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US charges Chinese firm with breaching North Korea sanctions through shell companies

The US Department of Justice (DoJ) has charged four Chinese nationals and a trading company based in China with conspiring to evade US sanctions on North Korea by using shell companies and laundering the profits in the US.28 Sep 2016

According to the charge Ma Xiaohong and her company Dandong Hongxiang Industrial Development (DHID) created or acquired numerous front companies in 2009 and used these to conduct US dollar transactions that were designed to evade US sanctions, the DoJ said.

From August 2009 until September 2015 these companies were used to disguise the fact that DHID was working with North Korea-based Korea Kwangson Banking Corporation (KKBC), the DoJ said.

KKBC has been designed a Specially Designated National (SDN) by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC). SDNs are individuals and companies that are owned or controlled by targeted countries, and US citizens and permanent residents are generally prohibited from dealing with them.

As a result of the alleged scheme, KKBC was able to cause financial transactions in US dollars through US banks without being detected by the banks, the DoJ said.

Ma, along with three executives of her company, has been charged with conspiracy to violate US sanctions law and to launder monetary instruments, the DoJ said.

The DoJ has filed a civil forfeiture action for all funds contained in 25 Chinese bank accounts that allegedly belong to DHID and requested that the federal court in the District of New Jersey issue a restraining order for all of the funds named in the civil forfeiture action, based upon the allegation that the funds represent property involved in money laundering, which makes them forfeitable to the United States, it said.

The United Nations Security Council called this month for EU member States to implement the sanctions that have been imposed on North Korea, and to report on concrete measures that they have taken to do so, in a statement condemning the ballistic missile launched by the country.