U.S. lists N.K. Dongbang Bank for illicit arms trade

WASHINGTON (Yonhap News) -- The United States Tuesday blacklisted a North Korean bank for its alleged involvement in arms trade banned under U.N. resolutions adopted after the North's nuclear and missile tests in 2009.

The Treasury Department said in a statement that it has designated the Bank of East Land, or Dongbang Bank, "for its facilitation of weapons-related transactions for, and other support to, designated arms manufacturer and exporter Green Pine Associated Corporation (Green Pine)."

Green Pine was blacklisted in August when U.S. President Barack Obama issued Executive Order 13551 to sanction several North Korean entities and citizens, including Office 39 of the North's ruling Workers' Party, which is believed to manage slush funds for North Korean leader Kim Jong-il, for their involvement in weapons of mass destruction and other activities banned by U.N. resolutions.

The order, issued in response to North Korea's torpedoeing of a South Korean warship, brought to more than 20 the number of North Korean entities and individuals under trade restrictions with the U.S. Forty-six sailors died in the attack.

The Treasury Department accused Dongbang Bank of having "facilitated transactions involving Green Pine and designated Iranian financial institutions, including Bank Melli and Bank Sepah."

The Iranian banks have already been targeted for their involvement in Iran's missile and other arms transactions. Tehran is also prohibited from engaging in transactions of weapons of mass destruction under U.N. resolutions.

Dongbang Bank "has also facilitated financial transactions for the benefit of North Korea's Reconnaissance General Bureau's (RGB) weapons program," the department said.

The RGB, sanctioned under the Executive Order 13551, is North Korea's premiere intelligence organization in charge of North Korea's conventional arms trade, and controls Green Pine, which "specializes in the production of maritime military craft and armaments, such as submarines, military boats and missile systems, and has exported torpedoes and technical assistance to Iranian defense-related firms," the department said.

David Cohen, acting treasury undersecretary for terrorism and financial intelligence, said Dongbang Bank is "a major conduit for facilitating North Korea's conventional arms trade," adding, "Today's designation exposes North Korea's efforts to circumvent sanctions to conduct illicit activities and degrades its ability to abuse the international financial system."

Dongbang Bank's designation was taken under Executive Order 13551, targeting "North Korea's importation and exportation of arms, importation of luxury goods, and other illicit activities, including money laundering, the counterfeiting of goods and currency, bulk cash smuggling, and narcotics trafficking," the department said.

The designation comes one day after Obama issued an executive order to reinforce executive orders issued by himself and former President George W. Bush to restrict trade with North Korea.

Obama's new executive order prohibits "the importation into the United States, directly or indirectly, of any goods, services or technology from North Korea," and calls on Treasury Secretary Timothy Geithner to "take such actions, including the promulgation of rules and regulations, and to employ all powers granted to the president by the International Emergency Economic Powers Act and the United Nations Participation Act of 1945 as may be necessary to carry out the purposes of this order."

The extended U.S. sanctions come as the six-party talks are deadlocked over heightening tensions on the Korean Peninsula after North Korea's torpedoing of the warship Cheonan and shelling of a South Korean island, which killed 50 people last year.

North Korea has yet to address South Korea's grievances over the sinking of the Cheonan and the attack on Yeonpyeong Island, although South Korea and the U.S. want the North to do so before moving on to another round of the denuclearization-for-aid talks.

Seoul has proposed that Pyongyang come out for inter-Korean nuclear dialogue to foster the atmosphere for an early resumption of the nuclear talks involving the two Koreas, the U.S., China, Japan and Russia amid reports the North may respond sooner or later.

Seoul and Washington have discussed possible food aid to North Korea, which is suffering from severe food shortages due to flooding and a severe winter, saying they will continue employing the two-track strategy of dialogue and sanctions to achieve the North's eventual nuclear dismantlement.

The U.S. move to reinforce sanctions on North Korea should not be seen as a shift to a more hardline policy on North Korea, a senior Obama administration official said.

The new sanction "neither strengthens nor weakens our previous restrictions on imports of North Korean products," the official said, asking anonymity. "It rationalizes the process."