Last week saw the 33rd birthday of Kim Jung-un, Dear Leader of North Korea. (I’m not sure whether anyone else in North Korea was allowed to celebrate a birthday on 8 January; I mention it only because in December 2014 the North Korean authorities ordered everyone else called Kim Jong-un to change their name, so it seems he’s not great on sharing.) From an AML perspective, North Korea is both easy and difficult. Easy because most institutions (financial and otherwise) simply steer clear of anything obviously North Korean. And difficult because that deals only with the obvious situations, and with modern finance being as complicated as it is, it can be remarkably tricky to be absolutely certain that there’s nothing North Korean lurking at the root of something. And getting specifics on the effectiveness (or even existence) of the North Korean AML regime is not for the faint-hearted.
North Korea has been on the naughty step at the FATF for so long now that it must have worn a groove in it, but in July 2014, the authorities in Pyongyang announced that North Korea (more properly, in FATF-speak, the Democratic People’s Republic of Korea, or DPRK) had joined the Asia/Pacific Group on Monday Laundering as an observer. According to the APG’s website, observer nations are “jurisdictions which are considering APG membership and are prepared to meet the first three membership requirements”.
Ah, I hear you say, and what might those three requirements be? Wonder no longer, for here they are: recognise the need for action to be taken to combat money laundering and the financing of terrorism and proliferation; recognise the benefits to be obtained by sharing knowledge and experience; and have taken or be actively taking steps to develop, pass and implement combating money laundering and the financing of terrorism and proliferation legislation and other measures based on accepted international standards. So the APG is obviously convinced that North Korea is doing these things. But this is only half the story – literally.
For full membership of the APG, North Korea will have to meet not just those first three requirements, but also a second set of three, namely: commit to implementing the decisions made by the APG; commit to participation in the mutual evaluation programme; and contribute to the APG budget. I’m guessing that the middle one is going to be something of a sticking point. Given the trouble the IAEA has had trying – and failing – to get a look at North Korea’s nuclear arrangements (IAEA inspectors left in 2009 and haven’t been allowed back in since then), I don’t hold out much hope for mild-mannered AML types securing much co-operation from Mr Kim, aka First Chairman of the National Defence Commission, First Secretary of the Workers’ Party of Korea, Supreme Commander of the Korean People’s Army, Chairman of the Central Military Commission of the Workers’ Party of Korea and, of course, Dear Leader. And with all those names, that’s a due diligence nightmare right there.
I am sad to say that the country my family moved to many years ago (Namibia), a reasonably calm and peaceful place, is one of North Korea’s sources of foreign income. The ruling party, SWAPO, has a mysterious affection for North Korea, which has resulted in Mansudae Overseas Corporation (a front for the ruling family) to build all the monuments to the heroes of the struggle at a cost of about R500 million, without having to go through the indignity of bidding for the contracts. In an entirely unrelated contract, they also renovated ex-President Nujoma’s farm and built a dozen state houses for the incumbent president.