The US Justice Department has accused 28 North Koreans and 5 Chinese citizens of an elaborate money laundering scheme that washed over $2.5 billion in assets through North Korea’s state owned foreign exchange bank to fund the government’s nuclear weapons program.
The indictment identifies the defendants as employees, four executives and two former presidents of the bank.
Starting in 2013, the accused are alleged to have set up front companies for accessing US dollar transactions through which they began funneling money back to the North Korean foreign exchange bank. They did it through a network of secret branches in Thailand, Libya, Austria, Russia, Kuwait and China. “The defendants and other co-conspirators concealed Foreign Trade Bank’s involvement in U.S. dollar payments from correspondent banks in order to trick the banks into processing payments that the banks otherwise would not have done,” said the indictment.
Michael Sherwin, the acting U.S. attorney in Washington, commented, “Through this indictment, the United States has signaled 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 W.M.D. and ballistic missile programs.”
The US has often tried to prevent rogue states from obtaining nuclear weapons through sanctions. One way of circumventing the economic damage of sanctions is for a rogue state to manipulate the international banking system. Given the failure of last year’s nuclear weapons negotiations between President Trump and Kim Jong Un, the task is increasingly urgent.