Twenty-eight North Korean nationals face a slew of charges related to bank fraud, money laundering and criminal enterprises, in what appears to be the first case brought against members of the North Korean financial system.
The 50-page indictment, which was signed in February and unsealed Thursday morning in Washington, DC, federal court, details a web of front companies and “cover branches” of a state-sponsored bank that were stood up in foreign countries, including China and Russia to help skirt international restricts on the regime’s ability to spend globally. Five Chinese nationals also were charged.
The scheme, dating back to 2013, was allegedly built amid several years of escalating sanctions placed by the US and other world powers on North Korea that aimed to deter the country’s growing arms capacity and have crippled their economy. The bank at the center of the Justice Department’s allegations, the Foreign Trade Bank of the Democratic People’s Republic of Korea State, is the country’s main financial institution, and in 2013, was designated as a blocked entity by the US Treasury Department.
The indictment says the Pyongyang-based bank dispatched the defendants to countries including Russia, China, Thailand, Libya, Austria and Kuwait, where they took up residence and operated the new, secret branches, as well as more than 250 front companies.
From there, prosecutors say, they worked with “third-party financial facilitators to procure commodities and facilitate payments in US dollars on behalf of parties in North Korea.”
“The defendants and other co-conspirators concealed (Foreign Trade Bank) involvement in US dollar payments from Correspondent Banks in order to trick the banks into processing payments that the banks otherwise would not have done,” the indictment says.