WASHINGTON, (Reuters) – President Barack Obama  broadened financial sanctions on North Korea yesterday and  froze the U.S. assets of four North Korean citizens and eight  firms in part to punish it for the sinking of a South Korean  warship.

Obama signed an executive order that lets the United States  block the U.S. assets of North Korean entities that trade in  conventional arms or luxury products, counterfeit currency or  engage in money laundering, drug smuggling or other “illicit”  activity that supports the government or its leaders.

The administration targeted one North Korean citizen and  three entities under the new order, aimed at the North Korean  leadership, and an additional three citizens and five state  entities under existing U.S. authority.

Perks and luxuries such as jewelry, fancy cars and yachts  derived from North Korea’s shadowy network of overseas  interests are believed to be one of the main tools Pyongyang  uses to ensure loyalty among top military and party leaders to  North Korean leader Kim Jong-il.

Stuart Levey, Treasury under secretary for terrorism and  financial intelligence, said the new order would help go after  businesses “that enrich the highest echelons of the North  Korean government while the North Korean people suffer.”

It was unclear how the actions, which U.S. Secretary of  State Hillary Clinton previewed in July, might affect the odds  of reviving multilateral talks on ending North Korea’s nuclear  programs.

Washington views the atomic capabilities of the North,  which tested nuclear devices in 2006 and 2009, as a threat to  its allies South Korea and Japan and a proliferation risk.

U.S.-North Korean relations have deteriorated since Obama  took office, with his aides deeply unhappy about Pyongyang’s  decision to conduct nuclear and missile tests last year as well  as the March 26 sinking of the South Korean corvette Cheonan.

Forty-six South Korean sailors were killed in the incident,  which the United States, South Korea and other nations blame  squarely on North Korea. Pyongyang denies responsibility.

In the executive order, posted on the U.S. Treasury  website, Obama cited the Cheonan’s sinking as well as the  nuclear and missile tests as evidence North Korea poses “an  unusual and extraordinary threat to the national security,  foreign policy, and economy of the United States.”