DPRK FINANCIAL ACTIVITIES IN SWITZERLAND

S E C R E T STATE 124655

SIPDIS

SIPDIS

E.O. 12958: DECL: 09/05/2017
TAGS: ETTC KNNP PREL KN SZ
SUBJECT: DPRK FINANCIAL ACTIVITIES IN SWITZERLAND


Classified By: EUR PDAS Kurt D. Volker for reasons 1.4 (b) and (d).


1. (SBU) This is an action request, please see paragraph 3.

OBJECTIVES
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2. (S) Washington has information that North Korea may be
seeking to establish a new bank in Switzerland similar to one
it used in the 1990s to facilitate money laundering and other
illicit financial transactions.

-- Alert Swiss officials to North Korea's activities and
those of Golden Star Bank; and

-- Request that they investigate and take appropriate steps
to protect the Swiss financial system from exploitation.

ACTION REQUEST & REPORTING DEADLINE
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3. Washington requests addressees draw on paragraph 2, as
appropriate, and deliver the non-paper in paragraph 4 to
appropriate host government officials in the Ministry of
Foreign Affairs and the Ministry of Finance. Please report
delivery of the U.S. nonpaper and any immediate response
within seven (7) days of receipt of this message. Please
slug replies for ISN, T, TREASURY, EUR and EAP. Please
include SIPDIS in all replies.


4. (S/REL TO SWITZERLAND) BACKGROUND/NONPAPER
FOR SWITZERLAND

-- In light of our commitment to share as much information
with your government as possible on suspected illicit or
proliferation-related transactions, we would like to raise
concerns about possible North Korean financial activities in
your country.

-- The United States has information that North Korea may be
seeking to establish a new bank in Switzerland that would be
similar to Golden Star Bank. The new bank may be a joint
venture bank under the auspices of North Korea's Foreign
Trade Bank.

-- This new entity may be intended to replace the now-defunct
Golden Star Bank that existed in Vienna. Golden Star Bank
was established in 1982 as a subsidiary of North Korea's
Daesong Bank, ostensibly to engage in foreign exchange
transactions. Golden Star Bank was suspected of money
laundering and ceased operations in 2004, returning its
banking license to the Austrian authorities that year.

-- Golden Star Bank and its parent, Daesong Bank, both fell
under the control of North Korea's Bureau 39. Bureau 39 is a
wing of the Korean Workers' Party that has been involved in
counterfeiting currency and selling narcotics. It is the
headquarters for almost all of the North's foreign
exchange-earning businesses.

-- As the North's only state bank branch in Europe, Golden
Star was the center of North Korea's euro-denominated
transactions.

-- Golden Star Bank also operated as a hub for North Korean
espionage in Europe. A 2003 report from Austria's Ministry
for the Interior declared, "There are detectable efforts by
the North Korean secret services to place its agents in
diplomatic and non-diplomatic positions in Austria. The
camouflage for these activities is Europe's only established
branch of the North Korean state bank, which is located in
Vienna."

-- We are concerned that North Korea may be attempting to
operate a new bank in Switzerland that could engage in

deceptive financial practices to circumvent controls
established by responsible financial institutions.

-- We urge you to investigate and prevent the establishment
of any financial institution that may be intended to
facilitate proliferation or other illicit activities.

-- We look forward to working with you on this and other
related security and counter-proliferation matters and are
prepared to provide additional assistance as appropriate.

End background/nonpaper.


5. POINT OF CONTACT: (U) Washington appreciates Post's
assistance. POC for this demarche is ISN/CPI Kevin McGeehan
at 202-647-5408 or mcgeehankj@state.sgov.gov.
RICE