Financial Crime World

North Korea’s Financial Web Exposed: Justice Department Unveils Massive Money Laundering Scheme

The United States Justice Department has unsealed criminal charges against over two dozen North Korean bankers, accusing them of masterminding an international money laundering operation that defied US sanctions.

The Scheme

The scheme allegedly funneled a staggering $2.5 billion through a network of front companies and secret branches in foreign countries, including China and Russia. The indictment details how the Pyongyang-based Foreign Trade Bank of the Democratic People’s Republic of Korea State dispatched its officials to set up operations in various countries, where they established over 250 shell companies.

How it Worked

  • Officials from the Foreign Trade Bank worked with third-party financial facilitators to procure commodities and make payments.
  • Payments were made in US dollars on behalf of parties in North Korea, concealing the involvement of the Foreign Trade Bank.
  • The defendants allegedly used front companies and secret branches in countries such as Russia, China, Thailand, Libya, Austria, and Kuwait to circumvent international restrictions.

Background

The scheme was orchestrated amid years of escalating sanctions imposed by the US and other world powers to curb North Korea’s growing arms capacity and crippled economy. The Foreign Trade Bank is North Korea’s main financial institution and has been designated as a blocked entity by the US Treasury Department since 2013.

Consequences

  • The indictment marks a significant blow to the reclusive regime’s financial system.
  • It could have far-reaching implications for global efforts to combat money laundering and sanctions evasion.
  • The move is seen as a major step forward in the US government’s efforts to hold North Korea accountable for its financial misdeeds.

Quotes

The indictment says that the defendants and 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.”

This could pave the way for further legal action against members of the regime, holding them accountable for their financial misdeeds.