Via One Free Korea comes the best news I have heard all day:

A United States government official who played a key role in freezing North Korean assets in 2005 will be part of an American delegation visiting Seoul this week, perhaps signaling that the international community will look to impose financial sanctions against Pyongyang following its nuclear test last week.

Stuart Levey, the U.S. Treasury Department’s undersecretary for terrorism and financial intelligence, is part of the American delegation led by Deputy Secretary of State James Steinberg. The group arrives in South Korea today for a two-day visit as part of a larger visit to China, Japan and Russia. [Joongang Ilbo]

OFK has a great write up on him, but basically Stuart Levey was the man behind the only sanctions that had any punitive effect on the North Korean regime elite.  For those that haven’t been following this issue closely the Treasury Department implemented financial sanctions on North Korea not because of their nuclear program, but because of their counterfeiting operations.

It is believed that North Korea was conterfeiting up to $250 million US dollars a year and then laundering the money through casinos around the world to include Las Vegas.  It was there that members of an Asian criminal syndicate were arrested in Operation Smoking Dragon laundering money through Vegas casinos.  The Secret Service has undercover tape of members of this syndicate explaining how the counterfeit money is brought into China and distributed through the Russian embassy in Beijing.  Prior reporting on North Korean counterfeiting also showed how the North Korean Supernotes were being openly distributed in China.  Even the inter-Korean project the Geumgang Resort was being used to launder money.

Another place these Asian criminal syndicates were laundering money was in Macau.  It was here that Stuart Levey sprung into action and had $25 million in dirty money frozen in a small bank called Banco Delta Asia.  It was estimated that just putting BDA off limits cost the Kim regime 40% of its foreign exchange.  However, after North Korea’s 2006 nuclear test President George Bush agreed to unfreeze the money and do away with the financial sanctions after vehement North Korean objections to them.

The US government desperate to cut a deal with Kim Jong-il bent over backwards to return Kim Jong-il’s ill gotten money, but no banks wanted to do business with North Korea; that is how dirty his money is. The US government was so desperate they asked the US Wachovia bank to launder North Korea’s money for him. Unsurprisingly Wachovia declined. So the US government was left to use the US Federal Reserve to launder his money through a Russia based bank. Even with the Federal Reserve laundering the money the Russian bank was still very hesitant about accepting the deal. Incredibly the US government went through all this hassle to launder money for Kim Jong-il and circumvent US counterfeiting laws in order to meet a demand by North Korea that was not even in the original deal. Even more incredible is the fact that the US government agreed to these demands due to a vague promise from North Korea to use the money to buy humanitarian aid. The odds of Kim Jong-il using that money to buy humanitarian aid is about equal with the odds of him ever dismantling his nuclear program, which is none and has history has shown Kim Jong-il ultimately reneged on all his promises.  By the way read this posting and tell me that this all wasn’t easy to predict.

So that is where we are now and hopefully the fact that Levey was renominated to stay on by the Obama administration combined with the fact they are sending him to Seoul; is a sign that the administration is looking at reimplementing financial sanctions to really hit Kim Jong-il where it hurts, his pocket book.