WASHINGTON (CN) – U.S. prosecutors claim in court a Chinese “trading” company is actually a front for laundering money on behalf of a sanctioned North Korean bank.
In federal complaint filed June 14, U.S. Attorney Channing Phillips says Mingzheng International Trading Ltd. facilitated prohibited dollar transactions through the United States on behalf of North Korea’s Foreign Trade Bank and laundered the proceeds.
Phillips is seeking $1.9 million from Mingzheng, which the Justice Department says is “one of the largest seizures of North Korean funds by the Department of Justice.”
The amount represents transactions Mingzheng, which is based in the Chinese city of Shenyang, carried out in 2015 via wire transfers.
The U.S. Treasury Department placed the Foreign Trade Bank under sanctions after the financial institution was linked to proliferation of weapons of mass destruction while acting as North Korea’s primary foreign exchange bank.
“North Korea has used the state-run Foreign Trade Bank to work with a host of front companies in order to access the U.S. financial system and evade the U.S. sanctions imposed on FTB and its sanctioned affiliates,” the complaint says.
The Justice Department says that in October and November 2015, Mingzheng was the counterparty in 20 illicit wire transfers of U.S dollars.
Through these transactions, just over $1.9 million was routed through a series of U.S. bank accounts, in violation of the International Emergency Economic Powers Act and the federal money laundering statutes.
According to the FBI, Mingzheng has no corporate documents or a website, which is consistent with front companies.
“The front companies engage in this scheme in support of purchases ultimately benefiting sanctioned North Korean end users, including North Korean military and North Korean weapons programs,” the complaint says. “In a 2013 designation of a North Korean financial institution, the Treasury Department noted that this North Korean bank was ‘part of the web of banks, front companies and government agencies that support North Korea’s continued proliferation activities.’”
In a written statement announcing the filing of the lawsuit, the Justice Department cites a United Nations Panel of Experts report that found that “despite strengthened financial sanctions, North Korean networks are adapting by using greater ingenuity in accessing formal banking channels.
“This includes maintaining correspondent bank accounts and representative offices abroad, which are staffed by foreign nationals making use of front companies. These broad interwoven networks allow the North Korean banks to conduct illicit procurement and banking activity,” the statement says.
Representatives of Mingzheng could not be reached for comment.