In September 2014, the news of the U.S. financial sanctions against Russia was rampant. Earlier, the U.S. also imposed a huge fine of nearly 9 billion U.S. dollars on BNP Paribas, which violated U.S. sanctions, and suspended its U.S. dollar clearing business. In 2010, this was tantamount to directly cutting off a large military transaction between France and Russia, which aroused strong dissatisfaction from the Russian authorities. Putin even made a public speech reminding Russia that it is a nuclear power that cannot be provoked. Why did financial sanctions make Russia, a superpower, even hear about it? Just as the U.S. Treasury Department publicly stated that "financial sanctions are a brand-new method of warfare in the 21st century." It is a long-range, precise and non-contact strike method. Financial sanctions are fundamentally different from traditional economic sanctions. Economic sanctions restrict trade itself, while financial sanctions destroy the basis of trade—currency payments. Therefore, they are both thorough and comprehensive, and the blow to the economy is destructive. The financial sanctions imposed by the United States on North Korea in September 2005 were the first financial war launched against a sovereign state in the world. This unprecedented sanction method has far-reaching effects so far. But the U.S. Treasury Department has a far-reaching significance, which is to shock China's financial system. This is definitely a war without smoke. So why did the US's financial war against North Korea get involved in China, and what is the final result of this financial war?
In recent years, we can see a term that is used more and more frequently-financial sanctions. You may not feel much about the term financial sanctions, thinking that it is just an ordinary economic sanction, or it is not much different from economic sanctions. But in fact, financial sanctions are much more severe than economic sanctions . If economic sanctions are a conventional economic war, then financial sanctions are nuclear wars in economic warfare. Let us use the U.S. sanctions against North Korea as a case study, and everyone will know how much financial sanctions have affected the entire North Korean economy and its nuclear weapons development. In fact, as early as 2003, many economists in the U.S. State Department and Treasury Department were very concerned about the North Korean issue, especially the development of North Korean nuclear weapons. Especially after decades of economic sanctions, North Korea does not seem to have any major problems in its economy. Of course, industrial production has dropped sharply. In the 1990s, North Korea suffered from famine, but North Korea’s economy did not collapse. This It is a point that confuses American economists. Since your industrial economy is in severe recession, the agricultural economy is in severe recession, and the trade deficit is about 1 billion U.S. dollars a year on average, then how come your entire country has no vicious What about inflation?
After doing some research, I always thought that North Korea must still have a channel for funds to continuously obtain a large amount of funds from the outside, so there is no problem with North Korea's economy. Then the U.S. Treasury Department took this as a major research project to analyze where North Korea’s external funds flowed in. The person in charge of this matter at the time was called Salat, and he was the assistant secretary of the US Treasury Department. They drew a big map and asked their analysts to mark the trading companies with the North Korean government and North Korea, especially the financial institutions that had financial transactions with these companies. A small national flag is pasted next to these financial institutions to represent which country the financial institution belongs to. Finished after a busy few weeks. Looking at this map, North Korea has trade activities in many places and a lot of financial activities. The most conspicuous thing on this map is that China's five-star red flag is basically all over the map. The US Treasury Department saw that North Korea's main funding channel is continuously supplying North Korea through Chinese financial institutions. This matter made the U.S. Treasury Department very vigilant. If China's financial channel is not cut off, sanctions on North Korea are empty words. Then there is a question here. How did the Americans know that Chinese companies and Chinese banks do business with North Korea. This involves a question of financial intelligence: how to obtain financial intelligence?
Let's give an example. If you want to transfer 100,000 yuan from ICBC to China Construction Bank, since each bank has an account in the People's Bank of China, you only need to subtract 100,000 yuan from the ICBC account in the People's Bank of China, and add it to the CCB account. 100,000, the remittance is complete. What about international remittances? It is impossible to find a superior unit of a bank all over the world. So everyone needs to find a common dollar clearing bank, such as Citibank. Open an account here, and it can be done like a domestic transfer. 95% of U.S. dollar clearing is done in New York. At this time, a problem arises.
How do banks exchange remittance information? They use the SWIFT (Swift) code, which means "Society for Worldwide Interbank Financial Telecommunication" in Chinese. It is a service organization co-founded by major banks around the world. It is like an intelligence center responsible for interpreting messages. For example, you To remit money from a bank in China to a bank in Singapore, China Construction Bank needs to send a series of messages to SWIFT. The message includes time, amount, validity period, bank access code, account name and other necessary information. After decoding, SWIFT decodes the message Send it to the clearing bank, and then the two banks can do addition and subtraction in the clearing bank, and a cross-border remittance is completed.
I just talked about the issue of financial intelligence. It can be said that the SWIFT database is a super gold mine. As long as data mining is carried out on it, basically all commercial secrets in the world can be dug out. If there is a transaction between who and whom, at what time, then these two people must be related. So the U.S. Department of the Treasury has been eyeing SWIFT for a long time, trying to get this data, but SWIFT is in Brussels , it is outside the jurisdiction of the United States, and the Americans went to find SWIFT as early as the 1980s , say can I take your data. Then SWIFT said, why should I listen to you, so in the end this matter was not negotiated. But after 9/11, the situation changed a lot. This time, the U.S. Department of the Treasury began to subpoena SWIFT. When you come to the U.S. Department of the Treasury, I want to talk to you. After the CEO of SWIFT arrived in the U.S., the officials of the U.S. Department of the Treasury directly said that we want you The data. From a legal point of view, the United States has no right to obtain this transaction data. So at the beginning, the CEO of SWIFT refused. In the end, the U.S. Treasury Department threatened that if we don’t give it, we will file a lawsuit. If you fight in the United States, you will definitely not win. Because we want this data to be used for anti-terrorism, do you want to support terrorist attacks? Finally, with this big hat pressed, SWIFT softened and made some concessions, allowing the US Treasury to partially and limitedly obtain data. As a result, the United States has solved many major cases through the data of SWIFT. For example, when terrorism attacks, the so-called suicide attacks will have funds mobilized before and after the attack. Why? pension. These pensions are often provided by some charitable organizations, so a large amount of funds will be found in the process. All the cases in the United States were solved by accessing SWIFT data to find family members receiving pensions. A sum of money was transferred from a foundation, so the foundation was traced and the second person of Al Qaeda was dug out. Therefore, in such an operation process, the United States has mastered a whole set of data mining and analysis techniques. Using the cooperation between SWIFT and the U.S. Department of the Treasury, they began to investigate all North Korea’s trade records and its bank transactions. As a result, a large number of Chinese banks’ transactions with North Korean trading companies were immediately cleared.
After knowing this, people from the U.S. Treasury Department began to think of a way, how to effectively cut off the funding channel between North Korea and China, including the funding channel between North Korea's domestic banks. On this issue, the U.S. Department of the Treasury and the State Department have conducted in-depth cooperation. The Ministry of Finance put forward an idea, that is, we have to choose a company as a breakthrough, how to carry out this matter? That is, the United States came up with a "Patriot Act" after 9/11, and there was a " Section 311" in the middle.", this clause has never been noticed by everyone in the past. This clause actually authorizes the U.S. Department of the Treasury to announce that any foreign financial institution is suspected of money laundering and is blacklisted for money laundering if there is conclusive evidence. Once it is on the This blacklist is troublesome, all your business partners are afraid to do business with you. This method is used to isolate the banking system, so the U.S. Treasury Department chose such a method. After screening through layers, the final selection Which bank did you buy? It is the Banca des Merits in Macau. It has 52 North Korean accounts and many trading companies in North Korea. For these trading companies, the United States says that these trading companies are suspected of money laundering and drug trafficking. Money laundering is not It’s easy to say, but the matter of drug trafficking was caught once. When the North Korean ship arrived in Australia, it was caught by Australia. It also sold counterfeit goods. So officially because of these problems, the U.S. Treasury Department believes that North Korea’s trade As long as the company is engaged in these illegal trades, then you are suspected of money laundering if you open an account with Huiye Bank. Huiye Bank said it was wronged. I don’t know that those trading companies in North Korea are doing this, and I can’t make a fortune. Check the pen. Here you need to pay attention, the 311 clause is powerful, and the responsibility lies with your bank's compliance. If your compliance personnel does not conduct a check and carefully review each transaction, it is your fault. There were several different opinions on this matter at the coordination meeting of the White House. The first one was Geithner, the then president of the Federal Reserve Bank of New York. He was worried that if he did this, he would offend China. There are trillions in U.S. national debt. The impact of this thing on the U.S. financial system is a bit unpredictable, but he has no objection. The U.S. State Department system feels that this matter is not very reliable. Sanctioning a bank will They think it’s unreliable to cut off the entire North Korea’s financial channels. The Secretary of Defense even thinks it’s an international joke. But Bush Jr. was very interested after hearing it, because if there is no financial sanction, then there is only war, Bush Jr. I don’t want to go to war with North Korea, because North Korea doesn’t have much potential. So Bush Jr. said that he can try it. The whole strategy was launched in 2003. After more than a year of intelligence collection, it was finalized in 2005 and the direction was chosen. , I chose the target, which is a small bank in Macau, the Banco de Distributor.
How did this battle go? On September 15, 2005, it officially announced the implementation of a blacklist against the Banco Banco in Macau. Before launching this campaign, the United States was still quite worried and did not know what consequences would result. Nuo, also specifically notified the People's Bank of China, on September 14, the day before the sanctions, saying that we were going to impose sanctions on this bank in Macau. This matter has not been taken seriously by the Chinese side, because only one bank is sanctioned, and it has money laundering. Suspect, then sanction. When the news came out on September 15th, no one in the whole world expected the strong impact, and everyone was taken aback. What happened? The first is that after the United States announced the news on September 15, it immediately triggered a large-scale bank run. All the customers of the Bank of Huizhou took away 300 million patacas that day, accounting for one tenth of its total bank deposits. Immediately this There was a major crisis in the bank. At the same time, banks in all countries announced to freeze the accounts of North Koreans in an instant. For example, the Bank of China froze the accounts of all North Korean customers in Macau. In major financial centers of the world, such as Hong Kong, Hong Kong The Regulatory Authority immediately began to take over, sending a neutral so-called consulting company to take over the operation of the Bank of Asia in Hong Kong. At the same time, it triggered a chain reaction all over the world and produced a huge shock wave. At the same time, the whole world began to freeze the accounts of North Koreans on that day, and at the same time interrupted the financial transactions with the Bank of Huizhou. This incident was far beyond everyone's expectations. I haven't seen it before, and I didn't expect that sanctioning a small bank would have such a big shock wave. Banks all over the world have to weigh it. Every bank that has a relationship with the Bank of China will ask itself, I have a transaction with him, and it has been included in the focus of anti-money laundering, so will this affect me? , Right, because I have financial transactions with him, will the United States sanction me next? If it wants to sanction me, this will be a problem, because I want to do international global trade, I want to do dollar business, If the Americans want to impose sanctions on me, it is equivalent to disconnecting my bank's business from the entire financial system of the United States, and I will not be able to do dollar business.
For example, if a certain bank has transactions with Banco da Banco, the biggest risk is that the United States also blacklists it. PetroChina is the biggest customer of this bank. When you buy an oil field in the Middle East, and you are blacklisted by the U.S. Treasury Department, the final liquidation of the money will be interrupted in New York, which will result in the inability to remit the money. If the money cannot be remitted, then the PetroChina business cannot be done. , Well, well, I won't open an account with you, I will transfer the money to other banks. The bank would face a massive loss of customers, and although it has a huge domestic business that might keep it from going out of business, it would take a severe hit to its reputation. As I mentioned at the beginning, Chinese banks have trade relations with North Korea, so these banks have begun to understand all relationships with North Korean customers, freeze accounts, clean up relationships, and cancel transactions. In this case, North Korea will immediately face a suspension of all fund transfers .
Well, North Korea didn't take the cause of the September 15 blacklist seriously at the beginning, because North Korea has been sanctioned by the United States for decades, and it has become numb. Sanctions are sanctions. But after 4 weeks, North Korea became a little restless. It suddenly found that all my funding channels were cut off. China refused to transfer money to me. Other overseas banks blocked my account, all funds, all For remittance, all letters of credit can't be opened. Due to the lack of bank support, foreign trade has come to a halt. That's okay, I'm already running a trade deficit, and my national economy can only be maintained by getting money from other channels, otherwise my national economy will suffer serious problems. So after 4 weeks, North Korea really found that the problem is getting worse, what should we do? For the first time, North Korea offered to ask the Americans to negotiate, which was unthinkable before. In the history of the United States, the Americans have always chased the North Koreans and said that we talk about nuclear weapons, nuclear development, etc. North Korea is passive again, but after being financially sanctioned this time, it took the initiative to resume peace talks . This is what we saw in the fifth round of six-party peace talks that began in November 2005. This shows a problem, economic sanctions may not be able to deal with North Korea, but financial sanctions, cut off its funding line, even North Korea can't stand it.
This happened from September 15 to the beginning of 2006, which is called the first stage of the financial war. Then immediately enter the second stage of the financial war, the stalemate stage. Something went wrong at this stage. What's the problem? The U.S. Treasury Department and the State Department are pinching each other. What is the main reason for the pinching? It was originally in September 2005 that North Korea had reached an agreement with the United States. North Korea was willing to return to peace talks, that is, to finally terminate the development of nuclear weapons, stop the nuclear program, resume the six-party peace talks on the Korean peninsula, and at the same time restore normal relations with the United States and Japan. Diplomatic relations, this matter has already been discussed, but it suddenly happened on September 15th, which caused North Korea to be very angry. I agreed, and then you stabbed me in the back, so North Korea closed the six-party peace talks. Once the door is closed, you have to talk about peace talks with me again, first lift the financial sanctions. Therefore, the State Department, the superior of the US Ministry of Foreign Affairs, became very angry about this matter, and more and more serious conflicts arose between the two departments. Originally, we had already reached an agreement. This is our political achievement, a great political achievement. As a result, the Ministry of Finance's meddling and financial warfare have ruined our political achievements? As a result, more and more serious conflicts have arisen between the two departments. For example, in March 2006, about half a year after the sanctions were imposed in September 2005, the U.S. Treasury Department sent an official named Glaser, a lawyer, with a very strong personality. His main purpose was to cooperate with the State Department. To solve North Korea’s so-called unfreezing of assets, after Glaser came, he and the head of the US delegation, Hill (Hill is from the US State Department system, the main purpose is to force North Korea to return to the negotiating table as soon as possible), A conflict arose between the two men. why? From Hill's perspective, the sooner North Korea returns to the six-party peace talks, the better for him, because this is the merit of his diplomatic system. But from Glaser's point of view, he doesn't see it that way. He said that we launched a financial war against North Korea because he laundered money. The matter of money laundering has not been clarified yet. You are now putting pressure on me through diplomacy to let me unfreeze his money. Assets, this matter is illogical and unruly. So the two sides had a fierce conflict. How many assets in North Korea have been frozen? In fact, it is not much. In the 52 accounts of North Koreans frozen by Huiye Bank, the total amount is only 25 million U.S. dollars. The State Council said, is this number wrong? This number is too small. 25 million US dollars is not worth mentioning at all. What can we do. For such a trivial matter, your Ministry of Finance has been delaying in thawing. Doesn’t this make it impossible to resume the Six-Party Peace Talks (fifth round)?
Everyone is very anxious. Under such circumstances, the official of the Ministry of Finance, he is mainly worried that because you have put the Bank of China on the blacklist now, it is actually in an isolated state in the global financial system, and no one Dare to have sex with him. You asked me to freeze assets. First, the Ministry of Finance believes that this is not the right thing to do, because the anti-money laundering is justified. Under diplomatic pressure, it can only make concessions. Second, he encountered a technical problem, how to unfreeze this asset. How can we transfer 25 million US dollars from a financial island to North Korea. North Korea’s last word in all negotiations, no matter how it is discussed before, the last word will always be when to pay back the money, when to pay back the money, and if I don’t pay back the money, I will not negotiate. Therefore, the two parties struggled with the technical details of the repayment. This technical detail issue is actually really difficult to handle. North Korea first refused to accept cash. Theoretically speaking, the easiest way is to withdraw 25 million US dollars in cash from the Huiye Bank and hand it over to the North Korean government, and the matter will be resolved. But Kim Jong Il disagreed, the money cannot be sent in cash, and must be remitted back to North Korea through international financial channels. why? The main purpose is to avenge my grievances, that is, you have to remit it back step by step through regular bank channels. In this way, you will tell the world that I have no problem with North Korea. The U.S. Treasury Department has unfreezed me. I got it off the blacklist, and everyone can do banking business with me. This is North Korea's main purpose.
But this problem has encountered a huge problem, that is, no bank is willing to do this. Through the efforts of the foreign department, Hill, the head of the US delegation, talked with the Chinese delegation, such as the foreign department. Now we have encountered a The specific trouble is that the money cannot be transferred, can you help us think of a way, these people in the Chinese diplomatic system are not people in the financial industry, do you think the transfer of 25 million US dollars is a drizzle, a piece of cake, We came forward to find a Chinese bank to transfer the money to you, so Hill told Glaser that the problem has been solved, and China has agreed, their bank will help us transfer the money, no problem, so don't worry about it. As a result, Glaser is very familiar with China’s financial circles. He went to the central bank (People’s Bank of China) and the Ministry of Finance to inquire, but it turned out that there was no such thing at all. Why did he transfer you to us? It may be blacklisted, we don't take the blame for this.
After Glaser got the news, he felt that this matter was very unreliable. As a result, he had to hold a press conference the next day. The press conference was going to say that the six-party peace talks (the fifth round) would be restarted soon, and the issue of freezing assets in North Korea would be resolved soon. China has agreed to send him money. But when Glaser heard the news, this was not the case. The day before the reception, he notified Hill and asked a question, saying that I had inquired about it, and the Bank of China said there was no such thing. At that time, Hill was already extremely annoying to the people in the Ministry of Finance. Our six-party peace talks, such an important event, were stuck on such a technical detail. It has been stuck for more than half a year and has not been implemented yet. What are you doing? . So when Hill heard that Glaser raised such a question again, he was basically furious. Why do you always find trouble for us? What is your purpose? Are you happy to overthrow the entire six-party peace talks? We are in Washington Everyone in the house knew what you were trying to do, and then slammed the door and left.
What did he mean by that? It's because your Ministry of Finance wants to show off and grab political achievements. So the two sides had a very fierce conflict. Glaser, later said, was the worst personal attack I had ever received, not just as an attack on my professionalism but as an attack on my personality, that I was taking credit, that I was fighting for something personal. Feeling wronged and angry, I cried on the spot. Someone said, how do you know he was crying, because "The War at the Treasury Department" clearly described every detail. Later, Glaser called Levy, the deputy minister of the Ministry of Finance, and reported the cause and effect. After hearing this, Levy was very angry. What kind of tricks are these people from the State Council doing? Our Ministry of Finance launched a financial war and actually created it for you. A huge opportunity, right? North Korea can’t stand it anymore. North Korea has proposed peace talks. For you at this time, you should use this opportunity to increase the price during the negotiation. This is what you should do. As a result, you guys, not only did not appreciate it, but instead complied with North Korea’s request and oppressed us to terminate the asset freeze. In fact, your diplomacy has made a big mistake. This complaint was brought to Secretary of the Treasury Paulson. When he heard that his subordinates had been wronged so much, he immediately called Rice (Secretary of State) and said that what you did was wrong and that personal attacks were not allowed. Rice seemed to be the same way. What happened, and then Rice called Hill and asked him to apologize. There should be no such conflicts between the two departments, and you attack people's personal conduct, which is problematic. The press conference was about to be held the next day, and the two parties reached an agreement after mediation by the leaders.
The last press conference was held in Beijing. How did it happen? Hill is radiant, and we have finally returned to the track of the Six-Party Talks. This may be a major achievement of our State Council. When he spoke, the representative of the Ministry of Finance, that is, Glaser, said that Glaser clearly knew that there was a problem with this matter, but he was inconvenient to publicly oppose Hill’s speech, so he could only follow him, to the effect that he would immediately To return to the six-party peace talks, the matter of freezing assets has also been effectively resolved, and Chinese banks are willing to help. That's what he said, but Glaser still didn't know whether the Bank of China agreed or not, so he asked again. The Chinese side said, didn’t you say it is money laundering? Did you ask us to help you anti-money laundering? We have already done what we should do. Why do you ask me to help it transfer the money back now? What are you doing? thing. It's embarrassing right now. . . What was the final result? Glaser didn't want to get involved in this mess, and took the people from the Ministry of Finance back home, preparing to return to Washington. He just got on the plane with his front foot, and it turned out that something really happened. The People's Bank of China publicly announced that the People's Bank of China will not approve any Bank of China to participate in this transfer. Now, the six-party peace talks are in danger of collapsing again. After hearing the news, Bush Jr. immediately called Paulson (Secretary of the Treasury Department) and asked where their people were. Paulson said that our people were on the plane. heaven. . . On the way back to Washington. Then, just as Glaser's plane landed at Washington's Dallas International Airport, Paulson called and immediately bought a ticket to fly to Beijing. Ah, we have many people and many diplomats, and we still have to apply for Chinese visas. He said it didn't matter and he went back immediately. Within 72 hours, Glaser returned to Beijing again, but this time he didn't take the initiative to come forward again. Didn't Hill say that everything can be handled, so you can handle it. As a result, Hill was worried now, and no one agreed to transfer the money to whomever he asked. In the end, there was only one American bank, Wachovia, which was called Wachovia, which later closed down during the financial crisis. After all the talk, Wachovia said yes, so I will help the government. As a result, the board of directors later assessed that this matter was too risky, not to mention that it would not make much money, and there was also the risk of being targeted by the Ministry of Finance. This matter is not fun, and we will not do this matter. After Wachovia withdrew from the deal, Hill fell into a very passive position. What should we do in the end? Make a move and let the president come forward. what trick? Let the Russian banks come forward. Bush Jr. approached Putin and talked about this matter at the G8 meeting. Putin agreed, but there was a condition that he could not settle accounts after the fall. us
How to deal with this matter? Because North Korea's foreign trade companies have accounts in the Russian Far East Commercial Bank. So it can be used to transfer money. The final operation is to operate like this. 25 million U.S. dollars was frozen in the 52 accounts of the Macau Distributor Bank. The money was first transferred to the Monetary Authority of Macau, which is equivalent to the Central Bank of Macau. It does not have a central bank, called the Monetary Authority. Go to its account. The Monetary Authority of Macau has an account with the Federal Reserve Bank of New York, and the money is being transferred to the Federal Reserve Bank of New York. The Federal Reserve Bank of New York has business dealings with the Central Bank of Russia, so the money is transferred to the Central Bank of Russia, and the Far Eastern Bank of Russia There is an account in the central bank, and then the money is transferred to the account of the Far East Commercial Bank, and finally the money is transferred to the North Korean trading company. In this way, the freezing of assets was completed after a very complicated financial transaction procedure. This time has come to 2007.
From the perspective of the entire financial battle, we can summarize:
1. On September 15, 2005, the U.S. Department of the Treasury acted as the first act of financial warfare in world history. This is the first year of the financial war. After careful calculation and a lot of analysis, the U.S. Treasury Department finally estimated every stage of the development of the campaign, so this is not a simple sanction on a bank.
2. Financial sanctions must be closely coordinated, and financial sanctions alone are useless . In particular, the U.S. Treasury Department had problems formulating its strategic goals throughout the entire process of launching the financial war. Who is the main player in this battle, whether it is the financial war or the diplomatic war? There are no clear rules in this regard, so what is the outcome of this battle? The United States won the game at the beginning, but fell into chaos in the later stage. In fact, financial sanctions ultimately failed to achieve its most important purpose, which is to curb North Korea's nuclear weapons development.
The financial sanctions mentioned this time are actually just an initial form. When we have time in the future, we can talk about relatively complete financial sanctions, that is, the financial sanctions imposed by the United States on Iran, which are completely different and much stronger.
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