Japan & Australia to sanction NK bank as part of US-led crackdown

By Antoni Slodkowski and Warren Strobel, Reuters

TOKYO/WASHINGTON–Japan and Australia plan to sanction North Korea’s Foreign Trade Bank as part of U.S.-led efforts targeting Pyongyang’s main foreign exchange bank for the role Washington says it has in funding the country’s nuclear program. A Japanese government source said Tokyo could act within the next two to three weeks. Australian Foreign Ministry sources said Canberra might also unveil sanctions soon. A senior U.S. official said the Obama administration was trying to convince other governments to crack down on the bank after Washington announced its own measures this month.

Washington had urged the European Union to take action, a State Department official said on Monday. David Cohen, the U.S. Treasury undersecretary for terrorism and financial intelligence, told reporters he raised the issue of the bank with Chinese officials in Beijing last week, although he did not say what their response was.

Experts said the U.S. move was designed to make foreign banks that do business in the United States think twice about dealing with the Foreign Trade Bank, much the same way banks have become wary about having ties with financial institutions in sanctions-hit Iran. “It was obvious to us, fairly early on, that this bank is key to the North Korean ability to finance and fund” their nuclear and ballistic missile programs, said the senior U.S. official, who spoke on condition of anonymity. “And so it was decided it would make sense to do everything we could to put pressure on their proliferation efforts and their WMD (weapons of mass destruction) efforts by putting pressure on this bank.” Not much is publicly known about the bank. One South Korean expert said it also handled legitimate trade and investment with China. The State Department official said some EU countries with embassies in Pyongyang used the bank for embassy business. Washington had asked the U.N. Security Council to include the bank in fresh sanctions imposed on North Korea for its Feb. 12 nuclear test, but China and Russia were opposed, said the senior U.S. official and U.N. diplomats. They did not say why Beijing and Moscow rejected the proposal. Neither Russia’s U.N. mission in New York nor China’s had an immediate comment. Russia and China each wield vetoes in the Security Council. The United States announced its unilateral measures against the bank several days after the U.N. resolution was passed on March 7. Washington’s measures prohibit any transactions between U.S. entities or individuals and the North Korean bank. Reputational Damage The Japanese government source with direct knowledge of the matter said Tokyo was expected to announce sanctions once legal documents were prepared. “The (bank) doesn’t have a branch in Japan so the main reason behind the move is an attempt to cause as much reputational damage as possible,” the source said, referring to any institutions that might be doing business with the bank. In Canberra, Foreign Ministry sources said sanctions would be applied to prevent Foreign Trade Bank operations in Australia. Talks were under way with bank representatives, the sources said, declining to say what the measures would be or where the talks were taking place. The office of Foreign Minister Bob Carr said that up to now regulators had yet to find any record of a Foreign Trade Bank branch in Australia. Australia has diplomatic ties with Pyongyang. Japan does not.