The U.S. government is tracking 200 North Korean accounts in foreign banks suspected of being linked to illicit activities such as nuclear weapons development, drug trafficking and counterfeiting. "Even before the Cheonan incident, the U.S. was tracking around 200 North Korean bank accounts in banks in China, Russia and even Eastern Europe and Africa that are believed to be involved in the development of weapons of mass destruction and the export of drugs, counterfeit money, fake cigarettes and weapons," a diplomatic source said Thursday.
North Korean leader Kim Jong-il is believed to have a US$4 billion slush fund stashed away in secret accounts in Switzerland, Luxembourg and Liechtenstein.
According to sources, North Korean bank accounts in Russia are being tracked after the U.S. government obtained information that the Russian mafia is laundering money for the North. Kim Jong-il and other officials cannot engage in financial transactions using their real names, so they are believed to operate secret bank accounts or rely on the Russian mob.
Philip Goldberg, the former U.S. State Department envoy charged with enforcing UN sanctions, visited Russia in August last year and reportedly asked Deputy Foreign Minister Alexei Borodavkin to crack down on the mob for its involvement in laundering money for North Korea.
North Korean accounts held in African banks are being tracked, because the reclusive regime has been earning a substantial amount of money in the region by smuggling ivory and selling weapons. "Despite the UN sanctions, North Korea has opened up new markets in Africa and Latin America," said one North Korean source.
The U.S. sanctions against North Korea are expected to differ from pressure applied to Macao-based Banco Delta Asia back in 2005. "Rather than freezing the operations of an entire financial institution like BDA by getting the U.S. Treasury Department to blacklist it on suspicion of money laundering, the measures this time will probably involve the tracking of individual North Korean accounts directly linked to illicit activities and freezing them," a diplomatic source said.
Sanctioning entire banks could prompt North Korea to complain that its legal financial transactions are also being blocked and this could make the lives of ordinary North Koreans even more difficult. This is probably why U.S. Secretary of State Hillary Clinton said these measures "are not directed at the people of North Korea," but at the "destabilizing, illicit and provocative policies pursued by that government."
Others say the latest sanctions could be more comprehensive than previous ones by automatically limiting U.S. transactions with all banks found to deal in a certain amount of money with North Korea, rather than singling out particular banks. Under such pressure, banks could voluntarily sever relations with North Korean businesses or individuals to avoid being blacklisted.
The South Korean government has apparently notified the U.S. of between 10 to 20 North Korean bank accounts under suspicion of being involved in illicit deals. There are fears that massive Chinese aid to the North could render the U.S. sanctions useless, but judging from the vehement protests lodged by North Korea when its accounts at BDA were frozen, experts say financial sanctions are an effective means of pressure.