By Michael Hernandez
WASHINGTON (AA) - The U.S. designated North Korea as a “primary money laundering concern” on Wednesday in a bid to further sever the country from international markets.
The designation under the Patriot Act prevents U.S. financial institutions from doing business with North Korean banks.
U.S. financial institutions will now have to “to implement additional due diligence measures” to ensure that North Korean firms are prevented “from gaining improper indirect access”, the Treasury Department said in a statement.
Pyongyang has been accused of using front companies to funnel money to its illicit nuclear and ballistic missile programs.
Adam Szubin, the agency’s terrorism and financial intelligence official, issued a statement saying that North Korea "is notoriously deceitful in its financial transactions.
“Today’s action is a further step toward severing banking relationships with North Korea and we expect all governments and financial authorities to do likewise pursuant to the new U.N. Security Council Resolution,” he said.
The new designation falls under a law passed by Congress and signed by President Barack Obama in February -- "the North Korea Sanctions and Policy Enhancement Act" -- that requires the Treasury Department to determine if North Korea is a primary money laundering location.
In March, the U.N. imposed some of the stiffest economic sanctions on Pyongyang following a series of ballistic missile and nuclear tests.
In a remarkable turn, China, the North's principal ally, backed the penalties, reportedly over frustration with its communist neighbor.