North Koreans charged in wide-ranging $3.7b sanctions-busting scheme

29 May 2020, 02:11 by Eric Tucker

Washington: The US Justice Department has accused a network of North Korean and Chinese citizens of secretly advancing North Korea's nuclear weapons program by channelling at least $US2.5 billion ($3.7 billion) in illicit payments through hundreds of front companies.

The indictment, unsealed in Washington's federal court on Thursday (Friday AEST), is believed to be the largest criminal enforcement action ever brought against North Korea.

https://static.ffx.io/images/$zoom_1%2C$multiply_1.5109%2C$ratio_1.776846%2C$width_1059%2C$x_902%2C$y_701/t_crop_custom/q_62%2Cf_auto/ab295d2c86c15e1a765ab5f748b20bc8786897ec — North Korean leader Kim Jong-un speaks during a meeting of the Seventh Central Military Commission of the Workers' Party of Korea on May 24.AP

The 33 defendants include executives of the state-owned Foreign Trade Bank, which in 2013 was added to a US Treasury Department list of sanctioned institutions for transactions that facilitated the nuclear proliferation network, and cut off from the US financial system.

According to the indictment, the bank officials - one of whom had served in North Korea's primary intelligence bureau - set up branches in countries around the world, including Thailand, Russia and Kuwait, and used more than 250 front companies to process US dollar payments to further the country's nuclear proliferation program.

The defendants created new front companies after the government or banks caught onto the association with North Korea, according to the indictment, and they had coded conversations and listed false destinations and customers on contracts and invoices.

Five of the defendants are Chinese citizens who operated covert branches in either China or Libya. Others who were charged include individuals who served at times as the bank's president or vice-president.

"Through this indictment, the United States has signified its commitment to hampering North Korea's ability to illegally access the US financial system and limit its ability to use proceeds from illicit actions to enhance its illegal WMD and ballistic missile programs," acting US Attorney Michael Sherwin said in a statement.

The US has frozen and seized about $US63 million from the scheme since 2015, according to the indictment.

The case was filed at a time of delicate relations between the two countries. The rapprochement that President Donald Trump has tried to engineer over the past two years has stalled badly, with the last face-to-face meeting between senior officials from the two sides taking place in October in Stockholm.

https://static.ffx.io/images/$zoom_0.265%2C$multiply_1.5109%2C$ratio_1.776846%2C$width_1059%2C$x_0%2C$y_109/t_crop_custom/q_62%2Cf_auto/0dbe2dd4cb1a790498de97af30921b2560f0dd35 — The Department of Justice seal.Bloomberg

Apart from recent speculation over North Korean leader Kim Jong-un's health, which prompted public expressions of concern from Trump, the administration has been almost completely silent on North Korea. US officials say they remain eager to restart negotiations but have gotten no indication from the North that any resumption is imminent.

The indictment also reflects ongoing concerns about sanctions violations.

Last month, United Nations experts recommended blacklisting 14 ships for violating sanctions against North Korea, accusing the country in a report of increasing illegal coal exports and imports of petroleum products and continuing with cyber attacks on financial institutions and cryptocurrency exchanges to gain illicit revenue.

It was not immediately clear whether any of the defendants had lawyers.