As pre-empted in our blog post here, on 28th May 2016, the EU published new restrictions on fund transfers, trade, investment and transport relating to the Democratic People’s Republic of Korea (“DPRK“). Some of these changes are very broad, and indeed mirror some of the restrictions that were in place in respect of Iran prior to the JCPOA. The Council published the new restrictions in the Council Decision (CFSP) 2016/849 of 27 May 2016 (the “Decision“) (binding on EU Member States), and in the Council Regulation (EU) 2016/841 of 27 May 2016 (the “Regulation“) (binding on private parties). The restrictions come into effect on 28th May 2016 and are set out below. Unless stated otherwise, the articles named refer to the new provisions of Regulation 329/2007 as amended by the Regulation.
- Fund Transfer Controls
- The EU has introduced a ban on the transfer of funds to and from the DPRK unless a prior authorisation from the relevant competent authority has been obtained, or the transfer involves an amount equal to or below EUR 15,000 (see new Article 5c(1)).
- Any transfer above EUR 15,000 needs to be authorised. Whilst under the previous sanctions regime against Iran there was also a notification mechanism covering a lower threshold, this is not being introduced in respect of transfers to/from DPRK. Thus, a mere notification appears to be is insufficient (see new Article 5c(4)).
- These restrictions are not limited to financial institutions, although credit and financial institutions are under broader restrictions in the context (see new Article 5c(2)).
- There are no other particular thresholds applying to financial institutions (as was the case for Iran).
- As with previous sanctions against Iran, the definition of “transfer of funds” is very broad and covers, inter alia, electronic transfers but also any transaction by non-electronic means, such as in cash, cheques or accountancy orders (see new Article 1(11)).
- These fund transfer controls apply regardless of whether the transfer of funds is executed in a single operation or in several operations which appear to be linked, including:
- A series of consecutive transfers with a single obligation to transfer funds, where each individual transfer falls below EUR 15 000 but which, in the aggregate, meet the criteria for authorisation;
- A chain of transfers involving different payment service providers, or natural or legal persons, which is related to a single obligation to make a transfer of funds (see new Article 5c(8)).
- Relevant authorisation may be obtained for transactions regarding a specific trade contract, but also those regarding, inter alia, foodstuffs, healthcare or medical equipment or for agricultural or humanitarian purposes, personal remittances or certain other listed transactions (see new Article 5c(3)).
- Financial support for trade with the DPRK
- Member States are prohibited from provide public financial support for trade with the DPRK, including the granting of export credits, guarantees or insurance, to their nationals or entities involved in such trade (see Article 1(2)(b) of the Decision).
- Private financial support, however, is restricted to the extent the support could contribute to the DPRK’s nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes or activities, or other activities prohibited by relevant UN Resolutions (see new Article 9b).
- Investment by the DPRK
- All investment by the DPRK in the EU has been prohibited. This applies to all persons, entities or bodies of the Government of DPRK, the Workers Party of Korea, DPRK nationals and entities incorporated in the DPRK, as well as anyone acting on behalf of the these entities/individuals or anyone owned or controlled by them. (see new Article 5b(1)).
- Establishing a JV with or take or extend an ownership interest in any entity (as listed above) engaged in activities in the sectors of mining, refining and chemical industries, or in DPRK’s nuclear-related, ballistic-missile-related or other weapons-of-mass-destruction-related activities or programmes is also prohibited (see new Article 5b(2)).
- The EU has introduced a prohibition on the import of certain listed luxury goods from the DPRK, as well as of petroleum products, gold, titanium ore, vanadium ore and rare-earth minerals, as listed in the Regulation, and coal, iron and iron ore (again, as listed in the Regulation) (see new Articles 2(4) and 4).
- These restrictions apply irrespective of whether the products originate from DPRK (see new Articles 2(4) and 4).
- The EU is also restricting any aircraft operated by DPRK carriers or originating from the DPRK from landing in, taking off or overflying EU territory (see new Article 11a(4)).
- Vessels owned, operated or crewed by the DPRK are in certain circumstances restricted from entering EU ports (see new Article 11a).
- The EU also requires that cargo originating from, destined for, brokered or facilitated by North Korea, or being transported on a North Korean vessel will be liable for inspection for the purposes of ensuring that it does not contain items prohibited by UN Security Council Resolutions (see new Article 5).