US charges North Koreans in $2.5B sanctions-busting scheme

In this undated photo provided on Sunday, May 24, 2020, by the North Korean government, North Korean leader Kim Jong Un speaks during a meeting of the Seventh Central Military Commission of the Workers’ Party of Korea in North Korea. Independent journalists were not given access to cover the event depicted in this image distributed by the North Korean government. The content of this image is as provided and cannot be independently verified. (Korean Central News Agency/Korea News Service via AP)

WASHINGTON — The Justice Department has accused a network of North Korean and Chinese citizens of secretly advancing North Korea’s nuclear weapons program by channeling at least $2.5 billion in illicit payments through hundreds of front companies.

The indictment, unsealed Thursday in Washington’s federal court, is believed to be the largest criminal enforcement action ever brought against North Korea.

The 33 defendants include executives of North Korea’s state-owned Foreign Trade Bank, which in 2013 was added to a Treasury Department list of sanctioned institutions for transactions that facilitated the nuclear proliferation network and cut off from the U.S. financial system.

According to the indictment, the bank officials – one of whom had served in North Korea’s primary intelligence bureau – set up branches in countries around the world, including Thailand, Russia, and Kuwait, and used more than 250 front companies to process U.S. dollar payments to further the country’s nuclear proliferation program.

The defendants created new front companies after the government or banks caught onto the association with North Korea, according to the indictment, and they had coded conversations and listed false destinations and customers on contracts and invoices.

Five of the defendants are Chinese citizens who operated covert branches in either China or Libya. Others who were charged include individuals who served at times as the bank’s president or vice president.

“Through this indictment, the United States has signified 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 WMD and ballistic missile programs,” acting U.S. Attorney Michael Sherwin said in a statement.

The U.S. has frozen and seized about $63 million from the scheme since 2015, according to the indictment.

The case was filed at a time of delicate relations between the U.S. and North Korea. The rapprochement that President Donald Trump has tried to engineer over the past two years has stalled badly, with the last face-to-face meeting between senior officials from the two countries taking place in October in Stockholm.

Apart from recent speculation over North Korean leader Kim Jong Un’s health, which prompted public expressions of concern from Trump, the administration has been almost completely silent on North Korea. U.S. officials say they remain eager to restart negotiations but have gotten no indication from the North that any resumption is imminent.

The indictment also reflects ongoing concerns about sanctions violations. In April, United Nations experts recommended blacklisting 14 vessels for violating sanctions against North Korea, accusing the country in a report of increasing illegal coal exports and imports of petroleum products and continuing with cyber attacks on financial institutions and cryptocurrency exchanges to gain illicit revenue.

It was not immediately clear whether any of the defendants had lawyers.