BIS News: Is USA about to freeze Malaysian bank accounts?

The story goes like this. The UN has applied a range of sanctions against North Korea - but they do not include financial sanctions blocking the use of bank accounts by North Korean interests.

But the USA PATRIOT Act can be used, through the correspondent banking network, to block access to US dollars in the event that the US Treasury is satisfied that the correspondent is being used by a party against whom the US applies sanctions - or simply decides it does not like and feels it can justify calling "of primary money laundering concern."

After the UN resolution passed recently, North Korea ship set off and was monitored by the USA. The North Koreans vowed retaliatory action if there was interference with their ship. The USA said that it suspected that the ship was bound for Myanmar with weapons on board and that there was an arms deal in the offing. That would have been in breach of the UN resolution.

But over the weekend, North Korea did two things: first, it launched a series of missiles and the ship turned round and headed away from Myanmar.

North Korea has a history of baiting the USA around US independence day. In 2006 it launched seven missiles. This time a further seven were launched on 4 July. They landed close to each other in international waters. The fact that they landed close to each other is seen as significant - potentially demonstrating improved guidance systems.

The USA conveniently forgets to tell the world that it is still at war with North Korea which signed a truce under the express threat that it would be subjected to a Hiroshima-style nuclear holocaust. North Korea feels it is justified in ensuring that, if the USA goes back on the truce, it is ready to retaliate. And North Koreans point to the fact that it has not been engaged in any hostility for more than 60 years whilst the USA has a history of starting wars anywhere it pleases. It's a powerful argument.

In the meantime, a report from South Korean News Agency Yonhap says that the USA has told it that it has identified specific bank accounts in Malaysia used by North Korea and that it is considering freezing those accounts.

But that presumes that the USA uses the USA PATRIOT Act as a precision weapon. It has not so far done so: rather than act against specific accounts, it has acted against banks, or even countries.