North Koreans Accused of Laundering $2.5 Billion for Nuclear Program
01 Jun 2020

North Korean and Chinese citizens are operating a multibillion-dollar money laundering scheme to help fund the North’s nuclear weapons program, the Justice Department said in an indictment unsealed on Thursday. The case underscores the Trump administration’s inability to halt Pyongyang’s nuclear weapons program through diplomacy.

The department charged 28 North Koreans and five Chinese citizens of using a web of more than 250 shell companies to launder over $2.5 billion in assets through the international banking system, according to court documents filed in February by the U.S. attorney’s office in Washington.

The government claimed that the money flowed back to North Korea’s primary, state-operated foreign exchange bank, the Foreign Trade Bank of the Democratic People’s Republic of Korea. The North used the funds to support its weapons of mass destruction program.

“Through this indictment, the United States has signaled its commitment to hampering North Korea’s ability to illegally access the U.S. financial system and limit its ability to use proceeds from illicit actions to enhance its illegal W.M.D. and ballistic missile programs,” Michael Sherwin, the acting U.S. attorney in Washington, said in a statement.

The charges are also a tacit acknowledgment that the United States has been unable to stop North Korea from building nuclear weapons by imposing economic sanctions or through President Trump’s attempts to broker an agreement with the North’s leader, Kim Jong-un.

After Mr. Trump’s most recent talks with Mr. Kim failed last year, North Korea accused the United States of maintaining a hostile stance and hinted that it could resume missile or nuclear weapons testing this year.

Mr. Trump said this year that he did not want to meet with Mr. Kim before the presidential election in November, and the Trump administration has been reluctant to provide any reminders of its failed attempts to rein in Pyongyang.

But North Korea’s ambitions have not waned. Last month, the administration accused the North of employing cyberattacks to steal and launder money and use digital currencies “to generate revenue for its weapons of mass destruction and ballistic missile programs.”

North Korea has conducted no significant tests this year. But Mr. Kim met this week with his nation’s top military-governing body and discussed “new policies for further increasing” the North’s nuclear abilities.

Mr. Kim had recently gone three weeks without making any public appearances, prompting speculation that he had been ill.

The West has placed strict economic sanctions on North Korea in a bid to cut off funding for its nuclear weapons program, and the United States has gone after companies that it believes illegally sent money to the North.

In the indictment unsealed on Thursday, the Justice Department identified the defendants as employees and four executives of the Foreign Trade Bank, including two of its former presidents, Ko Chol-man and Kim Song-ui. Another co-conspirator was identified as a member of North Korea’s primary intelligence agency. They were charged with conspiracy, bank fraud, money laundering and operating a criminal enterprise.

While the United States has little chance of apprehending the defendants, the Justice Department sometimes brings charges against foreigners in an effort to deter adversarial governments.

The defendants are accused of illegally laundering money back to the Foreign Trade Bank dating to 2013, when the bank was placed on the Treasury Department’s sanctions list for helping fund North Korea’s weapons programs. The department designated the entire North Korean financial system a money laundering risk in 2016.

Some of the bank’s employees were North Korean and Chinese citizens who worked for front companies that hid a covert branch of the bank in Shenyang, China, the indictment said. Federal prosecutors had accused one of the companies, Mingzheng International, in 2017 of serving as a front for the North Korean bank.

Other defendants were accused of moving overseas to set up hundreds of shell companies in China, Austria, Libya, Kuwait, Thailand and Russia. They closed companies when governments or banks detected their ties to North Korea and created more, according to court papers.

By Katie Benner, The New York Times, 28 May 2020

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