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Digital Subscriptions > The Hedge Fund Journal > Issue 127 - October 2017 > Sanctions and AML Update

Sanctions and AML Update

North Korea and Venezuela

SEETHA RAMACHANDRAN, BETTY SANTANGELO, GARY STEIN, JENNIFER M. OPHEIM and NICOLE GEOGLIS, SCHULTE ROTH & ZABEL

On September 20, 2017, in response to North Korea’s recent military actions and public statements made by North Korean leader Kim Jong-un, President Trump issued Executive Order 13810 (“E.O. 13810”), which authorizes the US Secretary of the Treasury to impose sanctions against persons, including foreign financial institutions, that knowingly engage in transactions and activity involving North Korea.1 As Secretary Mnuchin stated in his remarks announcing the action, E.O. 13810 puts foreign financial institutions “on notice that, going forward, they can choose to do business with the United States or with North Korea, but not both.”2

Subsequently, on September 26, 2017, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) imposed sanctions against a number of North Korean banks and individuals linked to North Korean financial networks.3

Separately, on September 1, 2017, OFAC released two new Frequently Asked Questions (“FAQs”) concerning the scope of the sanctions announced last month relating to Venezuelan-issued bonds.4 In another development relating to Venezuela, on September 20, 2017, the US Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) published an Advisory warning financial institutions of “widespread public corruption in Venezuela.”5

North Korea Sanctions Program Executive Order 13810

E.O. 13810 lays the groundwork for expanded sanctions that the US Secretary of the Treasury may impose to discourage foreign persons, including foreign financial institutions, from engaging in activity that serves to enable the continued existence of the current North Korean regime. The provisions, as discussed below, do not, on their own, alter the existing North Korea sanctions program; such changes will be the result of action by the Department of Treasury to implement E.O. 13810.

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