Terror

Joshua Stanton
F. Legal Consequences of a SSOT Listing
1. Mandatory Financial Sanctions
A SSOT listing carries some important legal consequences for the targeted government. The
most immediate of these is triggered by 18 U.S.C. § 2332d, a provision of the Criminal Code
that prohibits financial transactions by U.S. persons with the governments of SSOT listed states,
except in accordance with Treasury Department regulations, which are published at 31 C.F.R.
Part 596, and which require that any such transactions by U.S. persons be licensed through the
Treasury Department’s Office of Foreign Assets Control.
Importantly, the definition of “U.S. person” also extends to U.S. financial institutions that process
and clear international financial transactions denominated in U.S. dollars. Because more than
60% of the world’s currency reserves are denominated in U.S. dollars, 135 this sanction, by itself,
could constrain North Korea’s access to the global financial system and close one important
loophole in current U.S. sanctions against North Korea. 136
2. Loss of Immunity from Tort Lawsuits for Terrorism or Torture
A second impact of a SSOT designation is that the targeted government loses its sovereign
immunity from suits for personal injury or wrongful death due to the listed state’s acts of
terrorism or torture. The congressional report accompanying the 1995 passage of the terrorism
exception to the Foreign Sovereign Immunities Act 137 specifically found that North Korea and other
states considered terrorism “a legitimate instrument of achieving their foreign policy goals.” 138
135 International Monetary Fund, “Appendix Table I.2” in Annual Report 2014: From Stabilization to Sustainable
Growth (July 2014), http://www.imf.org/external/pubs/ft/ar/2014/eng/.
136 To understand the importance of Part 596 sanctions, one must first understand that, contrary to the
commonly expressed view, U.S. sanctions against North Korea are still among the weakest sanctions applicable to
any sanctioned government. See Joshua Stanton, “North Korea: The Myth of Maxed-Out Sanctions,” Fletcher Security
Review 2.1 (21 January 2015).
137 28 U.S.C. § 1605A.
138 U.S. House Committee on the Judiciary. Comprehensive Antiterrorism Act of 1995: report (to Accompany H.R.
1710). (104 H. Rpt. 383).
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