United States: US Announces New Sanctions Against North Korea

On September 21, 2017, President Trump, in response to North Korea's nuclear activities, issued an Executive Order "Imposing Additional Sanctions with Respect to North Korea" (EO). The EO provides for expansive designation authority against non-US persons and entities and, accordingly, has the potential to significantly expand existing US sanctions risk to a range of foreign financial institutions, shippers, insurers and other persons and entities that participate in or facilitate transactions involving North Korea.

The Countering America's Adversaries Through Sanctions Act (CAATSA),1 which became law on August 2, 2017 [See Dentons' alert " US enacts significant sanctions legislation against Iran, Russia and North Korea: Key takeaways"], gave the president authority to impose new sanctions on non-US persons for North Korea-related activities and targeted transactions involving the precious metals, mining, energy, textile, transportation, fishing, financial services, and agriculture sectors. The new measures announced on September 21, 2017 via the EO widen the scope of available sanctions and aim to curtail North Korea's access to the international financial system and international trade.

The EO provides additional bases for targeting non-US persons, including foreign financial institutions that engage in transactions involving North Korea, even where those transactions occur wholly outside the US and do not involve US persons;2 US-origin goods, services or technology; or the US financial system. Non-US persons engaging in the targeted transactions may be subject to blocking sanctions, other financial controls or limitations, and travel restrictions.

The EO also identifies numerous additional bases on which to designate North Korean persons as Specially Designated Nationals (SDNs) — including the mere fact of being a North Korean national or entity. The EO specifically targets multiple major sectors of the North Korean economy, as well as North Korean port owners and operators.

Summary of the new US sanctions measures

The EO (1) establishes new criteria under which the Office of Foreign Assets Control (OFAC) may list a person or entity as an SDN; (2) prohibits vessels and aircrafts that have called or landed at a port or location in North Korea in the previous 180 days, and vessels that have engaged in a ship-to-ship transfer with such a vessel in the previous 180 days, from entering the US; (3) blocks funds transiting certain accounts determined by OFAC to be linked to North Korea that come within the US or possession of a US person; and (4) provides OFAC authority to impose sanctions on a foreign financial institution that knowingly conducts or facilitates (i) any significant transaction on behalf of certain blocked persons or (ii) any significant transaction in connection with trade with North Korea. Further action from OFAC will be required to implement the changes authorized by the EO, including making specific designations of people or entities under the new criteria. However, both US and non-US persons should take steps now to assess and address the additional sanctions risk posed by the new EO.

Sanctions designations

The EO authorizes the US to block the assets of and impose a ban on entry into the US against any person determined to meet the following criteria specified in Section 1(a) of the EO:

  1. Operating in the construction, energy, financial services, fishing, information technology, manufacturing, medical, mining, textiles, or transportation industries in North Korea;3
  2. Persons or entities that own, control, or operate any port in North Korea, including any seaport, airport, or land port of entry;4
  3. Persons or entities that have engaged in at least one significant importation from or exportation to North Korea of any goods, services or technology;5
  4. North Korean persons, including a North Korea person that has engaged in commercial activity that generates revenue for the Government of North Korea or the Workers' Party of Korea;6
  5. Persons or entities that have materially assisted, sponsored, or provided financial material or technological support for goods or services to, or in support of, any person whose property and interests in property are blocked pursuant to EO of September 21, 2017;7 or
  6. Entities owned or controlled by, or that have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to the EO of September 21, 2017.8

Two of these new bases for designation have major implications for non-US, non-North Korean persons. Section 1(a)(iii) of the EO authorizes sanctions against any person found to have engaged in at least one significant importation from or exportation to North Korea of any goods, services or technology. Section 1(a)(v) of the EO allows for the blocking of non-US persons determined to have materially assisted, sponsored, or provided financial material or technological support for, or goods or services to or in support of, any person designated as an SDN pursuant to the EO.

The EO does not define either "significant" or "materially" for purposes of these new sanctions. Guidance in other sanctions programs provide little clarity as to whether a specific transaction would be deemed "significant" or considered to "materially assist" an SDN.9 What is clear, however, is that non-US persons conducting business involving North Korea, or providing services to persons or entities engaged in trade with North Korea, face a significantly increased risk of sanctions exposure, including asset blocking.

In addition, while no designations pursuant to the EO have been made as of the date of this alert, OFAC is also likely, in the near future, to designate additional SDNs under the criteria listed in Sections 1(a)(i), (ii), (iv) and (vi). These impending changes highlight the importance of continued diligence in screening counterparties to protect against conducting business with an SDN, which could expose both US and non-US persons to sanctions or enforcement risk.

Financial sanctions

The EO also establishes a new framework for US sanctions on foreign financial institutions engaged in certain transactions involving North Korea, regardless of whether those transactions are lawful under the local laws applicable to the foreign financial institution. Under the EO, foreign financial institutions that knowingly conduct or facilitate any "significant transaction" on behalf of persons blocked in connection with North Korea-related activities, or knowingly conduct or facilitate any significant transaction in connection with trade with North Korea, may be:

  • Prohibited from opening or subject to strict conditions on the maintenance of correspondent accounts or payable-through accounts in the US; or
  • Subject to blocking sanctions, whereby all property and interests in property in the US of such financial institution is blocked.10

As noted above, there is uncertainty about what would constitute a "significant" transaction. Foreign financial institutions facilitating or conducting business involving North Korea, or with clients in countries that have significant ties to North Korea (such as China or Russia) will need to reassess their risk in light of these enhanced sanctions.

The EO also requires the blocking of funds that originate from, are destined for, or transit a foreign bank account that the US determines (1) is owned or controlled by a North Korean person, or (2) has been used to transfer funds in which a North Korean person has an interest.

Aviation and shipping sanctions

The EO effectively prohibits any aircraft or vessel11 that has landed or called at any port or location in North Korea from landing or calling in the US within 180 days after departure from North Korea. This prohibition extends to vessels that have engaged in a ship-to-ship transfer with a vessel that has called at a port in North Korea.12


The new sanctions authorities outlined last week come at a time of increased rhetoric and escalating diplomatic tensions between the US and North Korea. They also occur in the context of efforts by the Trump administration to place pressure on nations that maintain significant trade and financial ties to North Korea to reduce those ties to more effectively limit North Korea's nuclear program and belligerent conduct. Given the widespread congressional support for increased sanctions against Russia in CAATSA, and the president's stated desire to press China to take greater action, the prospect of designation for Russian or Chinese persons or entities should not be ignored.

The recent changes to the North Korea sanctions program make it increasingly similar in nature to US sanctions against Iran as the latter existed prior to the Joint Comprehensive Plan of Action (JCPOA). The new North Korea sanctions, like the pre-JCPOA Iran sanctions before it, target non-US persons for engaging in certain conduct with the sanctioned country, even absent a US nexus.

Several of the provisions in the EO of September 21, 2017 do not have immediate effect and require OFAC to designate targets. Others, however, immediately increase the sanctions risk facing even non-US persons engaging in activity with no nexus to the US. As a result, any person, including non-US persons, who may have business activity that involves North Korea should promptly conduct a risk assessment, monitor changes to the North Korea sanctions program (including new designations), and implement any appropriate compliance improvements.


1 Pub. L. No. 115-44, 131 Stat. 886 (August 2, 2017).

2 The EO of September 21, 2017 and the related North Korea Sanctions Regulations (31 C.F.R. Part 510) define US Person as "any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States."

3 Exec. Order, Section 1(a)(i) (September 21, 2017)

4 Exec. Order, Section 1(a)(ii) (September 21, 2017)

5 Exec. Order, Section 1(a)(iii) (September 21, 2017)

6 Exec. Order, Section 1(a)(iv) (September 21, 2017)

7 Exec. Order, Section 1(a)(v) (September 21, 2017)

8 Exec. Order, Section 1(a)(vi) (September 21, 2017)

9 See, e.g., 31 C.F.R. § 561.404, Significant transaction or transactions; significant financial services; significant financial transaction.

10 OFAC also issued a revised general license authorizing certain debits from blocked accounts under limited circumstances.

11 This provision of the EO specifically applies to any aircraft or vessel in which a foreign person has an interest, but those owned by US persons are already generally prohibited from landing or calling in North Korea.

12 OFAC also issued a general license allowing aircraft or vessels subject to the ban to land or call at US ports under limited circumstances.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
22 Jan 2019, Seminar, San Francisco, United States

Dentons is pleased to offer a full day of classes, just in time for the California MCLE compliance period deadline of January 31, 2019.*

23 Jan 2019, Seminar, Los Angeles, United States

Dentons is pleased to offer a full day of classes, just in time for the California MCLE compliance period deadline of January 31, 2019.*

24 Jan 2019, Other, New York, United States

Join Dentons’ Health Care Partner Lori Mihalich-Levin and White Collar & Government Investigations Counsel Christine Genaitis as they lead conference sessions at AHLA Academic Medical Centers and Teaching Hospitals Institute.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions