WASHINGTON – The United States tightened its financial restrictions on North Korea, slapping sanctions on Chinese and Russian entities it accused of assisting Pyongyang’s development of nuclear weapons and ballistic missiles.
It is also seeking millions of dollars it said moved through the US as part of the alleged scheme. Prosecutors in Washington, D.C, are seeking to recover US$11 million (S$15 million) from companies based in China and Singapore that they accuse of conspiring with North Korea to evade sanctions.
In complaints filed Tuesday (Aug 22) in a federal court in the District of Columbia, prosecutors outlined how a web of front companies – some run by Russian nationals – were used by North Korean banks, including the country’s government-owned Foreign Trade Bank, or FTB, to launder money through transactions involving coal and oil.
In one of the lawsuits, US prosecutors allege that Singapore-based Velmur Management and Transatlantic Partners laundered US dollars for sanctioned North Korean banks that were seeking to buy petroleum products from JSC Independent Petroleum Company, a blacklisted entity based in Russia.
North Korean banks used companies such as Transatlantic to make US dollar payments to Velmur, according to the complaint. The lawsuit involves funds that the US alleges were transferred through four companies to Velmur, which then wired the proceeds to JSC. That company was designated a sanctioned entity by OFAC on June 1 for allegedly shipping more than $1 million of petroleum products to North Korea.
The US is seeking the US$7 million that was wired to Velmur in May.
Based on information by the Accounting And Corporate Regulatory Authority (Acra) of Singapore, Transatlantic Partners was registered in May last year, with a paid-up capital of S$1,000. Its stated principal activity is the wholesale of industrial and construction equipment. Its sole director and shareholder is Andreuw Tang You Liang, who lives in Woodlands.
Velmur Management was registered with Acra in November 2014, with a paid-up capital of S$1,000. Its stated business is oil products transportation and storage. The sole shareholder is a Russian named Ruslan Larin, who is also a director. The company has a second director, South African Amtchentsev Vladen.
When contacted by The Straits Times, Transatlantic Partners' Mr Tang said: "I do not have any information pertaining to the matter, as I do not handle the day-to-day operations of the company and I am just a nominee shareholder."
The sanctions and forfeiture requests are the latest against third-country companies and individuals in an effort to exert greater economic pressure on Kim Jong Un’s regime, which has conducted regular missile and nuclear tests in defiance of United Nations resolutions and has developed weapons that may be capable of hitting the continental US.
President Donald Trump has sought to pressure China – North Korea’s top trading partner – to use greater leverage on its neighbour and ally, though Kim’s regime often makes decisions contrary to Beijing’s wishes. “These complaints show our determination to stop North Korean sanctioned banks and their foreign financial facilitators from aiding North Korea in illegally accessing the United States financial system to obtain goods and services in the global market place,” said US Attorney Channing D. Phillips.
“According to the complaints, these front companies are supporting sanctioned North Korean entities, including North Korean military and North Korean weapons programmes.”
The sanctions against the 10 companies and six individuals are designed to disrupt the economic ties that have allowed Pyongyang to continue funding its missile and nuclear programme despite strict United Nations sanctions prohibiting it. It was the fifth set of US sanctions related to North Korea this year, and the largest.
A Chinese embassy spokesman said on Tuesday that the US should “immediately correct its mistake” of imposing unilateral sanctions on Chinese companies and individuals to avoid damaging bilateral cooperation.
"China opposes unilateral sanctions out of the UN Security Council framework, especially the ‘long-arm jurisdiction’ over Chinese entities and individuals exercised by any country in accordance with its domestic laws,” the embassy spokesman said. “We strongly urge the US to immediately correct its mistake, so as not to impact bilateral cooperation on relevant issues.”
Treasury Secretary Steven Mnuchin said in a statement accompanying the sanctions announcement: “Treasury will continue to put pressure on North Korea by targeting those who support the advancement of nuclear and ballistic missile programmes and isolating them from the American financial system.”
The sanctions also drew the ire of Russia, which already is at odd with the US over its annexation of Crimea and interference in the American presidential election. Russian Deputy Foreign Minister Sergei Ryabkov, in a statement on the ministry’s website, said the sanctions against the Russian individuals continues a trend damaging the US-Russia relationship.
He warned that Russia would develop unspecified “counter-measures inevitable in this situation”. In early July, after tensions with Pyongyang escalated, US prosecutors disclosed their effort to seize millions of dollars linked to North Korean entities from eight global banks.
In a second lawsuit, China-based Dandong Chengtai and related companies are accused of laundering millions of dollars for North Korea through the purchase of coal. Dandong Chengtai was added Tuesday to Treasury’s list of sanctioned entities, along with Transatlantic and Velmur.
It wasn’t immediately possible to locate company representatives for comment.
North Korea generates about US$1 billion a year from the coal trade, according to the Treasury, which singled out three Chinese coal companies it said were responsible for importing almost a half-billion dollars in North Korean coal between 2013 and 2016.
Controlled by Chinese national Chi Yupeng, Dandong Chengtai allegedly conspired to evade US sanctions by facilitating prohibited US dollar transactions on behalf of the North Korean Workers’ Party, a sanctioned entity, according to the complaint.
Dandong Chengtai allegedly made US dollar wire transfers for purchases of goods that are well outside the scope of a mineral trading company and financial records allegedly show that purchases of bulk commodities such as sugar, rubber, petroleum products and soybean oil, among others, were in fact destined for North Korea, according to the complaint.
The US is seeking the forfeiture of more than US$4 million that Dandong Chengtai wired on June 21 to an affiliated company, Maison Trading, using Chinese bank accounts. US investigators allege Maison Trading is a front company operated by a Dandong Chengtai employee.
Bloomberg, Reuters and Washington Post contributed to this report.