On November 4, 2010 the Office of Foreign Assets Control, Department of the Treasury (OFAC) issued the North Korean Sanctions Regulations, a new Part of the Code of Federal Regulations, at 31 C.F.R. Part 510. These regulations are based on Executive Orders 13466 (June 26, 2008) and 13551 (Aug. 30, 2010), which, as described further below, block the property of certain North Korean individuals and entities, proscribe a range of activities regarding such individuals and entities and their property, and prohibit US persons from engaging in any dealings involving North Korean vessels.

Under Part 510.201(a) of the new rule, all property and interests in property that were blocked under the Foreign Assets Control Regulations, 31 C.F.R. Part 500 as of June 16, 2000, and that remained blocked immediately prior to June 26, 2008, continue to be blocked. Part 510.201(a) also prohibits US persons from registering, owning, leasing, operating, insuring or otherwise providing support to North Korean vessels. This provision implements Executive Order (EO) 13466, which found that North Korea’s nuclear weapons development activities constituted a “national emergency” under the International Emergency Economic Powers Act, 50 U.S.C. §§1701-1706 (IEEPA).

Part 510.201(b) of the rule implements EO 13551, which expanded the scope of the national emergency in EO 13466 and authorized the Secretary of the Treasury to block the property of any entity found to be involved, directly or indirectly, in North Korean arms trafficking, luxury goods procurement, money laundering, counterfeiting, narcotics trafficking or other illicit economic activity supporting the Government of North Korea or its senior officials. As with EO 13466, US persons may not transfer, pay, export, withdraw, or otherwise deal in the property of any entity or individual named in the Annex of EO 13551 or who is subsequently designated pursuant to this Executive Order. The property of any entity found to be owned or controlled by such entities is also subject to these restrictions. The names of entities and individuals whose property is blocked and with whom transactions are barred are named in OFAC’s Specially Designated Nationals List.

To provide the public with guidance as soon as possible, OFAC has promulgated the new regulations in “abbreviated form” and intends to supplement them with additional interpretive and definitional guidance, as well as a statement of licensing policy. Accordingly, we expect additional regulatory changes that may influence the operation of these restrictions.

We will monitor the progress of the North Korean Sanctions Regulations and will publish future advisories as pertinent changes occur.