking transaction that runs through North Korea.
It is hard to assess how much the action will hurt North Korea. Such sanctions against financial institutions doing business with Iran proved effective because Tehran had billions of dollars in monthly oil and other energy exports that could be choked off; North Korea has none. Oftentimes Pyongyang deals in cash. Until a few years ago it was one of the largest counterfeiters of $100 bills. But that once-lucrative fraud was largely cut off by the redesign of the $100 bill.It is hard to assess how much the action will hurt North Korea. Such sanctions against financial institutions doing business with Iran proved effective because Tehran had billions of dollars in monthly oil and other energy exports that could be choked off; North Korea has none. Oftentimes Pyongyang deals in cash. Until a few years ago it was one of the largest counterfeiters of $100 bills. But that once-lucrative fraud was largely cut off by the redesign of the $100 bill.
The key test will be the reaction of the Chinese. American officials will have a chance to find out next week: Secretary of State John Kerry and Treasury Secretary Jacob J. Lew are traveling to Beijing for the Strategic and Economic Dialogue, where the isolation of North Korea will be a major subject of discussion. China voted for the latest United Nations sanctions, but Beijing’s fears of provoking a collapse of North Korea’s government still outweigh its desire to rein in Mr. Kim’s government.The key test will be the reaction of the Chinese. American officials will have a chance to find out next week: Secretary of State John Kerry and Treasury Secretary Jacob J. Lew are traveling to Beijing for the Strategic and Economic Dialogue, where the isolation of North Korea will be a major subject of discussion. China voted for the latest United Nations sanctions, but Beijing’s fears of provoking a collapse of North Korea’s government still outweigh its desire to rein in Mr. Kim’s government.
Underlying the financial action was the United States’ desire to respond to North Korea’s third nuclear weapons test, conducted in January, which the country said was its first test of a hydrogen bomb. (There is no evidence that it was, in fact, a hydrogen weapon, which increases the magnitude of the blast.) More recently Pyongyang has attempted, and failed, to launch a Musudan intermediate-range missile. It is based on an early Soviet model, which was launched from a submarine, but the repeated failures have embarrassed Mr. Kim and undermined his effort to convince the world that his nuclear missile program is steaming ahead quickly.Underlying the financial action was the United States’ desire to respond to North Korea’s third nuclear weapons test, conducted in January, which the country said was its first test of a hydrogen bomb. (There is no evidence that it was, in fact, a hydrogen weapon, which increases the magnitude of the blast.) More recently Pyongyang has attempted, and failed, to launch a Musudan intermediate-range missile. It is based on an early Soviet model, which was launched from a submarine, but the repeated failures have embarrassed Mr. Kim and undermined his effort to convince the world that his nuclear missile program is steaming ahead quickly.
The bigger mystery is whether Mr. Kim is also trying to show that he can undermine the global financial system, his best way of getting back at the West and his Asian neighbors for their support of sanctions. Two cybersecurity firms identified Pyongyang as the culprit behind a series of cyberattacks against Asian banks, including the theft that spirited $81 million from the central bank of Bangladesh’s account at the Federal Reserve Bank of New York.The bigger mystery is whether Mr. Kim is also trying to show that he can undermine the global financial system, his best way of getting back at the West and his Asian neighbors for their support of sanctions. Two cybersecurity firms identified Pyongyang as the culprit behind a series of cyberattacks against Asian banks, including the theft that spirited $81 million from the central bank of Bangladesh’s account at the Federal Reserve Bank of New York.
Private security researchers analyzing those thefts say that unique digital fingerprints in the attackers’ code match those of the code used in cyberattacks against Sony in 2014 and South Korean banks and broadcasting companies in 2013. The Sony hack destroyed 70 percent of the firm’s computers.Private security researchers analyzing those thefts say that unique digital fingerprints in the attackers’ code match those of the code used in cyberattacks against Sony in 2014 and South Korean banks and broadcasting companies in 2013. The Sony hack destroyed 70 percent of the firm’s computers.
South Korea has blamed North Korea for the attacks on its firms. Elements of the code in those attacks closely track some of the code found in the more recent bank thefts.South Korea has blamed North Korea for the attacks on its firms. Elements of the code in those attacks closely track some of the code found in the more recent bank thefts.
Banks in the United States are already prohibited from doing business with financial institutions in North Korea. But the recommended rules would require them to perform additional due diligence to ensure they are not inadvertently transacting with North Korean financial institutions or the Pyongyang government through shell companies or other fictitious entities.Banks in the United States are already prohibited from doing business with financial institutions in North Korea. But the recommended rules would require them to perform additional due diligence to ensure they are not inadvertently transacting with North Korean financial institutions or the Pyongyang government through shell companies or other fictitious entities.
The rules are the result of a monthslong effort by the Treasury’s Financial Crimes Enforcement Network to determine whether North Korea is a haven for money laundering.The rules are the result of a monthslong effort by the Treasury’s Financial Crimes Enforcement Network to determine whether North Korea is a haven for money laundering.
With that designation established, the Treasury secretary is able to take aggressive measures to cut off the country’s access to the United States financial system.With that designation established, the Treasury secretary is able to take aggressive measures to cut off the country’s access to the United States financial system.
Other countries have also been stepping up efforts to isolate North Korea. In March, the United Nations Security Council said its members had 90 days to sever banking relationships with North Korean financial institutions.Other countries have also been stepping up efforts to isolate North Korea. In March, the United Nations Security Council said its members had 90 days to sever banking relationships with North Korean financial institutions.
The recent attacks on Asian banks exposed new vulnerabilities in the way banks move money around the world.The recent attacks on Asian banks exposed new vulnerabilities in the way banks move money around the world.
North Korea’s possible involvement in those cyberattacks has raised alarms about Pyongyang’s ability to exploit Swift, the global bank messaging network. But the attack did not go to the core of the Swift system; instead, it was analogous to stealing a credit card number to post a phony transaction in the Visa or MasterCard system.North Korea’s possible involvement in those cyberattacks has raised alarms about Pyongyang’s ability to exploit Swift, the global bank messaging network. But the attack did not go to the core of the Swift system; instead, it was analogous to stealing a credit card number to post a phony transaction in the Visa or MasterCard system.