U.S. Sanctions Chinese, Russians For Trade with N. Korea

August 23, 2017

Elaborate North Korean sanctions-busting networks revealed for first time

The Trump administration on Tuesday slapped economic sanctions on 10 Chinese and Russian companies and six people for covertly assisting North Korea’s nuclear weapons and missile programs.

The Treasury Department announcement said the sanctions were imposed “in response to North Korea’s ongoing development of weapons of mass destruction, violations of United Nations Security Council Resolutions, and attempted evasion of U.S. sanctions.”

The sanctions represent the first time the U.S. government has cracked down on Chinese and Russian firms that have been facilitating North Korea’s development of nuclear arms and long-range missiles.

“Treasury will continue to increase pressure on North Korea by targeting those who support the advancement of nuclear and ballistic missile programs, and isolating them from the American financial system,” said Treasury Secretary Steven T. Mnuchin.

“It is unacceptable for individuals and companies in China, Russia, and elsewhere to enable North Korea to generate income used to develop weapons of mass destruction and destabilize the region,” he said in a statement. “We are taking actions consistent with UN sanctions to show that there are consequences for defying sanctions and providing support to North Korea, and to deter this activity in the future.”

The sanctions call for blocking all property and interests of the designated companies and people while prohibiting American banks from working with those sanctioned.

The action was taken in support of the latest UN Security Council Resolution 2371, passed Aug. 5, in response to North Korean missile tests and nuclear development.

The sanctions for the first time reveal in detail how North Korea has used companies in China, Russia, and elsewhere to evade decades of economic sanctions.

Rep. Robert Pittenger (R., N.C.), who has sponsored legislation designed to punish companies that support North Korea, praised the new sanctions.

“For far too long, China has enabled North Korea to pursue nuclear development, cyber warfare, global provocation, and egregious human rights violations. Russia has also not been a good faith partner on these issues,” said Pittenger, vice chairman of the financial services subcommittee on terrorism and illicit finance.

“The status quo is no longer acceptable,” he said in a statement. “President Trump’s decisive action, coupled with my legislation to further punish businesses which support North Korean cyber attacks, sends a strong message. If you support the brutal North Korean regime, there will be a punitive response from the United States.”

Notably absent from the latest U.S. sanctions is the China Aerospace Science & Industry Corporation (CASIC). CASIC’s Sanjiang Special Vehicle Corporation has been linked to production of the missile transporter erector launchers used in North Korea’s new long-range mobile missile, the Hwasong-14, as well as other mobile missiles.
 
“It is surreal that both the Obama and Trump administrations can’t bring themselves to sanction the most obvious Chinese missile technology proliferator to North Korea,” said Rick Fisher, a China military expert with the International Assessment and Strategy Center.
The North Korean activities involve the use of front companies and sales of coal by North Korea to purchase technology and other goods for the weapons programs.

In China, the Dandong Rich Earth Trading Co. Ltd. was sanctioned for purchasing vanadium ore from North Korea’s Korea Kumsan Trading Corp. The sale of the metal ore was banned under UN Security Council Resolution 2270, imposed after a nuclear test in January 2016.

Kumsan Trading is linked to the General Bureau of Atomic Energy that is in charge of the North Korean nuclear program.

The Chinese firm Mingzheng International Trading Limited also was sanctioned for operating as a front company for the Foreign Trade Bank (FTB), North Korea’s primary foreign exchange bank. Mingzheng provided North Korea with financial services, including U.S. dollar transactions in violation of U.N. sanctions.

FTB was first sanctioned in 2013 for conducting financial transactions on behalf of North Korea’s arms proliferation activities, including on behalf of the Korea Mining Development Corp. and Korea Kwangson Banking Corporation.

In June, Mingzheng’s owner, Sun Wei, was sanctioned by Treasury.

In Russia, Treasury sanctioned the company called Gefest-M LLC and its director Ruben Kirakosyan for supporting the North Korean company Tangun Trading Corp., also known as Korea Kuryonggang Trading Corp., that is linked to the Second Academy of Natural Sciences, which is involved in developing weapons of mass destruction and missiles.

The Moscow-based Gefest-M took part in procuring metals from Tangun.

According to the Treasury announcement, North Korea funds its nuclear and ballistic missile programs through sales of mining resources abroad, mainly sales of coal.

Coal sales have generated over $1 billion a year for North Korea, which prompted the UN Security Council to ban purchases of North Korean coal, in part last year and earlier this month in total.

Three Chinese coal companies were sanctioned on Tuesday for purchasing nearly $500 million worth of coal between 2013 and 2016. The companies were identified as Dandong Zhicheng Metallic Materials Co. Ltd., JinHou International Holding Co. Ltd., and Dandong Tianfu Trade Co. Ltd.

The companies’ transactions “may have benefitted the nuclear or ballistic missile programs of the government of North Korea or the Workers’ Party of Korea,” the department said.

JinHou and Dandong Tianfu also were sanctioned for mining that benefited the North Korean economy. Zhicheng helped Pyongyang in the import, export, and transport of steel and anthracite coal, and also worked with other sanctioned firms, including Koryo Credit Development Bank and Korea Ocean Shipping Agency.

Zhicheng was linked to purchasing nuclear and missile components for North Korea and the company’s director and majority owner, Chi Yupeng, was sanctioned.

“Chi Yupeng has used a network of companies to engage in bulk purchases, wire transfers, and other transactions on behalf of North Korean interests,” the statement said, noting the transactions violated UN resolutions.

Two Singapore-based companies and three Russians also were sanctioned for providing oil to North Korea. They were identified as Transatlantic Partners Pte. Ltd., and two company officials, Russians Mikhail Pisklin and Andrey Serbin, and linked to illicit energy industry support to North Korea.

Pisklin at Transatlantic purchased fuel oil through a North Korean bank, Daesong Credit Development Bank, and Serbin, also with Transatlantic, worked with Irina Huish of Velmur Management Pte. Ltd. to buy gasoline for delivery to North Korea.

The activities were designed to evade sanctions on North Korea.

“Both of these companies have attempted to use the U.S. financial system to send millions of dollars in payments on behalf of North Korea-related transactions,” Treasury said.

Additionally, Treasury imposed sanctions designed to curtail North Korea’s use of its nationals working abroad as a source of hard currency for its weapons programs.

A North Korean entity called Mansudae Overseas Projects Architectural and Technical Services Ltd. was sanctioned for supporting Mansudae Overseas Projects Group of Companies, or MOP.

MOP was sanctioned in early August by the United Nations for exporting workers from North Korea to support the regime of Kim Jong Un and the ruling Workers’ Party of Korea.

The workers were used to build statues abroad, often in African nations, to raise currency. Some of the funds generated by the company were used by North Korea’s Munitions Industry Department that oversees the ballistic missile program.

Another target of the sanctions was Kim Tong Chol and Qingdao Construction, a Chinese subsidiary in Namibia. Kim was sanctioned for working MOP, Mansudae Overseas Projects Architectural and Technical Services, and Qingdao.

Kim was involved in a deal with Qingdao to take over four Namibian government-sponsored construction projects along with North Korean employees and materials linked to the projects.

In a separate but related action, the Justice Department on Tuesday announced it is filing two complaints seeking civil money laundering penalties and demanding more than $11 million from companies that acted as financial facilitators for North Korea.

The legal action was filed in U.S. District Court for the District of Columbia and represents the largest seizure of North Korean assets by the Justice Department.

One complaint seeks nearly $7 million from Velmur Management, the Singapore company, and the second complaint wants $4 million from China’s Dandong Chengtai Trading Co. Ltd., also known as Dandong Zhicheng Metallic Material Co. Ltd. Transatlantic also was linked to the activities.

The Justice Department earlier in June sought $1.9 million from Mingzheng International Trading Ltd., a company based in Shenyang, China.

The companies were linked by Justice investigators to money laundering of U.S. dollars on behalf of North Korean companies in violation of U.S. economic sanctions.

“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 U.S. Attorney Channing D. Phillips in a statement.

“According to the complaints, these front companies are supporting sanctioned North Korean entities, including North Korean military and North Korean weapons programs. Working with our law enforcement partners, we will vigorously enforce vital sanctions laws.”

FBI Special Agent Michael DeLeon, head of the Phoenix office, said the companies were involved in helping North Korea evade sanctions.

“We will continue to use the necessary resources to expose these types of actions and investigate those who utilize the U.S. banking systems for illegal activities,” he said.

The FBI found that Velmur and Transatlantic operated as money laundering fronts for North Korean banks.

The $7 million sought by the government was wired to Velmur in May.

The second complaint involving Dandong Chengtai and other front companies are controlled by Chi Yupeng, who was described as one of the largest financial facilitators for North Korea.

Dandong Chengtai conducted money laundering through the United States for the Korean Workers’ Party, which is a sanctioned entity.

“These broad interwoven networks allow sanctioned North Korean entities to conduct illicit procurement and banking activity,” the Justice Department said.

(First reported by The Townhall)  http://freebeacon.com/national-security/u-s-sanctions-chinese-russians-illicit-trade-north-korea/  (August 23, 2017)

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