The Dear Leader Exacts Revenge

It seems as though the Dear Leader has not forgotten the Department of Treasury's successful 2006 bulwark of North Korea from the international financial system. The AP is reporting that North Korea is suspected of cyber-attacks against our Department of Treasury, Secret Service, and a few other agencies. I guess this is Kim Jong Il's attempt at revenge. Revenge you may ask? If you don't know the story - you should.

Daniel Glaser is known the architect behind the throttling of North Korea's illicit financial networks. Glaser works as the Department of the Treasury's Deputy Assistant Secretary for Terrorist Financing and Financial Crimes. It serves as the offensive branch of the treasury which protects the international financial system from funding the activities of rogue nations, drug cartels, and terrorist organizations. They are the unsung financial warriors of our current GWOT (or overseas contingency.... whatever Barry and Napolitano call it.) They also have constructed mechanisms to keep rogue nations like Iran and North Korea out of the international financial system, thus hurting their chances of financing a war of annihilation against the United States and its allies. Needless to say I am thankful for their efforts.

One of the greatest efforts put forth by the TFI and the program under it FINcen (Financial Crimes Enforcement Network) is the Financial Action Task Force (FATF) a program designed in 1989 to counter the use of the international financial system as a tool of criminals. Essentially FATF is a coalition of large first-world economies which monitor each others financial dealings and places restrictions on those that deal with less than savory characters. Since membership is voluntary, it takes some convincing to persuade nations to give up the free flow of financial capital.

Originally, the program targeted drug cartels as a part of the crusading war on drugs. We learned in the post 9-11 world that the system was also effective against other illicit networks; including FTO's and rogue states.

Glaser, serving as the head of the U.S. delegation to FATF, convinced member nations that it was not within their economic interest to allow banks in their territory to deal with the money laundering- counterfeiting- Hennessey drinking-Rambo loving- Kim Jong Il regime. These banks had a fiduciary obligation to their shareholders to insulate themselves from North Korea. It did help that section 311 of the patriot act allowed FINcen to target specific banks and order US banks to halt their dealings with them.

The most notable bank was the Banco Delta Asia (BDA) which crumbled under the financial isolation. This sent a clear message - stop dealing with North Korea or your financial institution may be next. This is the best "kickass" moment I think the Department of Treasury will ever experience.

Stuart Levey commented on the real impact of the financial restrictions was that,

"many private financial institutions worldwide responded by terminating their business relationships not only with [BDA], but with North Korean clients altogether".

Within a short period of time, North Korea found their hands financially tied. Thus we gained leverage over the North's nuclear program. Leverage that we quickly wasted - this was THE window of opportunity for the United States to take a meaningful shot at Kim's illegal nuclear program. Instead the Bush administration valued the six party talks as almost an end.

Robert Joseph (professor at DSS) commented in a WSJ article,

"For a short period, a matter of weeks, the approach seemed to produce results. But when Pyongyang announced its willingness to return to the negotiations, the Bush Administration, in an abrupt reversal of its policies which I opposed and could not support, rushed headlong into the snare. By February 2007, the Talks were becoming the strategy, and an end in themselves. There would be no more “pressure” placed on the North. Strengthening interdiction capacities and even implementing the mandatory UN sanctions were seen as too provocative, as threatening the prospects for diplomacy. It soon became apparent that the Administration would endure any humiliation to keep the Talks going. The spectacle of American diplomats pleading for foreign banks to facilitate the return of the assets from Macao, some of which were known to stem from the North’s proliferation activities, could not have been more pathetic or, ironically, more damaging to the prospects for diplomacy. "

So we lost an opportunity. We did however make inroads to discovering a meaningful tactic against rogue nations. If we can strangle finances, rogue states will come to their knees. Note that FATF is currently targeting Iran.

So it looks like Kim Jong Il is exacting his revenge against the United States Treasury in the form of cyber attacks. I'm not certain that his "revenge" will have a lasting impact on the United States, but I do know that the combination of the Patriot Act, FINcen FATF did.

Although I'm sure his advisers informed him that the attack was a resounding success.

Just as a side note, if you ever get the chance, take a look at Bradley Martin's Under the Loving Care of the Fatherly Leader: North Korea and the Kim Dynasty. I'm in the process of reading it now - the stories of the two Kim's - father and son - are unreal.