North Korea Launders Over $170 Million Through U.S. Banks

From 2008 to 2016, through both the Obama and Trump administrations, one thing has stayed constant, the tightening of sanctions on North Korea. North Korea, since the early 1980s, has had a “secret” nuclear arms program that has consistently threatened to disrupt the relative peace throughout the world. From apparent nuclear warhead tests in the capital, Pyongyang, to launching intercontinental ballistic missiles (ICBMs) towards Japan in 2017, North Korea has been a constant threat to peace in east Asia. In reaction to these acts, many countries, such as the US, have put steep economic sanctions on them as a means to discourage the nuclear program. This in turn, has led to North Korea being an extremely poor country, famine and disease still rife in much of the country. 

Due to the crippling weight of this economic depression, North Korea has often used methods to try and avoid US sanctions, many of them involving their neighbor to the North, China.

There has been a recent leak of secret documents from an investigation into suspicious bank activity reports, by the Treasury Department's Financial Crimes Enforcement Network, known as FinCEN. These documents report that the North Korean government moved $174 million dollars through US banks such as JP Morgan Chase and the Bank of New York Mellon. Though FinCEN has denounced and condemned the leaking of the documents, they have not commented on the contents of the reports.

In one of the reports, a CEO of a company in Dandong, China, a city right on the North Korean border, laundered money for the North Koreans through her business and made almost no attempt to hide it. The US indicted the CEO and other executives with charges of money laundering and helping North Korea evade international sanctions; however, China has not extradited them, so the charges are still pending. 

The banks marked some of the payments as “suspicious” after processing, as most of the money was going to seemingly shell companies in Cambodia, China, and Singapore. One of the transactions included a Singapore shipping concern called United Green Pte. Ltd. United Green Pte. Ltd. has a director by the name of Leonard Lai, who was reprimanded by the US in the past for a different company he had, which had connections in apparently trying to move weapons from Cuba to North Korea. 

One key thing to note is that although the banks marked the transactions as “suspicious” they still processed the payments and received their cuts. The only reason these transactions were caught was because banks were prompted to comb through its records as a result of a "government inquiry." The banks allowed many of these payments to companies who had been open with their dealings with North Korea. One executive was even interviewed by the Associated Press in a report detailing their trade with North Korea in 2014 and is quoted by the Stimson Center as admitting to North Korean trade as far back as 2010. 

JP Morgan Chase, one of the two main banks involved, was quoted as moving at least $89 million to these shell companies. Chase, ironically, was one of the four banks bailed out by the US taxpayers during the 2008 financial crisis, with taxpayers paying over $25 billion to keep the bank afloat. Even though previously listing these shell companies as “suspicious” and with possible ties to North Korea, they still carried out at least 14 more wire transfers. It is unknown why they allowed these payments to carry on, but the bank has said it has invested in efforts to bolster anti-money laundering measures.

China has refused to comment on these reports or aid US officials in bringing those indicted to justice.

As a response, in 2017, the United States put North Korea on the list of State Sponsors of Terrorism.