WASHINGTON (Reuters) – The United States said on Monday it had sanctioned a Chinese industrial machinery and equipment wholesaler, a new step in tightening the financial noose around North Korea’s nuclear program after its fifth nuclear test this month.
The U.S. Treasury said it was sanctioning Dandong Hongxiang Industrial Development Co (DHID) and four of its executives, including the firm’s founder Ma Xiaohong, under U.S. regulations targeting proliferators of weapons of mass destruction.
It accused the firm of acting on behalf of North Korea’s Korea Kwangson Banking Corporation (KKBC), which has been under U.S. and U.N. sanctions for supporting proliferation of weapons of mass destruction.
The U.S. Department of Justice said it had filed criminal charges against the Chinese firm and the executives for using front companies to evade sanctions on North Korea’s nuclear weapons and ballistic missile programs.
The charges accuse the firm and the individuals of conspiring to violate sanctions rules and engaging in international money laundering. The Justice Department said bank accounts associated with the firm and front companies received hundreds of millions of dollars that transited through the United States.
“Today’s action exposes a key illicit network supporting North Korea’s weapons proliferation,” Adam Szubin, the Treasury Department’s acting under secretary for terrorism and financial intelligence, said in a statement.
“DHID and its employees sought to evade U.S. and U.N. sanctions, facilitating access to the U.S. financial system by a designated entity.”
The announcement came after the White House said last week that President Barack Obama and Chinese Premier Li Keqiang agreed in New York on Sept. 20 to step up cooperation in the U.N. Security Council and in law-enforcement channels after North Korea’s latest and largest nuclear test on Sept. 9.
China’s Foreign Ministry said last week the Liaoning Hongxiang Group was under investigation following the provisions of U.N. resolution 2270, which imposed tighter sanctions on North Korea in March.
On Monday, South Korea’s JoongAng Daily newspaper reported that China was investigating a top official of the KKBC at its branch in the Chinese border city of Dandong.
While China is North Korea’s sole major ally, it disapproves of Pyongyang’s nuclear and missile programs and was angered by its latest nuclear test.
Beijing has said it will work within the U.N. to formulate a necessary response, but questions remain as to whether it is willing to agree tough enough steps to force North Korea to abandon nuclear weapons.
Daniel Russel, the U.S. assistant secretary of state for East Asia, said the aims would include preventing North Korea’s abuse of international infrastructure, including banking and shipping, to further its nuclear program.
In announcing Monday’s sanctions, the Justice Department said it was seeking forfeiture of all funds held in 25 bank accounts associated with DHID and its front companies located in various banks in China.
“The charges and forfeiture action announced today allege that defendants in China established and used shell companies around the world, surreptitiously moved money through the United States and violated the sanctions imposed on North Korea in response to, among other things, its nuclear weapons program,” U.S. Assistant Attorney General Leslie Caldwell said.
“The actions reflect our efforts to protect the integrity of the U.S. banking system and hold accountable those who seek to evade U.S. sanctions laws,” he said in a statement.
(Reporting by Timothy Ahmann, Susan Heavey and David Brunnstrom; Editing by Paul Simao)