13 Oct 2017
Mainland Chinese Companies Could Be Affected by Tougher U.S. Sanctions on North Korea
Foreign companies that engage in trade with North Korea, as well as the financial institutions that facilitate such trade, could be subject to U.S. economic sanctions under a 21 September executive order that aims to prevent the use of funds generated through international trade to support North Korea’s nuclear and missile programmes and weapons proliferation. The order could particularly affect companies in mainland China, which is North Korea’s largest trading partner.
Treasury Secretary Steve Mnuchin said EO 13810 significantly expands Treasury’s authorities to “target those who enable [the North Korean] regime’s activity wherever they are located.” This includes (i) targeting those conducting significant trade in goods, services or technology with North Korea and banning them from interacting with the U.S. financial system; (ii) blocking and freezing the assets of actors supporting North Korea’s textiles, manufacturing, information technology, fishing and other industries; and (iii) suspending U.S. correspondent account access to any foreign bank that knowingly conducts or facilitates significant transactions tied to trade with North Korea or certain designated persons.
Specifically, this EO blocks all property and interests in property that are in the United States or within the possession or control of any U.S. person of any person (i.e., an individual, partnership, association, trust, joint venture, corporation, group, subgroup or other organisation) determined by Treasury, in consultation with the State Department, to:
- operate in the construction, energy, financial services, fishing, information technology, manufacturing, medical, mining, textiles or transportation industries in North Korea;
- own, control or operate any seaport, airport or land port of entry in North Korea;
- have engaged in at least one significant importation from or exportation to North Korea of any goods, services or technology;
- be a North Korean person, including one that has engaged in commercial activity that generates revenue for the government of North Korea or the Workers' Party of Korea;
- have materially assisted, sponsored, or provided financial, material or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked pursuant to this order; or
- be owned or controlled by, or have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order.
Such property and interests in property may not be transferred, paid, exported, withdrawn or otherwise dealt in. These prohibitions are in addition to export control authorities implemented by the U.S. Department of Commerce. The EO also prohibits the entry into the U.S. of (i) vessels that have called at a North Korean port or engaged in a ship-to-ship transfer with such a vessel within the previous 180 days and (ii) aircraft that have landed at a place in North Korea within 180 days after their departure from North Korea.