U.S. Sanctions Chinese, Russian Firms for Aiding North Korea--Update

By Ian Talley and Aruna Viswanatha Features Dow Jones Newswires

The U.S. Treasury named 10 Chinese and Russian firms and six related individuals to its North Korea sanctions list Tuesday for allegedly aiding Pyongyang's weapons program.

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The actions include targeting major coal exporters that North Korea leader Kim Jong Un allegedly relies on to help fund his nuclear weapons and ballistic missile programs. It follows an escalation in U.S. and United Nations sanctions in response to a series of weapons test and threats by the regime to destroy America.

"Treasury will continue to increase pressure on North Korea by targeting those who support the advancement of nuclear and ballistic missile programs, and isolating them from the American financial system," Treasury Secretary Steven Mnuchin said in a statement. "We are taking actions consistent with U.N. sanctions to show that there are consequences for defying sanctions and providing support to North Korea, and to deter this activity in the future."

In its designations, the U.S. Treasury's Office of Foreign Assets Control said Dandong Zhicheng Metallic Materials Co., Ltd., JinHou International Holding Co., Ltd., and Dandong Tianfu Trade Co., Ltd., facilitated North Korea's weapons program by collectively buying roughly $500 million of coal between 2013 and 2016. Pyongyang used much of the revenue for its nuclear or ballistic missile programs, the U.S. said. Treasury sanctioned Chi Yupeng, a Chinese national who is listed as the majority owner of Dandong Zhicheng, a company previously accused by federal prosecutors of being involved in a money-laundering ring that helps finance Pyongyang.

OFAC also targeted three Russian individuals and two Singapore-based companies, Transatlantic Partners Pte. Ltd. and Velmur Management Pte. Ltd., for selling petroleum products to North Korea. Others sanctioned include China-based Dandong Rich Earth Trading Co., Ltd., Russia-based Gefest-M LLC, China-based Mingzheng International Trading Limited, a firm the U.S. alleges acts as a front company for previously designated North Korea Foreign Trade Bank, the country's primary foreign-exchange firm.

Representatives of the firms could not immediately be located for comment.

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Write to Ian Talley at ian.talley@wsj.com and Aruna Viswanatha at Aruna.Viswanatha@wsj.com

Corrections & Amplifications

This article was corrected at 2:08 p.m. ET because an earlier version incorrectly referenced $500 billion, instead of $500 million, of coal imports between 2013 and 2016 in the fourth paragraph.

The U.S. Treasury said the three Chinese coal companies it sanctioned on Tuesday purchased roughly $500 million of coal from North Korea between 2013 and 2016. "U.S. Sanctions Chinese, Russian Firms for Aiding North Korea," at 11:33 a.m. ET, incorrectly reported $500 billion of coal imports. (Aug. 22)

The U.S., seeking to clamp down on financing critical to North Korea's nuclear-weapons program, on Tuesday targeted a host of Chinese and Russian firms and related individuals it accuses of aiding Pyongyang.

The U.S. Treasury's Office of Foreign Assets Control added 10 firms, including Chinese coal importers and Russian fuel exporters, to its North Korea sanctions list. Federal prosecutors also filed a pair of cases in federal court in Washington seeking tens of millions of dollars in penalties in addition to seizing $11 million in funds frozen at U.S. banks.

The cases target Chinese firms that allegedly had imported $700 million in North Korean coal since 2013 and a Russian firm allegedly helping Pyongyang procure fuel.

"Treasury will continue to increase pressure on North Korea by targeting those who support the advancement of nuclear and ballistic missile programs, and isolating them from the American financial system," Treasury Secretary Steven Mnuchin said in a statement. "We are taking actions consistent with U.N. sanctions to show that there are consequences for defying sanctions and providing support to North Korea, and to deter this activity in the future."

The United Nations earlier this month banned coal exports from North Korea, and while the U.N.'s panel of experts complain member compliance has so far been spotty, China agreed to enforce the latest measures amid growing international pressure.

"These complaints show our determination to stop North Korean sanctioned banks and their foreign financial facilitators from aiding North Korea in illegally accessing the United States financial system to obtain goods and services in the global market place," said Channing Phillips, the U.S. Attorney in Washington, D.C., whose office brought the cases.

North Korean officials didn't immediately appear to comment on the U.S. sanctions. Earlier Tuesday, Pyongyang attacked President Donald Trump in the state media, branding his approach to the crisis on the Korean Peninsula "unimaginably reckless."

Anthony Ruggiero, a former senior U.S. Treasury official now at the Foundation for the Defense of Democracies, said the latest sanctions move was a strong step forward in the administration's broader pressure campaign. "It's definitely a message to Beijing and Moscow they can't continue to facilitate Pyongyang."

Analysts say efforts by the U.S. Attorney's office, which has been working on similar cases focusing on North Korea's financial conduits for more than a year, are proving a potent diplomatic weapon in the White House's broader sanctions offensive.

Sanctions not only make it illegal for companies operating in the U.S. to do business with designated entities, but are meant to freeze those firms and individuals out of global markets. Banks, for example, would no longer be able to clear any wire transfers through the U.S., the world's most important financial market, for any of those designated companies. And even though the asset seizures may seem relatively small in the context of North Korea's total cross-border trade and finance, the forfeiture actions are a signal to other companies of the risks of doing business for Pyongyang.

Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com and Ian Talley at ian.talley@wsj.com

(END) Dow Jones Newswires

August 22, 2017 14:52 ET (18:52 GMT)