In a Federal Register notice published on April 10, 2020, the US Department of the Treasury, Office of Foreign Assets Control (OFAC), amended its North Korea Sanctions Regulations (NKSR) to extend their application to non-US entities owned or controlled by US financial institutions. The change was mandated by Congress in Section 7121 of the National Defense Authorization Act for Fiscal Year 2020.
This jurisdictional expansion involving US sanctions on North Korea is noteworthy. With the exception of the Cuba and Iran sanctions programs, US sanctions prohibitions typically do not apply directly to non-US entities owned or controlled by US persons. Historically, the extension of US sanctions prohibitions to foreign subsidiaries of US companies has been one of the most controversial “extraterritorial” aspects of US sanctions programs. (So-called “secondary sanctions” do generally apply to non-US entities, but they do not impose “prohibitions” under US law.)