PART 4Finance

CHAPTER 1Asset-freeze etc.

Asset-freeze in relation to designated persons13

1

A person (“P”) must not deal with funds or economic resources owned, held or controlled by a designated person if P knows, or has reasonable cause to suspect, that P is dealing with such funds or economic resources.

2

Paragraph (1) is subject to Part 9 (Exceptions and licences).

3

A person who contravenes the prohibition in paragraph (1) commits an offence.

4

For the purposes of paragraph (1) a person “deals with” funds if the person—

a

uses, alters, moves, transfers or allows access to the funds,

b

deals with the funds in any other way that would result in any change in volume, amount, location, ownership, possession, character or destination, or

c

makes any other change, including portfolio management, that would enable use of the funds.

5

For the purposes of paragraph (1) a person “deals with” economic resources if the person—

a

exchanges the economic resources for funds, goods or services, or

b

uses the economic resources in exchange for funds, goods or services (whether by pledging them as security or otherwise).

6

The reference in paragraph (1) to funds or economic resources that are “owned, held or controlled” by a person includes, in particular, a reference to—

a

funds or economic resources in which the person has any legal or equitable interest, regardless of whether the interest is held jointly with any other person and regardless of whether any other person holds an interest in the funds or economic resources;

b

any tangible property (other than real property), or bearer security, that is comprised in funds or economic resources and is in the possession of the person.

7

For the purposes of paragraph (1) funds or economic resources are to be treated as owned, held or controlled by a designated person if they are owned, held or controlled by a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by the designated person.

8

For the avoidance of doubt, the reference in paragraph (1) to a designated person includes P if P is a designated person.

Making funds available to designated person14

1

A person (“P”) must not make funds available directly or indirectly to a designated person if P knows, or has reasonable cause to suspect, that P is making the funds so available.

2

Paragraph (1) is subject to Part 9 (Exceptions and licences).

3

A person who contravenes the prohibition in paragraph (1) commits an offence.

4

The reference in paragraph (1) to making funds available indirectly to a designated person includes, in particular, a reference to making them available to a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by the designated person.

Making funds available for benefit of designated person15

1

A person (“P”) must not make funds available to any person for the benefit of a designated person if P knows, or has reasonable cause to suspect, that P is making the funds so available.

2

Paragraph (1) is subject to Part 9 (Exceptions and licences).

3

A person who contravenes the prohibition in paragraph (1) commits an offence.

4

For the purposes of this regulation—

a

funds are made available for the benefit of a designated person only if that person thereby obtains, or is able to obtain, a significant financial benefit, and

b

“financial benefit” includes the discharge (or partial discharge) of a financial obligation for which the designated person is wholly or partly responsible.

Making economic resources available to designated person16

1

A person (“P”) must not make economic resources available directly or indirectly to a designated person if P knows, or has reasonable cause to suspect—

a

that P is making the economic resources so available, and

b

that the designated person would be likely to exchange the economic resources for, or use them in exchange for, funds, goods or services.

2

Paragraph (1) is subject to Part 9 (Exceptions and licences).

3

A person who contravenes the prohibition in paragraph (1) commits an offence.

4

The reference in paragraph (1) to making economic resources available indirectly to a designated person includes, in particular, a reference to making them available to a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by the designated person.

Making economic resources available for benefit of designated person17

1

A person (“P”) must not make economic resources available to any person for the benefit of a designated person if P knows, or has reasonable cause to suspect, that P is making the economic resources so available.

2

Paragraph (1) is subject to Part 9 (Exceptions and licences).

3

A person who contravenes the prohibition in paragraph (1) commits an offence.

4

For the purposes of paragraph (1)—

a

economic resources are made available for the benefit of a designated person only if that person thereby obtains, or is able to obtain, a significant financial benefit, and

b

“financial benefit” includes the discharge (or partial discharge) of a financial obligation for which the designated person is wholly or partly responsible.

CHAPTER 2Investment, financial services and financial markets

UK credit or financial institutions: accounts and correspondent banking relationships etc.18

1

A UK credit or financial institution must not—

a

open a bank account with,

b

establish a correspondent banking relationship with,

c

establish a joint venture with, or

d

take an ownership interest in,

a person falling within paragraph (2), if the UK credit or financial institution knows, or has reasonable cause to suspect, that the bank account, correspondent banking relationship or joint venture is with, or the ownership interest is in, a person falling within paragraph (2).

2

The following persons fall within this paragraph—

a

a credit or financial institution domiciled in the DPRK;

b

a branch or subsidiary, wherever located, of a credit or financial institution domiciled in the DPRK;

c

a credit or financial institution that is not domiciled in the DPRK but is owned or controlled directly or indirectly (within the meaning of regulation 7) by a person domiciled in the DPRK.

3

A UK credit or financial institution must not—

a

open a representative office of that institution in the DPRK, or

b

establish a branch or subsidiary of that institution in the DPRK.

4

Paragraphs (1) and (3) are subject to Part 9 (Exceptions and licences).

5

A person who contravenes a prohibition in paragraph (1) or (3) commits an offence.

UK credit or financial institutions: severance of existing financial relationships19

1

A UK credit or financial institution must—

a

close any bank account with,

b

terminate any correspondent banking relationship with,

c

terminate any joint venture with, and

d

relinquish any ownership interest in,

a person falling within regulation 18(2).

2

A UK credit or financial institution must—

a

close any representative office of that institution in the DPRK; and

b

close any branch or subsidiary of that institution in the DPRK.

3

Paragraphs (1) and (2) are subject to Part 9 (Exceptions and licences).

4

A person who fails to comply with a requirement in paragraph (1) or (2) commits an offence.

Opening of or taking up of business by a representative office, branch or subsidiary of DPRK credit or financial institution20

1

A person (“P”) must not—

a

open a representative office or establish a branch or subsidiary in the United Kingdom of a person falling within regulation 18(2);

b

enter into an arrangement for, or on behalf of, a person falling within regulation 18(2) which relates to the opening of a representative office or the establishment of a branch or subsidiary in the United Kingdom, if P knows, or has reasonable cause to suspect, that the arrangement is for, or on behalf of, such a person; or

c

authorise the taking up and pursuit of business by a representative office, branch or subsidiary of a person falling within regulation 18(2), if the representative office, branch or subsidiary was not operational before 19 February 2013.

2

Paragraph (1) is subject to Part 9 (Exceptions and licences).

3

A person who contravenes a prohibition in paragraph (1) commits an offence.

DPRK credit or financial institutions: branches, subsidiaries, and representative offices21

1

A person (“P”) must not operate or facilitate the operation of—

a

a branch,

b

a subsidiary, or

c

a representative office,

of a person falling within regulation 18(2) if P knows, or has reasonable cause to suspect, that the branch, subsidiary or representative office is a branch, subsidiary or representative office of such a person.

2

Paragraph (1) is subject to Part 9 (Exceptions and licences).

3

A person who contravenes a prohibition in paragraph (1) commits an offence.

Acquisition or extension of ownership interest by a DPRK credit or financial institution22

1

A person falling within regulation 18(2) must not directly or indirectly acquire or extend a participation, or acquire any ownership interest, in a UK credit or financial institution.

2

Paragraph (1) is subject to Part 9 (Exceptions and licences).

3

A person who contravenes the prohibition in paragraph (1) commits an offence.

Designated persons: closure of representative offices23

1

This regulation applies to a designated person which is not an individual, and which has a representative office in the United Kingdom.

2

If the person was a designated person immediately before the relevant date, the person must close the office immediately.

3

If the person was not a designated person immediately before the relevant date, the person must close the office within the period of 90 days beginning with the date on which the person became a designated person.

4

Paragraphs (2) and (3) are subject to Part 9 (Exceptions and licences).

5

A person who fails to comply with a requirement in paragraph (2) and (3)commits an offence.

6

In this regulation, “the relevant date” means—

a

where regulations under section 56 of the Act provide that this regulation comes into force at a specified time on a day, that time on that day;

b

otherwise, the date on which this regulation comes into force.

Business arrangements with designated persons24

1

A person (“P”) must not participate, directly or indirectly, in business arrangements, including joint ventures, with a person who P knows to be, or has reasonable cause to suspect is—

a

a designated person, or

b

acting on behalf of or at the direction of a designated person.

2

Paragraph (1) is subject to Part 9 (Exceptions and licences).

3

A person who contravenes the prohibition in paragraph (1) commits an offence.

Bank accounts for diplomatic missions etc.25

1

A UK credit or financial institution must not open a bank account for—

a

a diplomatic mission or consular post of the DPRK, or

b

a national of the DPRK who is a member of a diplomatic mission or consular post of the DPRK.

2

Paragraph (1) is subject to Part 9 (Exceptions and licences).

3

A person who contravenes the prohibition in paragraph (1) commits an offence.

Investment and commercial activities26

1

A person (“P”) must not accept or approve investment in a commercial activity which P knows, or has reasonable cause to suspect, is investment made by—

a

the Government of the DPRK or any member of that Government;

b

the Worker’s Party of Korea;

c

a national of the DPRK;

d

a person, other than an individual, which is incorporated or constituted under the law of the DPRK;

e

a person acting on behalf of or at the direction of a person falling within any of sub-paragraphs (a) to (d); or

f

a person, other than an individual, which is owned or controlled directly or indirectly (within the meaning of regulation 7) by a person falling within any of sub-paragraphs (a) to (d).

2

A person (“P”) must not directly or indirectly provide financial services to, or make funds available to, any person falling within paragraph (1)(a) to (f) if P knows, or has reasonable cause to suspect, that P is so providing the financial services or making the funds so available.

3

A person (“P”) must not establish, maintain or operate a joint venture or a co-operative entity with—

a

a person falling within paragraph (1)(a) to (f), or

b

a person, other than an individual, which is domiciled in the DPRK,

if P knows or has reasonable cause to suspect that P is so doing.

4

A person (“P”) must not take, acquire or extend any ownership interest in—

a

a person falling within paragraph (1)(a) to (f), or

b

a person domiciled in the DPRK,

if P knows or has reasonable cause to suspect that P is so doing.

5

A person (“P”) must not take, acquire, maintain or extend any ownership interest in activities or assets in the DPRK if P knows, or has reasonable cause, to suspect that P is so doing.

6

A person (“P”) must not provide financial services directly or indirectly related to any activity that is prohibited by paragraphs (2) to (5) if P knows, or has reasonable cause to suspect, that P is so doing.

7

Subject to paragraph (8), a person must close any joint ventures or co-operative entities with a person falling within paragraph (1)(a) to (f) or with a person, other than an individual, which is domiciled in the DPRK.

8

Where a person has directly or indirectly requested approval for a joint venture or co-operative entity from the Committee, that person is not obliged to close that joint venture or co-operative entity—

a

while no decision has yet been taken by the Committee, or

b

if the Committee has denied the request for approval, until the end of the period of 120 days beginning with the date on which the Committee denied the request.

9

Paragraphs (1) to (7) are subject to Part 9 (Exceptions and licences).

10

A person who contravenes a prohibition in paragraphs (1) to (6) commits an offence.

11

A person who fails to comply with the requirement in paragraph (7) commits an offence.

Land27

1

A person (“P”) must not—

a

lease, or otherwise make available, land, directly or indirectly, to the Government of the DPRK, any member of that Government or any person who P knows, or has reasonable cause to suspect, to be acting on its behalf;

b

lease land, directly or indirectly, from the Government of the DPRK, any member of that Government or any person who P knows, or has reasonable cause to suspect, to be acting on its behalf;

c

engage in any activity linked to the use of land that the Government of the DPRK, any member of that Government or any person who P knows, or has reasonable cause to suspect, to be acting on its behalf owns, leases or is otherwise entitled to use.

2

Paragraph (1) is subject to Part 9 (Exceptions and licences).

3

A person who contravenes a prohibition in paragraph (1) commits an offence.

Transfers of funds etc.28

1

A person must not make or receive a transfer of funds which that person knows or has reasonable cause to suspect is a transfer of funds to or from the DPRK.

2

A UK credit or financial institution must not enter into, or continue to participate in, any transaction with a person who the institution knows or has reasonable cause to suspect to be a person falling within regulation 18(2).

3

Paragraphs (1) and (2) are subject to Part 9 (Exceptions and licences).

4

A person who contravenes a prohibition in paragraph (1) or (2) commits an offence.

5

In this regulation the reference to a transfer of funds includes the clearing of funds.

Insurance and reinsurance services in relation to ships29

1

A person (“P”) must not provide insurance or reinsurance services in relation to a ship if P knows, or has reasonable cause to suspect, that P is providing such services in relation to a ship that is—

a

owned, controlled or operated by a person connected with the DPRK;

b

a specified ship;

c

a ship registered in the DPRK, or

d

a ship flying the flag of the DPRK.

2

Paragraph (1) is subject to Part 9 (Exceptions and licences).

3

A person who contravenes the prohibition in paragraph (1) commits an offence.

4

For the purposes of paragraph (1), the reference to a ship being “owned” or “controlled” by a person is to be interpreted in accordance with regulation 80.

5

In this regulation—

  • “ship” includes every description of vessel (including a hovercraft) used in navigation;

  • “specified ship” means a ship specified by the Secretary of State under regulation 11(1) or (2).

Sale or purchase of bonds30

1

A person (“P”) must not directly or indirectly—

a

sell to a person falling within paragraph (4), or

b

purchase from such a person,

public bonds or public-guaranteed bonds issued after 19 February 2013 if P knows, or has reasonable cause to suspect, that the sale or purchase of such bonds is directly or indirectly to or from such a person.

2

A person (“P”) must not provide brokering services to a person falling within paragraph (4) in respect of public bonds or public-guaranteed bonds issued after 19 February 2013, if P knows, or has reasonable cause to suspect, that the person falls within paragraph (4).

3

A person (“P”) must not provide—

a

brokering services,

b

advertising services, or

c

any other services,

if P knows, or has reasonable cause to suspect, that the provision of the services assists a person falling within paragraph (4) to issue public bonds or public-guaranteed bonds.

4

The following persons fall within this paragraph—

a

the Government of the DPRK;

b

the Central Bank of the DPRK;

c

a person falling within regulation 18(2) (DPRK credit or financial institutions etc.);

d

a person acting on behalf of or at the direction of a person falling within sub-paragraph (a) or (b);

e

a person, other than an individual, which is owned or controlled directly or indirectly (within the meaning of regulation 7) by a person falling within any of sub-paragraphs (a) to (c).

5

Paragraphs (1) to (3) are subject to Part 9 (Exceptions and licences).

6

A person who contravenes a prohibition in paragraph (1), (2) or (3) commits an offence.

CHAPTER 3Interpretation and further provision

Circumventing etc. prohibitions31

1

A person must not intentionally participate in activities knowing that the object or effect of them is, whether directly or indirectly—

a

to circumvent any of the prohibitions in Chapter 1 or 2 of this Part, or

b

to enable or facilitate the contravention of any such prohibition.

2

A person who contravenes a prohibition in paragraph (1) commits an offence.

Meaning of “designated person” in Part 432

In this Part a “designated person” means—

a

a person who is designated under regulation 5 for the purposes of—

i

regulations 13 to 17 (asset-freeze etc.), and

ii

regulations 23 (closure of representative offices) and 24 (business arrangements with designated persons), or

b

a person who is a designated person for the purposes of those regulations by reason of regulation 10.

Interpretation of Part 433

1

In this Part—

  • “branch” means—

    1. a

      in relation to a UK credit or financial institution, a place of business which forms a legally dependent part of that institution and which carries out all or some of the transactions inherent in the business of that institution, or

    2. b

      in relation to a credit or financial institution domiciled in the DPRK, a place of business which forms a legally dependent part of that institution and which carries out all or some of the transactions inherent in the business of that institution;

  • “credit or financial institution domiciled in the DPRK” means—

    1. a

      a person, other than an individual, which is domiciled in the DPRK and which would satisfy the threshold conditions for permission under Part 4A of the Financial Services and Markets Act 2000 if it had its registered office (or if it does not have one, its head office) in the United Kingdom; or

    2. b

      an undertaking domiciled in the DPRK which by way of business—

      1. i

        operates a currency exchange office,

      2. ii

        transmits money (or any representation of monetary value) by any means, or

      3. iii

        cashes cheques that are made payable to customers;

  • “subsidiary” has the meaning given by section 1159 of the Companies Act 200611;

  • “UK credit or financial institution” means—

    1. a

      a person that has permission under Part 4A of the Financial Services and Markets Act 200012 (permission to carry on regulated activity); or

    2. b

      an undertaking which by way of business—

      1. i

        operates a currency exchange office,

      2. ii

        transmits money (or any representation of monetary value) by any means, or

      3. iii

        cashes cheques that are made payable to customers.

2

In paragraph (1), the definitions of—

a

“credit or financial institution domiciled in the DPRK”, and

b

“UK credit or financial institution”,

are to be read with section 22 of the Financial Services and Markets Act 200013, any relevant order under that section14 and Schedule 2 to that Act.