Here is the last part of my paper.  Think of it as a small early Christmas present.

Part 1:

Part 2:

Illicit Activities Initiative

It is clear that, while necessary, merely reacting to North Korean provocations will not be enough. During the George W. Bush administration, the United States formed the Illicit Activities Initiative to combat North Korea’s criminality. The initiative started in 2003, and was run by the State Department under David Asher. Unlike other police efforts to combat North Korean criminality, the Illicit Activities Initiative was a comprehensive, proactive, program that included support from fourteen U.S. government departments and agencies, along with cooperation from fifteen different countries and international organizations, and even support from private companies that were impacted by North Korea’s illegal actions like cigarette manufacturers and pharmaceutical companies. The initiative had three main objectives, which included applying law enforcement, cutting off illicit support for the regime, and containing the threat of proliferation.16

In 2005 came the most important success of the Illicit Activities Initiative, the Banco Delta Asia operation. The Banco Delta Asia is a small family owned bank in Macao. Before the U.S. government took action against it, Macao was a major center for North Korean financial activity, including money laundering, because of its lenient banking regulations. At the time most of the banks in Macao were involved with North Korean finances, but there was concern that if the Initiative went after larger banks it could damage the Macao financial system. In order to go after the finances of the Kim Regime, the Banco Delta Asia was declared a primary money laundering concern. The Bank earned this designation due to evidence it was helping the regime launder money and to distribute super notes.

Due to the designation by the Treasury Department, $25 million dollars worth of North Korean assets that were in the Banco Delta Asia were frozen. At this same time, the six party talks about Korean nuclear issues were ongoing. Kim Jong Il was furious about the freeze of assets in Macao, and made an ending of sanctions a condition to continue negotiating. In 2007 the Macao government unfroze the $25 million in North Korean assets. The Banco Delta Asia was an important move not only because it targeted one bank that was laundering money, but it compelled the Macao government to increase banking regulations and made other banks less willing to deal with the North Korean government making it much more difficult for them to move money and distribute super notes.17

There is clear evidence that the Illicit Activities Initiative was having a strong effect on North Korea’s ability to continue funding important regime activities. North Korea’s options are limited, and it depends on its ability to earn money through criminal activities. The US Treasury Department following the action against the Banco Delta Asia also actively persuaded other banks to close questionable North Korean bank accounts and to not become involved with the state. In 2006 there were reports that Kim Jong Il told Chinese president Hu Jintao that he feared that sanctions would cause the collapse of his government. Experts also estimated that in this time period criminal activity vastly declined. All of this progress could have continued, but instead in 2007 it was given up.18 Two promising possibilities to follow up on the progress made by the Illicit Activities Initiative are UN Security Council Resolution 2094 (2013) and US House Resolution 1771. Both of these measures target North Korean illicit activities as well as their access to the world financial market, but there is a problem of implementation. There have been several UN Security Resolutions that were similar to 2094 that failed to live up to their potential, and it is not clear that there is the political will to pass HR 1771, which was introduced in April and has yet to be voted on.


The decision to unfreeze North Korea’s seized money, as well as the decision to end the Illicit Activities Initiative, is demonstrative of a key difficulty of going after North Korea’s criminal activities. Crime is not a top priority for any state dealing with North Korea, but rather security and nuclear issues are. As long as Pyongyang is able to present a compelling nuclear and military threat, they will be able to hold negotiations hostage, using their capability as a trump card to be able to continue their criminal sovereignty. The hesitance to push too hard is understandable, but North Korean security issues and criminal issues cannot be treated as two separate entities.

Since the ending of the Illicit Activities Initiative there hasn’t been a similar comprehensive program to target the regime. Despite some US executive orders, and UN Security resolutions that target the regime, there has been a lack of sufficient follow through like there was during the time period of David Asher’s targeting of Pyongyang. Dealing with this problem is not a matter of uncertainty, there is an understanding of how Office #39 operates, and even an understanding of North Korea’s weak points. What is lacking is the political will, both in the United States and in other affected countries, to confront these issues.

The possibility that the Kim Jong-Un regime might refuse to negotiate if its criminal activities are actively targeted cannot be discounted, but it is imperative that nations that are affected by the Kim families’ crimes and military provocations exploit North Korea’s dependence on illicit funds by constraining the North Korean’s states ability to continue their criminal sovereignty. No matter what policy is chosen, to continue the status quo and allow North Korea to continue to survive through humanitarian aid on one hand, and through crime on the other while its people starve, are put into concentration camps, and the whole region is threatened is not sustainable or in any parties best interest.


16. David L. Asher, The Heritage Foundation, The Impact of U.S. Policy on North Korean Illicit Activities, April, 2007 (accessed December 7, 2013); available from

17. “North Korea’s Dollar Store” Vanity Fair.

18. One Free Korea, A Financial Constriction Strategy for North Korea, May, 2012 (accessed December 7, 2013); available from


About Leon Whyte

I'm a recent graduate of the Fletcher school of Law and Diplomacy. My interests include Pacific Asia and Security. I am looking for related opportunities.
This entry was posted in Crime, International Relations, Korea, Pacific Asia, Student Life and tagged , , , , , , , , , , . Bookmark the permalink.

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