Sanctioned nation seeks access to intern’l financial system

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Russia’s need for weapons and ammo may be opening banking access to North Korea

Access to the international financial system remains a top priority to countries around the world. That drive to get and preserve access is a key point of leverage in AML Compliance and countering the financing of terror (CFT). But a recent New York Times article shows how Russia’s need for weapons and ammunition—and North Korea’s need for hard currency and banking access—may be subverting AML and CFT efforts.

Intelligence officials from US-allied sources believe Russia authorized a bank there to release millions of dollars to North Korea from accounts frozen by U.N. sanctions. 

Sources also believe that Russia is facilitating North Korea’s access to the international financial system through at least one private bank in Russia. Analysts believe the banking access is a quid pro quo for North Korea providing ammunition to Russia for use in its war on Ukraine.

In addition to the release of frozen funds, a Russia-aligned private bank opened a new account for a front company representing North Korea.

Analysts have noted the warming relations between Russia and North Korea as both seek options that evade sanctions and military and economic isolation. 

Russia itself grapples with sanctions and narrowed access to the international financial system, but it has expanded relationships with countries willing to walk a fine line, and sometimes cross it. 

While banks that do business that violates sanctions should be held accountable, actually making that happen can be difficult. If the prevailing government in a country like Russia slow-walks or otherwise subverts compliance enforcement, there are limited options. 

And that is especially true when Russia has become an expert at workarounds to sanctions and related measures. Given the pressure Russia faces to re-arm and press forward in Ukraine, the downside to helping North Korea access the international financial system must seem quite small at present.

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