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$2.5 Billion Money Laundering Scheme Meant to Circumvent Sanctions

The U.S. Department of Justice (DoJ) recently released an indictment  against 32 bankers, located in China and North Korea. Covert branches of the North Korea owned Foreign Trade Bank (FTB) attempted to circumvent sanctions and access the United States financial system. Seven years ago, OFAC placed FTB on the Specially Designated Nationals and Blocked Persons list. Three years after that, FINcen declared that the entire financial sector of North Korea was a money laundering risk. FINcen “cut all North Korean financial institutions—and entities acting on their behalf—off from any trade in U.S. dollar transactions via correspondent banking.” All of these measures were meant to impede North Korea’s military plans. It seems that these bankers never gave up unfortunately.

In order to circumvent sanctions, FTB allegedly opened up branches in multiple countries.  These covert branches then used international financial institutions that regularly maintained accounts in the United States to conduct transactions with US dollars. The financial institutions likely had no idea the transactions were linked to FTB, as the the bankers are also accused of falsifying business documents. Over 250 front companies were also created over the years to hide any North Korean involvement. This international multi-year, multi-billion dollar scheme was complex.

The defendants are not within United States jurisdiction or custody, but the United States seems committed to target foreign nationals involved in financial crime. Earlier this year, the United States government charged two Chinese nationals claiming that the defendants helped North Korea launder almost $100 million worth of stolen digital assets. 


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