riskregulation,Risk and Regulation,Transaction Banking,

riskregulation,Risk and Regulation,Transaction Banking,

Three North Korean banks subject to U.N. sanctions have been banned by the Society for Worldwide Interbank Financial Telecommunication from using the society’s network, through which banks around the world send international remittances, SWIFT told The Yomiuri Shimbun.

The move, aiming to tighten a crackdown on financial transactions with North Korea, will leave the banks unable to receive money sent from overseas.

The Wall Street Journal reported in its online edition that the three banks that have been cut off from the network were Bank of East Land, Korea Daesong Bank and Korea Kwangson Banking Corp.

The Belgium-based network had continued to allow the North Korean banks to use its services because it did not have the authority to decide on the sanctions, according to the network.

SWIFT explained that it suspended providing the network’s services to the banks subject to the sanctions in the wake of a notification from Belgian authorities.

A recent U.N. report revealed that the three banks had used the SWIFT network for the past few years, despite being designated as subject to U.N. sanctions.

Using the network involves such financial transactions as the movement of capital and payments for usage charges, violating the asset freeze imposed on the banks in the U.N. sanctions.

Members of the U.S. Congress had warned that SWIFT’s transactions with North Korean entities including banks could be in violation of U.S. law.

Without access to the SWIFT network, countries under economic sanctions receive a major blow on trade as they must conduct transactions in such forms as barter trading and smuggling operations, The Wall Street Journal reported.

In 2012, the United States and the European Union pressed SWIFT to ban Iranian banks from using its network as Tehran was pushing ahead with a nuclear development program. Some observers say the measure seriously hit the Iranian economy, resulting in Iran’s nuclear deal with major powers in 2015.Speech

Re-disseminated by The Asian Banker from The Japan News