WASHINGTON D.C. -- The Justice Department on Monday unsealed criminal charges against a China-based company and four of its executives for conspiring to evade U.S. economic sanctions that target
Also Monday, the Treasury Department blacklisted the same firm, Dandong Hongxiang Industrial Development Company, and the individuals. The department alleged in a statement that Hongxiang has provided financial services to a North Korean firm that is already sanctioned, Korea Kwangson Banking Corporation.
International concern over Pyongyang’s nuclear and missile programs is deepening following its fifth and largest atomic test explosion this month, its second this year. That’s fueling worries that North Korea is moving closer to its goal of a nuclear-armed missile that could one day strike the U.S. mainland.
Last week, Chinese authorities said they were investigating Hongxiang, based in Dandong, a northeastern city on the North Korean border. Police and China’s foreign ministry said the company was suspected of unspecified “serious economic crimes.” That was an unusually explicit announcement for Beijing, whose dealings with the North are shrouded in secrecy, in a sign of growing frustration with its traditional ally.
China signed on in March to the stiffest U.N. sanctions yet that limit trade with the North. It has tightened controls on cross-border flows of goods, but that hasn’t allayed suspicions that North Korea can still conduct illicit business through China. U.N. Security Council resolutions prohibit nuclear weapons development by the North and all ballistic missile activity.
Monday’s action by the Treasury Department blocks any property Hongxiang and the executives - Ma Xiaohong, Zhou Jianshu, Hong Jinhua, and Luo Chuanxu -- may have in the U.S., and prohibits Americans from doing business with them.
“Today’s action exposes a key illicit network supporting North Korea’s weapons proliferation,” said Adam J. Szubin, acting Treasury undersecretary for terrorism and financial intelligence. “Treasury will take forceful action to pressure North Korea’s proliferation network and to protect the U.S. financial system from abuse,” he said.
State Department spokesman Mark Toner said it was necessary to take these actions to maintain the integrity of sanctions imposed by the United Nations and the United States.
“We are going to continue obviously to work with China and urge them to use their leverage, and they do have leverage over North Korea as their largest trading partner, to fully implement” all the current U.N. sanctions, Toner said.
The four Chinese nationals are charged with conspiring to commit money laundering and to violate the International Emergency Economic Powers Act. The Justice Department also filed a civil forfeiture action to seize funds from Chinese bank accounts that authorities say belong to Hongxiang and its front companies.
It wasn’t immediately clear whether any of the defendants have lawyers.
A South Korean think tank, the Asan Institute for Policy Studies, said in a report last month that Hongxiang supplied aluminum oxide and other materials that can be used in processing nuclear bomb fuel. Hongxiang is one of the biggest traders with North Korea and carried out imports and exports worth a total of $532 million in 2011-15, said the report, co-authored by the U.S.-based research group, C4ADS.
A South Korean newspaper reported Monday that Chinese authorities are also investigating Korea Kwangson Banking Corp. The bank was ordered closed under the U.N. sanctions imposed in March but kept operating in secret in the border city of Dandong, Joongang Daily reported, citing unidentified sources.
China’s Foreign Ministry and its bank regulator did not respond to requests for comment.