Most US and multinational corporations are quick to say "we don't do business with North Korea". However, some companies will recognise the risk of sourcing products from businesses located outside North Korea that may use North Korean overseas workers or subcontract to North Korean companies. They worry about how to reduce this risk.
On 23 July 2018 the Office of Foreign Assets Control (OFAC) issued a useful guidance document that provides businesses a helping hand. The highlights of this guidance are set out below:
- The OFAC guidance clarifies that the United States is not seeking to disrupt the efforts of North Korean refugees and asylum seekers. According to the guidance, if North Koreans gain other citizenship, they are no longer considered North Korean for the purposes of the US sanctions – in particular, Title III, the Korean Interdiction and Modernisation of Sanctions Act of the Countering America's Adversaries through Sanctions Act.
- The guidance also provides a list of industries and countries in which North Korean labourers working on behalf of the North Korean government were present in 2017 and 2018 (at Page 3). While the list of countries is long, it at least narrows somewhat the supply chain sourcing concerns to certain parts of Asia, Africa and the Middle East.
- Annex 3 of the guidance provides a sectoral breakdown of where North Korean labourers are working overseas on behalf of the North Korean government by sector. While Annex 3 states that it is not a comprehensive list of all countries, jurisdictions and industries, it is helpful in highlighting some higher risk jurisdictions by sector. For example, the IT sector is warned about Angola, Bangladesh, China, Laos, Nigeria, Uganda and Vietnam.
- Finally, Annex 2 sets out a list of joint ventures that have operated or are currently operating in North Korea established prior to 2016, organised by industry sector. Again, this is not a comprehensive list, nor is it an specially designated nationals or blocked parties list. Instead, the list helps companies to evaluate suppliers in Asia and China which may wish to check as they evaluate potential suppliers.
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For further information on this topic please contact Kay C Georgi, Regan K Alberda or Lamine Hardaway at Arent Fox LLP by telephone (+1 202 857 6000) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The Arent Fox LLP website can be accessed at www.arentfox.com.