North Korea has laundered money through US banks in an elaborate, years-long plot to evade international sanctions, according to a new report citing a leak of confidential documents from leading financial institutions.
The documents revealed that North Korea-linked organizations allegedly transferred more than $174.8 million illegally using shell companies and assistance from Chinese companies through US banks, including JPMorgan Chase and the Bank of New York Mellon, NBC News reported.
During that period, Washington had ramped up its sanctions against the Hermit Kingdom as Pyongyang pursued its nuclear and missile programs with vigor, according to the network.
Wire transfers from companies with shady ownership were made only days or hours apart in some instances, with amounts in round numbers and with no clear commercial reasons, according to the documents cited by NBC News.
Anti-money laundering expert Graham Barrow told the news outlet that those types of transactions are “red flags” that suggest efforts to hide the origins of illegal money.
Eric Lorber, a former Treasury Department official who worked on sanctions against the rogue regime during the Trump administration, told NBC News that “taken as a whole, you have what really, frankly, looks like a concerted attack by the North Koreans to access the US financial system over an extended period of time through multiple different avenues in ways that were fairly sophisticated.”
The trove of documents are part of the so-called “FinCEN Files” uncovered in the leak of suspicious activity reports, or SARs, filed with the Treasury’s Financial Crimes Enforcement Network, according to NBC News.
BuzzFeed News obtained the files in 2019 and shared them with the International Consortium of Investigative Journalists and other media outlets around the world.
FinCEN has announced plans for a major overhaul of the nation’s anti-money laundering rules as NBC and other media outlets prepared to report about the leaked documents.
The highly confidential SARs are filed by financial institutions to alert authorities about potentially illegal transactions, but they do not necessarily represent evidence of criminality, according to the report.
FinCEN condemned the leak of the materials, declined to comment on their content and said it had referred the matter to the Justice Department and the Treasury’s inspector general.
“As FinCEN has stated previously, the unauthorized disclosure of SARs is a crime that can impact the national security of the United States, compromise law enforcement investigations, and threaten the safety and security of the institutions and individuals who file such reports,” the department told NBC News.
“The documents you have in front of you, I think, help explain why the North Koreans have been so successful at sanction evasion,” Hugh Griffiths, former head of a UN Panel of Experts who tracked Pyongyang’s efforts to dodge sanctions, told the network.
“What you have is gold dust, because so few journalists, or investigators generally, get access to banking internal compliance documentation,” he added.
In one report cited by NBC News, JPMorgan informed the Treasury Department that the bank had overseen $89.2 million in transactions over a two-year period that benefited 11 companies believed to have ties to North Korea.
JPMorgan said it had previously flagged the companies as suspicious, according to the report, which said it was unclear why the bank approved the transactions given its stated suspicions.
The bank told NBC News it was prohibited by law from commenting on specific SARs, but said it has admitted to shortcomings and has invested in efforts to expand anti-money laundering, or AML, measures.
“We acknowledged in that 2014 report that our existing AML controls needed improvement, and have since devoted considerable resources to comply with the laws and regulations governing anti-money laundering, terrorist financing and economic sanctions,” a JPMorgan rep told the network.
“Today, thousands of employees and hundreds of millions of dollars are devoted to helping support law enforcement and national security efforts,” said the company,” the spokesperson added.
In another case, bank documents reveal how the head of a company in the Chinese city of Dandong along the North Korea border apparently laundered money.
The US has indicted the woman, Ma Xiaohong, her company, Dandong Hongxiang Industrial Development Corp., and others at the company on money-laundering charges and helping Pyongyang evade sanctions – though no one has yet been extradited, NBC News reported.
Federal prosecutors declined to comment to the outlet about the pending charges from last year and 2016.
Ma and her company allegedly routed money to North Korea through various countries by using shell companies to move tens of millions of dollars through banks in New York, according to the SAR filed by the Bank of New York Mellon, which reported that it handled suspicious transfers of $85.6 million.
The bank wrote that it was prompted to search through its records because of a “government inquiry,” according to NBC News, which reported that the bank permitted dozens of transfers despite media accounts that showed that Ma had talked openly about conducting business with Pyongyang.
The Bank of New York Mellon also said it could not comment but that it “takes its role in protecting the integrity of the global financial system seriously” and fully complies with applicable laws and regulations, according to the report.
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