US may toughen sanctions against fake companies from the DPRK

American experts on North Korea expect Washington to toughen sanctions against fake companies representing the DPRK communist regime abroad. They also believe that it will be much more difficult to impose sanctions on Chinese financial institutions that maintain business relations with the North Korean regime.

On January 2, President Barack Obama issued an administrative order imposing sanctions against the DPRK in response to a recent hacker attack against Sony Pictures Entertainment. At the end of last year, this company released the comedy film Interview, which tells how two American journalists are assigned to kill North Korean leader Kim Jong-un.

In accordance with a presidential decree, US authorities have been granted the right to impose sanctions against the General Intelligence Bureau of the DPRK, the Korean Mining Trading Company and the Tangun Trading Corporation, as well as against 10 individuals.

White House spokesman Josh Ernest made it clear that this prescription would be followed up, noting that "this is the first action of the US government against North Korea."

While the Obama administration is considering other options for putting pressure on Pyongyang, experts point out that these latter sanctions are more symbolic in nature.

“We are left with less and less of what sanctions can be imposed against,” said John Merrill, the former head of the department for Northeast Asia at the Department of Intelligence and Research.

“We have already imposed sanctions against so many things that we have nothing left to do but double things up,” Merrill said in a telephone interview with the Korean service of Voice of America. “We actually imposed sanctions on certain organizations and individuals who were already under sanctions already.”

Nevertheless, experts note, the sanctions against fake companies representing the interests of the DPRK abroad can be strengthened.

"The North Korean regime is largely supported through officially operating front companies," says William Newcomb, a former member of the UN Expert Council on DPRK Sanctions, referring to companies to which others are shifting responsibility.

Newcomb clarified that foreign nationals cooperating with the DPRK through such companies are also “potential candidates” for whom Washington may impose sanctions.

The expert notes that after the appearance of the presidential order, fake companies used by the DPRK may be included in the relevant list compiled by the Foreign Assets Control Department of the Ministry of Finance.

According to experts, in order for the additional sanctions against the DPRK to take effect, it is necessary to be able to apply sanctions against institutions representing third countries.

“We know that the North Korean regime was able to build relationships with banks and financial institutions in China and, through them, launder money and make other monetary transactions,” says Larry Nyksh of the Washington-based Analytical Center for Strategic and International Studies.

At the same time, Niksch notes, sanctions against Chinese financial institutions are not among the priority issues in relations between the world's two largest economies. “They are viewed, especially by the State Department, as potentially harmful to relations between the United States and China,” Niksch emphasizes, writes Voice of America.