snapshots

Jun 29, 2017 | 21:28 GMT

3 mins read

U.S.: New Sanctions Against North Korea Target China, Too

(Stratfor)

The U.S. Department of the Treasury unveiled new sanctions June 29 targeting Chinese entities allegedly acting as fronts for North Korean interests, including the Dalian Global Unity Shipping Company and two Chinese nationals. Most notably, the Treasury Department's Financial Crimes Enforcement Network (FinCEN) issued a proposal to bar U.S. institutions from transacting with the Chinese-run Bank of Dandong, which it accuses of carrying out money laundering for the North Korean government. This would require a two-month comment period before going into effect.

In 2005, Washington similarly went after Macau-based Banco Delta Asia for money laundering on behalf of North Korea and froze $24 million in assets. The proposed U.S. actions against Bank of Dandong (and those against Banco Delta Asia) fall under Section 311 of the U.S. Patriot Act, which the Treasury used in June 2016 to name North Korea a "primary money-laundering concern." Bank of Dandong itself has been in the U.S. crosshairs since 2016, but along with Bank of China and China Merchants Bank it claimed to have since halted remittances to North Korea.

In some ways the new sanctions are symbolic — Pyongyang has shown itself adept at circumventing sanctions in the past, and the targeted entities are just part of a larger network it uses to conduct economic activity. But they do show the United States' willingness to pursue secondary sanctions against Chinese institutions (even if minor ones like Bank of Dandong) — sending a clear message to China that the United States is dissatisfied with Beijing's lack of success (or willingness) to rein in North Korea's nuclear and missile programs.

While research and preparation for the sanctions has been in the works for a while, the timing reinforces President Donald Trump's recent tweet asserting that China has been unable to stop North Korea so the United States must take action. It also comes hours before a dinner between Trump and South Korean President Moon Jae In, during which the differences in approach to North Korea will be brought into stark contrast. Moon has pressured Washington to ease off on military threats (the United States let it be known today that the Pentagon has its new battle plans drawn up for a North Korean contingency), to give Seoul time to try to draw Pyongyang back into negotiations. Doubling down on sanctions does little to encourage the South's proposals.

Whether intentional or coincidental, the timing highlights divisions between the United States and South Korea, divisions that Pyongyang has been able to exploit in the past. It will be critical to watch how North Korea responds. Another important thing to watch in the coming weeks is whether more significant Chinese entities are targeted by the United States, though Beijing has already proved that economic pressure is not enough to force it into taking unilateral action against North Korean policy.

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