Treasury Secretary Steve Mnuchin | YouTube, The White House

The Facts

  • Treasury Secretary Steven Mnuchin announced Thursday that the US had imposed sanctions on four Chinese entities, including a Chinese bank, cutting them off from the US financial system for “supporting North Korean sanctions evasion,” pending a 60-day review period.
  • The US Department of Treasury has alleged that the Bank of Dandong, along with two individuals and another separate entity, provided continued financial support for the government of North Korea. The Treasury Department alleges that the Bank of Dandong has been acting as a gateway for North Korea, providing the country access to the US financial system, as well as to international financial systems.
  • Details released by the Treasury Department stated that the Bank of Dandong allegedly acted as a conduit for the North Korean government “by facilitating millions of dollars of transactions for companies involved in North Korea’s WMD and ballistic missile programs.”
  • Mnuchin spoke to reporters in a briefing at the White house, saying:

“Today the Treasury’s Financial Crimes Enforcement Network has found the Bank of Dandong to be a foreign financial institution of primary money laundering concern under section 311 of the USA Patriot Act. This bank has served as a gateway for North Korea to access the US and international financial systems, facilitating millions of dollars of transactions for companies involved in North Korea’s nuclear and ballistic missile programs…

The United States will not stand for such action…

This will require US banks to ensure that the bank of Dandong does not access the US financial system directly or indirectly through other foreign banks. This action reaffirms the Treasury department’s commitment to ensure that North Korea is cut off from the US financial system…

In addition, the Department of Treasury’s Office of Foreign Asset Control has sanctioned two individuals and one entity for their continued support of North Korea’s activities.”

  • Despite the fact that the sanctions are being imposed on Chinese entities, Mnuchin noted that this move is not meant to target China. Instead, the US hopes the sanctions will maximize economic pressure on North Korea, according to Mnuchin.

“While today’s actions are directed at Chinese individuals and entities, we look forward to continuing working closely with the government of China to stop illicit financing involving North Korea. We are in no way targeting China with these actions. We will be meeting with China and other countries at the G20 [summit] next week to further our efforts to cut off North Korea’s illicit activities. North Korea’s provocative, destabilizing and inhumane behavior will not be tolerated. We are committed to targeting North Korea’s economic enablers and maximizing economic pressure on the regime until it ceases nuclear and ballistic missile programs. This is very significant since this is the first bank that we’ve cut off, under this.”

  • The Office of Foreign Asset Control said Chinese citizens Sun Wei and Li Hong Ri, along with Dalian Global Unity Shipping Co., also are receiving sanctions for their alleged financial support of North Korea.
    • The Department of Treasury released details concerning the alleged the nature of financial support between these entities and North Korea.

“Sun Wei has been closely aligned with the U.S.-designated Foreign Trade Bank (FTB) in establishing and running a cover company on behalf of FTB. FTB is North Korea’s primary foreign exchange bank, and it was designated in 2013 for facilitating transactions on behalf of North Korea’s WMD proliferation network…

Li Hong Ri established several front companies used by Ri Song Hyok. Ri Song Hyok is a Beijing-based official for U.S.-designated Koryo Bank and U.S.-designated Koryo Credit Development Bank and has reportedly established front companies to procure items and conduct financial transactions on behalf of North Korea…

[Dalian Global Unity] — According to the 2013 report by the UN Panel of Experts on North Korea, Dalian Global Unity was actively involved in eight cases of luxury goods smuggling incidents and is suspected of involvement in at least one other case. Middlemen from Dalian Global Unity gave specific instructions about how shipments and transactions could evade the UN-mandated luxury goods ban.”

  • Mnuchin did not specify whether the Chinese government had been given advanced notice before the US announced the sanctions.
  • Cui Tiankai, China’s ambassador to the United States, told reporters that China disagreed with the US’ decision to sanction these Chinese individuals and entities:

“We are enforcing all [of] the UN Security Council resolutions. If there’s any evidence that any Chinese company or individual or entity violates such a resolution, we will conduct our own investigation and pursue the cases in accordance with our own law. But we’re against this long-arm jurisdiction by the USA.”

  • During the White House briefing, Mnuchin said:

“While we will continue to seek international cooperation on North Korea, the United States is sending an emphatic message across the globe that we will not hesitate to take action against persons, companies and financial institutions who enable this regime.”

  • The Treasury placed the entities on its Specially Designated Nationals List — meaning each entity’s “assets are blocked and US persons are generally prohibited from dealing with them.”

The Context

  • The Treasury Department punished the Bank of Dandong under section 311 of the USA Patriot Act.
  • This section, which is designated as an anti-laundering act, “authorizes the Secretary of the Treasury to require domestic financial institutions and domestic financial agencies to take certain special measures against foreign financial institutions, classes of international transactions, or types of accounts of primary money laundering concern.”
    • In 2005, the Treasury designated another Chinese financial institution, Bank of Delta Asia, as a primary concern for money laundering under Section 311 of the Patriot Act.
    • At the time, Stuart Levey, the Treasury’s Under Secretary for Terrorism and Financial Intelligence, said:

“Bank of Delta Asia has been a willing pawn for the North Korean government to engage in corrupt financial activities through Macau, a region that needs significant improvement in its money laundering controls.”

  • As mentioned, Mnuchin said the new sanctions are intended to increase economic pressure on North Korea, a regime that Mnuchin described as “provocative and inhumane.”
  • Earlier this month, following the death of 22-year-old American student Otto Warmbier, President Donald Trump tweeted:

  • Anthony Ruggiero, a former official in the Treasury’s Office of Terrorist Financing and Financial Crimes, told The New York Times:

“This is the tip of the iceberg. We know there are more Chinese banks that are either wittingly or unwittingly assisting North Korea.”

  • Ruggerio continued, arguing that the sanctions against the Bank of Dandong “will make reputable Western banks ask questions about larger financial institutions in China.”
  • William Newcomb —a former member of the UN sanctions panel on North Korea — told Foreign Policy in 2016:

“You have designated entities that have continued to operate in China. It’s not an accident. China’s security services are good enough to know who is doing what.”

  • No evidence has been presented to support the the claim that China is aware of institutions that have been working with North Korea.
  • Bonnie Glaser, the director of the China Power Project at the Center for Strategic and International Studies, told Vox:

“This is an effort by the Trump administration to get China to apply more pressure. Part of it is reputational — this is a signal that the US is not happy about what China is doing.

But more importantly, it is an effort to begin to address the way that the North Korean regime and its military is getting access to funds, because they are conducting illicit activities thorough these entities in China.”

  • Zhao Tong, a fellow at the nuclear policy program at the Carnegie-Tsinghua Centre for Global Policy in Beijing, told The New York Times:

“I think major state-owned banks and shipping companies have strictly implemented the sanctions, but the smaller ones still seek opportunities to make money wherever they can.”

North Korea’s import partners:

North Korea’s export partners:

  • According to Richard Haass, the Council of Foreign Relations President, the China views its relationship with North Korea with a sense of tense necessity:

“Chinese leaders have no love for Kim Jong-un’s regime or its nuclear weapons, but it dislikes even more the prospect of North Korea’s collapse and the unification of the Korean Peninsula with Seoul as the capital.”

  • When asked if China was disappointed by the announcement of the sanctions, Cui Tiankai, China’s ambassador the the US, responded:

“We are always aware that there are some negative things in the relationship. So as I said earlier, our job is to make sure the positive developments will be overwhelming. And we will continue to do our best to keep the relations on the right track.”

Mark Goldbach contributed to this report.

The Whim News Team

The Whim News Desk

We'd rather be second and accurate than be first and wrong. The Whim News Desk is a dedicated team of researchers and investigators committed to presenting the news without bias. Follow us @TheWhimOnline for daily news coverage without the spin!

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