U.S. Charges North Korea Officials With Illegally Transferring $2.5 Billion
U.S. authorities unsealed a sweeping indictment charging more than 30 people with helping North Korea illegally transfer $2.5 billion since 2013, amid dim hopes for resumption of long-stalled nuclear talks between the two countries.
In a 50-page indictment filed in February and made public on Thursday, prosecutors said officials and agents of North Korea’s primary foreign exchange bank, the Foreign Trade Bank, opened and operated covert branches in Thailand, Austria, Russia, China and elsewhere to move funds as recently as earlier this year.
Pyongyang has said that relief from the punishing U.S. and international sanctions that have crippled its access to the global financial system are critical to any talks on the nuclear issue. The U.S. counters that it won’t consider any deal that doesn’t include a commitment by the government to total denuclearization, a stance the North Koreans reject.
The North Korean mission at the United Nations didn’t immediately respond to requests for comment.
Thursday’s action follows comments by North Korean leader Kim Jong Un reported in the country’s state-controlled news agency earlier this week calling for an expansion of the country’s nuclear programs.
The case is among only a handful in the U.S. targeting North Korean citizens, and appears to be the first targeting senior North Korean government officials, including the chairman of the Foreign Trade Bank and a member of North Korea’s intelligence agency, the Reconnaissance General Bureau. None of the defendants are in U.S. custody.
The indictment says the agents and officials opened and operated front companies at the secret branches and worked with others to procure commodities and facilitate otherwise prohibited payments in U.S. dollars on behalf of parties in North Korea. The actions began in 2013, after the U.S. Treasury Department sanctioned the bank in an effort to limit North Korea’s ballistic missile and weapons of mass destruction programs, and continued through January, the indictment said.
The defendants and others caused banks “to process at least $2.5 billion in illegal payments via over 250 front companies, which payments transited through the United States during the period of the conspiracy,” the indictment alleges. Most of the defendants are North Korean, along with a few Chinese citizens.
Josh Stanton, a veteran North Korea analyst who helped draft new sanction laws prosecutors are using to target Pyongyang’s illicit operations, said the case represents a potentially significant setback for North Korea.
“The impact will depend on whether anyone will be extradited, and above all, how much money they caught,” said Mr. Stanton.
The indictments mean those North Korean agents, many of whom worked through Pyongyang’s diplomatic outposts, will find it difficult to continue their activities in the numerous countries with extradition treaties with the U.S., according to analysts.
The case also exposes the centrality of Chinese banks to North Korea’s financial operations, with many of the transactions allegedly routed through accounts in the country. While U.S. authorities have publicly lauded the steps Beijing has taken to stem North Korean activities within its borders, some current and former U.S. officials say Washington needs to take more aggressive action against Chinese institutions to effectively quash Pyongyang’s efforts.
Several major Chinese banks have been named in other cases as conduits for illicit North Korean transactions, potentially exposing them to hefty U.S. fines and even the so-called death-knell sanction that severs the access to dollars critical to their businesses.
In the indictment, U.S. authorities said they seized $63 million in funds in the U.S. between October 2015 and January of this year.
Prosecutors do have the ability to seize funds held in U.S. correspondent accounts and force those international banks to determine whether they hold related funds in their accounts overseas, but that requires approval from the Secretary of State. The State Department referred requests for comment to the Justice Department.
The case shows a U.S. “commitment to hampering North Korea’s ability to access the U.S. financial system and limit its ability to use proceeds from illicit actions to enhance its illegal weapons of mass destruction program,” said Michael Sherwin, the acting U.S. attorney in Washington, whose office brought the case.
Foreign Trade Bank policy dictated sending the defendants and others abroad to work with financial institutions in those countries and “study fast developing financial technologies and experiences of other countries,” the indictment said.
Several of the defendants were identified earlier this year in a report from the United Nations panel of experts, including one who was described in the report as entering Russia as an accredited member of the Embassy of the Democratic People’s Republic of Korea to the Russian Federation. In that report, both Russia and China disputed that the identified North Korean individuals remained in their countries.
China said it had “closed all the representative offices of the DPRK financial institutions in China, and all the relevant representatives in China have left China,” according to the report.
The case comes as North Korea’s economy under Mr. Kim appears to be under pressure after it closed the border with China, its main benefactor and trading partner, amid the coronavirus pandemic.
Mr. Kim began this year by broadcasting a policy speech that implored the nation to acclimate to a life under sanctions.
Still, U.S. officials and other North Korean experts say Pyongyang has gained a mastery over several decades of sanctions-evasion of running a diverse global portfolio of illicit activities that have kept the country on life support and the regime in power.
U.S., U.N. and industry officials say North Korea’s intelligence agency is relying less on the traditional banking industry to fund and launder its illicit proceeds, and more on its cyber expertise to raise revenue and move money around the globe.
Some of the allegedly laundered funds were used to pay American companies on behalf of the North Korean government, the indictment said.
Photo: North Korea released an undated image of leader Kim Jong Un this week. The country’s economy appears to be under pressure amid the coronavirus lockdown. - KCNA/KNS/ASSOCIATED PRESS
