“They’ve been very clear that they are willing to inflict some economic pain on North Korea, but not to the degree that it would threaten the stability of the regime,” he said. “And that is why China continues to pump the brakes on international sanctions.”
North Korea is subject to a range of international sanctions that prohibit the sale of military equipment and luxury goods, that target its financial system, and that ban the trade of certain commodities that provide a valuable financial lifeline to the North. But those international sanctions have been limited in their impact and there’s little indication they have either curbed North Korea’s missile and nuclear programs or blocked its access to the international financial system. U.S.-specific sanctions against Pyongyang, imposed last year, target entities that cooperate with North Korea on, among other things, its weapons programs and trade in commodities. It also sanctions North Korean officials over the country’s human-rights record. The U.S. also designated North Korea a primary money-laundering concern—a move that should prompt stricter sanctions.
Critics of the U.S. policy toward the North argue the Trump administration could do much more to target Pyongyang not only by sanctioning its officials and entities, but also those from its allies that enable the North’s continued survival.
Bruce Klingner, a senior research fellow for Northeast Asia at the Heritage Foundation who worked for two decades at the CIA and the Defense Intelligence Agency, told me the U.S. could use targeted financial steps to unilaterally target North Korea. He said the vast majority of all financial transactions in the world, including North Korea’s, go through U.S. banks that are regulated by the Treasury Department.
“That actually gives us tremendous leverage to seize and freeze assets, to impose fines, and to identify entities as money-laundering concerns, which means that they cannot access the U.S. financial system, which is the kiss of death for a financial institution,” Klingner said. “And it also makes them an international pariah that no one else will want to deal with.”
Klingner pointed out that the U.S. has fined European banks $12 billion for laundering money for Iran, but has not fined Chinese financial institutions for laundering money for North Korea—for which he blamed the Obama administration.
“If you talk to people who work sanctions in the U.S. government, they’ll say they’ve had evidence for years against North Korean and Chinese violators of U.S. law, but they were prevented from implementing it by senior officials,” Klingner said, adding the U.S. must defend and enforce its laws.
He compared the situation with China and North Korea to a bank president witnessing “someone physically entering his bank with suitcases of cash and knowing it’s for illicit activities.”