Washington levies sanctions on Chinese firmWashington on Monday sanctioned a Chinese firm, Dandong Hongxiang Industrial Development Co. (DHID), suspected of contributing to the proliferation of weapons of mass destruction in North Korea, along with four of its top executives.
The U.S. Treasury said it imposed sanctions on Dandong Hongxiang, one of the subsidiaries of the Liaoning Hongxiang Group based in northeastern China near the border with North Korea, for working with the North’s Korea Kwangson Banking Corporation (KKBC), previously blacklisted by Washington and the United Nations for providing financial services in support of entities contributing to North Korea’s nuclear and missile program.
Along with the founder and chairwoman of Liaoning Hongxiang Group, Ma Xiaohong, DHID’s general manager Zhou Jianshu, deputy general manager Hong Jinhua and financial manager Luo Chuanxu were also placed on the Treasury’s Office of Foreign Assets Control’s blacklist. They are all Chinese nationals.
This marks the first time that Washington has sanctioned a Chinese company in connection with the North’s nuclear and missile programs, and it comes after Pyongyang’s fifth nuclear test on Sept. 9.
Any property of the four Chinese individuals and the company in the possession or control of U.S. nationals, or within the United States, are to be blocked through this measure, and Americans are generally prohibited from engaging in transactions involving these designated individuals.
“Today’s action exposes a key illicit network supporting North Korea’s weapons proliferation,” said Adam J. Szubin, acting under secretary for terrorism and financial intelligence in the U.S. Treasury Department, adding that the company and its employees “sought to evade U.S. and UN sanctions, facilitating access to the U.S. financial system by a designated entity.”
The U.S. Department of Justice also announced Monday that it had filed criminal charges against DHID and the four executives for using front companies to facilitate prohibited transactions of U.S. dollars through the United States on behalf of sanctioned North Korean entities.
It further announced it had filed a civil forfeiture action for all funds contained in 25 Chinese bank accounts that are believed to belong to Hongxiang and its front companies allegedly involved in money laundering.
The Justice Department requested a restraining order to be sent to China for all the funds, which it claims represent property involved in money laundering.
Leslie R. Caldwell, assistant attorney general of the U.S. Justice Department’s Criminal Division, said, “The charges and forfeiture action announced today alleges that defendants in China established and used shell companies around the world, surreptitiously moved money through the United States and violating the sanctions imposed on North Korea in response to, among other things, its nuclear weapons program.” She continued, “The actions reflect our efforts to protect the integrity of the U.S. banking system and hold accountable those who seek to evade U.S. sanctions laws.”
U.S. Magistrate Judge Joseph A. Dickson of New Jersey on Aug. 3 signed a criminal complaint charging DHID and the four executives for defrauding the United States and conspiring to launder monetary instruments.
The criminal and civil complaints allege that from August 2009 to September 2015, DHID formed front companies and established offshore jurisdictions in havens such as the British Virgin Islands, Seychelles and Hong Kong, then opened Chinese bank accounts to conduct U.S. dollar financial transactions through the American banking system when completing sales to North Korea.
These transactions were allegedly financed or guaranteed by KKBC, an affiliate of North Korea’s state-run Foreign Trade Bank, the country’s primary foreign exchange bank.
“Denying the use of the U.S. financial system can greatly curtail illegal activities and disrupt efforts to provide weapons of mass destruction to terrorists and rogue nations,” said John P. Carlin, assistant attorney general for national security.
He added, “Those who seek to evade our financial sanctions will be fully prosecuted, and we will be unflagging in our efforts to bring them to justice.”
The FBI is currently investigating the case.
The Chinese Foreign Ministry confirmed last week that Hongxiang Group was under investigation for “serious economic crimes” following the provisions of UN Security Council Resolution 2270, which imposed the toughest-ever sanctions on North Korea in March in response to its fourth nuclear test in January.
And the South Korean government said Tuesday it “highly regarded” Washington’s new sanctions on Hongxiang.
“This measure reaffirms the U.S. government’s strong intention to sanction North Korea, which was also confirmed in the recent foreign ministers’ meeting between South Korea, U.S. and Japan,” said Cho June-hyuck, spokesman of the Ministry of Foreign Affairs, in a briefing.
BY SARAH KIM [firstname.lastname@example.org]