President Trump has signed a new executive order attempting to impose yet more sanctions against North Korea. Since the US has no economic ties with North Kora in the first place, this increasingly means targeting third party entities, and other countries.
This appears to be taking two major forms. The first is sanctions against nations that are continuing to trade with North Korea, though the exact scope of this is unclear. The second, and potentially far more serious, is a wholesale sanction on banks with ties to North Korea.
According to Treasury Secretary Steve Mnuchin, the US will be formally requiring all banks around the world to choose whether to do business with the US or with North Korea, and that will cut all banks that in any way facilitate North Korean trade from US business.
This has been something advocated for awhile by the Trump Administration, but is potentially dangerous. That’s because banks broadly have internal transactions with one another, and trying to excise a certain segment of the banking community for having some involvement with facilitating trade risks cutting broad swathes of the world’s largest banks off from one another, particularly in big countries like China, where such transactions are not unusual.
The US tried similar banking sanctions with Iran, but the situation was different, as those sanctions came before the international digital banking systems were in place. Iran’s banks weren’t integrated into the world’s system as heavily at the time, whereas North Korea’s banking partners, overwhelmingly in China, are.
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