Three North Korean banks have been barred from Swift, the international transaction system, after the UN found they were using its services in defiance of sanctions.
Swift, based in Brussels, said on Wednesday that Belgian regulators would not allow it to provide services to banks that are subject to UN sanctions.
More than 11,000 banks, securities houses and other organisations use Swift to communicate and verify financial transactions globally. It processes about 25m messages a day involving billions of dollars in transfers.
The ban came just days after North Korea fired four ballistic missiles into the Sea of Japan, and a week after the UN issued a lengthy report on how the country has flouted financial sanctions and maintained ties to international finance.
Tensions between North Korea and several Asian nations have risen in recent weeks following the assassination in Kuala Lumpur of Kim Jong Nam, the elder brother of Kim Jong Un, the North Korean leader.
The killing by nerve agent and the missile launch have drawn in China, whose foreign minister this week likened relations between Pyongyang, Seoul and Washington to “runaway trains” that Beijing was trying to stop.
Despite increased sanctions, North Korea has continued to use formal channels to access the global banking system, according to the report from the UN.
The report detailed how banks in North Korea had maintained correspondent banking relationships abroad through joint ventures and noted that “inadequate compliance” by UN member states had been a contributory factor.
“The panel found evidence that financial institutions in several member states continue to provide both direct and indirect correspondent banking services to banks” in North Korea, a violation of a 2016 resolution, according to the report.
Swift did not name the banks it has dropped but the UN said the company had continued to provide services to Bank of East Land, KKBC and Korea Daesong Bank.
The system had previously provided messaging services to four other UN-sanctioned North Korean banks but stopped at their request, the UN said. Several North Korean banks that are not sanctioned by the UN still use Swift.
The UN report also indicated a conflict between EU regulations and a UN resolution implemented last year. Belgium has noted that under European law Swift was permitted to take up to €15,000 in fees from a UN-sanctioned North Korean bank, while the UN panel said Belgium first needed approval from the UN Sanctions Committee for Swift to collect such fees.
Early last year, Swift was embroiled in one of the biggest bank robberies in history. Cyber criminals made off with $81m from the Bangladeshi central bank in February 2016. Hackers had sent fake orders from the Bangladesh Bank via Swift to the central bank’s account at the Federal Reserve in New York.
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