Money-laundering watchdog: Close North Korean banks

PARIS: The watchdog that monitors global and illicit misuse of funds cited North Korea as a top source of "ongoing and substantial" money laundering and terrorist financing, and urged countries to keep North Korea at arm's length and close its banks.

A report issued by the Financial Action Task Force (FATF) yesterday named nine countries with "strategic deficiencies," including Iraq, Syria, Yemen and Tunisia.

Pakistan escaped mention, despite foreboding that it could be listed.

Pakistan was on the list from 2012-2015 and feared a return would deter foreign investment and hurt access to international financial markets.

A Foreign Ministry spokesman in Islamabad, Mohammad Faisal, said at a news briefing earlier Friday that the US and Britain had jointly submitted a letter to the FATF nominating Pakistan for placement on a "grey list." Faisal said most of the concerns raised by Washington had been addressed in 2015, and Pakistan was still working to take more measures.

The FATF said after plenary session that North Korea has failed to address "significant deficiencies" in its system to combat the ills that pose a risk to the international financial system.

The FATF report on North Korea came as President Donald Trump increased US sanctions on North Korea on Friday, blacklisting scores of companies and ships accused of illicit trading with the pariah nation.

The Paris-based global watchdog that monitors measures taken by nations to combat money laundering and terrorism financing urged nations to be cautious about business ties and transactions with North Korea, taking "necessary measures to close existing branches, subsidiaries and representative offices of (North Korean) banks within their territories."

Targeted measures and sanctions are aimed at protecting world financial sectors from involvement in money laundering or financing terror or North Korea's nuclear programme.

Iran was singled out in the report, but the task force chose to maintain its suspension of counter-measures.

Bosnia and Herzegovina was removed from the FATF list, judged to be in compliance with efforts to counter money laundering and terror financing. Pakistan, which had feared it would end up on a watch list, got a reprieve.

The report urged Iran to continue addressing items on a now-expired action plan to combat money laundering and terrorist financing, citing an eight-item "to do" list that includes freezing terrorist assets and adequately criminalising terrorist financing, including by removing the exemption for designated groups 'attempting to end foreign occupation, colonialism and racism.'"

The FATF warned that that action could be taken in June against Iran if progress is not made.