April 22, 2020 | Policy Brief

How to Fight COVID-19 in North Korea While Maintaining Sanctions

April 22, 2020 | Policy Brief

How to Fight COVID-19 in North Korea While Maintaining Sanctions

Sen. Edward Markey (D-MA) and Rep. Andy Levin (D-MI) last week introduced the Enhancing North Korea Humanitarian Assistance Act in their respective chambers, in an effort to expedite medical aid to North Korea. Although this new legislation attempts to show how the United States can simultaneously enforce sanctions and help the North Korean people most vulnerable during the COVID-19 pandemic, it is unclear if this bill currently can fulfill these two critical objectives.

The bill sets requirements for the facilitation of the humanitarian exemptions process for North Korea in light of a finding by a UN Panel of Experts that sanctions have unintentionally hindered humanitarian aid programs. In particular, the legislation seeks to widen banking channels for aid groups, which have claimed that most banks have been hesitant to provide them with financial services for fear of violating North Korea sanctions.

The legislation thus requires the U.S. Treasury Department to issue guidance notices for banks, shippers, suppliers, and other organizations distributing aid, clarifying how to utilize humanitarian exemptions. Treasury guidance could reduce ambiguity and provide additional information to help banks, shipping companies, foreign customs officials, and anyone else involved in humanitarian assistance to deliver aid without violating sanctions.

This bill, however, overlooks the high likelihood that the North Korean regime will exploit these humanitarian assistance financing benefits. The North Korean regime has repeatedly abused past humanitarian assistance programs to redirect aid to its elite while millions of ordinary citizens suffer.

Legislators should therefore anticipate regime deception and improve any legislation by including robust verification protocols that ensure supplies and services actually reach those who need it most. The Treasury and State Department’s humanitarian financial channel for Iran serves as a helpful comparison for North Korea, considering that Tehran has also attempted to use the humanitarian sector for sanctions evasion activity.

The Iran humanitarian financial channel requires all participating governments, nongovernmental organizations (NGOs), and financial institutions to conduct enhanced due diligence to anticipate higher risks associated with providing services in Iran. These enhanced due diligence measures require the banks, NGOs, and governments to provide Treasury on a monthly basis with detailed information about the Iranian individuals to whom these NGOs and governments are delivering aid and assistance. Collecting this information helps Treasury continually verify the identities and beneficial ownership ties of these Iranian recipients. The creation of this kind of secure channel would facilitate the provision of aid, while making sanctions evasion substantially more difficult.

While the United States should provide humanitarian and medical assistance to the vulnerable North Korean people during this global health crisis, policymakers must carefully approach this delicate task. If Washington overlooks the strategic risks, these humanitarian efforts will not only fail to provide relief for the North Korean people, but will also help the Kim regime continue its nuclear weapons development and maintain its illicit revenue sources.

Mathew Ha is a research analyst focused on North Korea at the Foundation for Defense of Democracies (FDD), where he also contributes to FDD’s Center on Economic and Financial Power (CEFP). For more analysis from Mathew and CEFP, please subscribe HERE. Follow Mathew on Twitter @MatJunsuk. Follow FDD on Twitter @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.


North Korea Sanctions and Illicit Finance