The US Treasury has designated North Korea a "primary money laundering concern" under section 311 of the Patriot Act.
OK, that sounds bad, but also boring. What is it and what effect will it have? (Don't worry, we'll keep this short.)
The 311 is perhaps the United States' most powerful unilateral financial sanctioning tool, short of freezing an entity's assets. Essentially, banks conducting transactions in US dollars have to do it through accounts in New York: this makes them subject to Treasury regulations.
In this case foreign banks are prohibited from using these accounts to process transactions for North Korean banks. The penalties for trying to sneak such transactions by are severe: a bank could lose access to dollar trading, a kind of death choke-hold on any international bank.
A bank and slogan in Rason, DPRK.
Why now? The Obama administration was compelled into choosing whether to designate the DPRK under North Korea Sanctions and Policy Enhancement Act, which was passed on February 18, 2016. This gave the US Treasury to 180 days determine if North Korea was a primary money laundering concern. Given the political sentiment right now regarding the DPRK, it was fairly clear what the choice would be.
What is less clear is what effect it will have. North Korean banking is already pretty toxic to most international banks, which are risk averse. The smaller often regional banks that do deal with the DPRK, either don't trade in dollars or help their Korean partners hide their transactions, for a price. Individuals may also do this, again, for a price. That price may now go up as the risk increases post-311. Cash will become even more paramount in DPRK business-dealings. North Korean institutions will try to settle international transactions in RMB more.
Other important unknowns include how much Treasury can find out about hidden transactions and, if they are taking place in China, how much the US is willing to push Beijing on the issue.
At the end of the day, North Koreans have had a decade to practice flying under the radar. In 2005, Treasury slapped a 311 on a single Macau Bank - the now infamous Banco Delta Asia - sending banks worldwide running away from business with North Korea. Since then, moving money has been hard for DPR Koreans. We'll have to wait and see how much harder this Treasury action will make it.