French and other European financial institutions must be alert to significant new U.S. sanctions issued recently against North Korea that could sweep European financial institutions into their scope should they have any business connected with North Korea. President Trump signed a new Executive Order on September 20, 2017 that, among other things, increases the authority of the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) to impose both primary and secondary sanctions on non-U.S. persons transacting with North Korea.
In particular, new secondary sanctions are specifically targeted at foreign financial institutions. OFAC is now authorized to impose either (a) full asset blocking sanctions or (b) more limited restrictions or prohibitions on maintaining correspondent or payable through accounts in the United States, on any foreign financial institution that, after September 21, 2017, knowingly conducts or facilitates a significant transaction with any specially designated national (SDN) identified under existing North Korea sanctions, including the new Executive Order; or in connection with trade with North Korea. Effectively, the secondary sanctions are meant to force non-U.S. persons to choose between dealing with North Korea or retaining access to the U.S. dollar.
Meanwhile, updated sanctions against North Korea were also adopted by the European Union last week. Following the adoption on September 11, 2017 by the United Nations Security Council of Resolution 2375 (2017), the Council strengthened its measures against North Korea. After a first round of transposition mid-September extending the list of sanctioned peoples and entities, the Council Regulation 2017/1836 of October 10, 2017 imposing new prohibitions with regard to import of textiles, exports of petroleum products, joint ventures and maritime transportation was published this week in the EU Official Journal.
Please see the Client Alert issued by Crowell & Moring LLP discussing the scope of the new Executive Order. We encourage our finance clients to seek advice directly from their U.S. sanctions advisors to ensure their ongoing compliance with these expanded U.S. sanctions rules. Our New York office would be happy to facilitate procuring such advice for you or connecting you with the right U.S. sanctions advisor. Our Brussels office is also at your disposal should you have any questions on EU-related aspects.