FATF status

North Korea is subject to a FATF call on its members and other jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing (ML/FT) risks emanating from the jurisdictions.

Latest FATF Statement - 25 October 2024

Building upon the FATF statements over the past decade, the FATF remains concerned by the DPRK’s continued failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threats posed by the DPRK’s illicit activities related to the proliferation of weapons of mass destruction (WMDs) and its financing.

The FATF has continually reiterated since 2011 the need for all countries to robustly implement the targeted financial sanctions in accordance with UNSC Resolutions and apply the following countermeasures to protect their financial systems from the money laundering, terrorist financing, and proliferation financing threat emanating from DPRK: 

Terminate correspondent relationships with DPRK banks;

Close any subsidiaries or branches of DPRK banks in their countries; and

Limit business relationships & financial transactions with DPRK persons. 

Despite these calls, DPRK has increased connectivity with the international financial system, which raises proliferation financing (PF) risks, as the FATF noted in February 2024. This requires greater vigilance and renewed implementation and enforcement of these countermeasures against the DPRK. As set out in UNSCR 2270, DPRK frequently uses front companies, shell companies, joint ventures and complex, opaque ownership structures for the purpose of violating sanctions. As such, FATF encourages its members and all countries to apply enhanced due diligence to the DPRK and its ability to facilitate transactions on its behalf.

The FATF also urges countries to adequately assess and account for the increased proliferation financing risk with the greater financial connectivity reported, particularly since the next round of assessments requires countries to adequately assess PF risks under Recommendation 1 and Immediate Outcome 11. The ability to obtain reliable and credible information to support the assessment of PF risks relating to the DPRK is hampered by the recent termination of the 1718 Committee Panel of Experts mandate. Thus, the FATF will monitor the measures to comply with DPRK targeted financial sanctions and the implementation of countermeasures against DPRK.

European Commission list of countries with strategic deficiencies in their AML/CFT regimes

North Korea is on the EU Commission list of high risk countries

Compliance with FATF Recommendations

North Korea has not yet undertaken a Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards.

North Korea has one of the most closed and centralized economies globally, characterized by state ownership and control over nearly all means of production. The economy faces significant challenges, including food shortages and a lack of infrastructure, which have been worsened by the loss of trading partners and natural disasters. Despite attempts at economic reforms and the introduction of semi-private markets, the economy remains largely command-based, with major industries focused on military equipment, machine building, and mining.

The investment climate in North Korea is marked by strict government control and limited opportunities for foreign investors, despite the presence of special economic zones. While the country has attempted to attract foreign investment through tax incentives, the overall environment remains risky due to political instability, a lack of transparency, and significant bureaucratic hurdles.