U.S. Sanctions Russian Bank For Facilitating North Korea Transactions

by Ike Obudulu Posted on August 5th, 2018

Washington D.C., USA : The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions against Russia’s Agrosoyuz Commercial Bank for knowingly facilitating a significant transaction on behalf of Han Jang Su, a North Korean designated for weapons of mass destruction-related activities – on Friday. Han is the Moscow-based chief representative of Foreign Trade Bank, North Korea’s primary foreign exchange bank.

The action targets Agrosoyuz Commercial Bank for knowingly facilitating a significant transaction on behalf of an individual designated for weapons of mass destruction-related activities in connection with North Korea.  OFAC also targeted one individual and two entities for facilitating North Korean illicit financial activity.  This action reinforces the United States’ ongoing commitments to upholding the decisions of the UN Security Council (UNSC).

“The United States will continue to enforce UN and U.S. sanctions and shut down illicit revenue streams to North Korea.  Our sanctions will remain in place until we have achieved the final, fully-verified denuclearization of North Korea,” said Treasury Secretary Steven Mnuchin.

As a result of today’s action, any property or interests in property of the designated persons in the possession or control of U.S. persons or within (or transiting) the United States is blocked, and U.S. persons generally are prohibited from dealing with any of the designated persons.

 Financial And Foreign Trade Bank-affiliated Targets

OFAC, pursuant to Section 4 of Executive Order (E.O.) 13810, today sanctioned Russian-registered Agrosoyuz Commercial Bank (Agrosoyuz) for knowingly conducting or facilitating a significant transaction on behalf of Han Jang Su, the Moscow-based chief representative of Foreign Trade Bank (FTB), North Korea’s primary foreign exchange bank.  Pursuant to E.O. 13687, OFAC today designated Ri Jong Won, the Moscow-based deputy representative of FTB.  Both Han Jang Su and FTB were already designated by the United States under E.O. 13382 and by the UNSC Committee established pursuant to Resolution 1718 (2006).  OFAC designated Han Jang Su on March 31, 2017, for acting for or on behalf of FTB, an entity designated pursuant to E.O.s 13382 and 13722.

On August 5, 2017, Han Jang Su was designated at the UN.  According to UNSC Resolution 2321 (2016), if a Member State determines that an individual is working on behalf of or at the direction of a DPRK bank or financial institution, Member States shall expel the individual from their territories.  Therefore, Han Jang Su and Ri Jong Won should be expelled from Russia.

Nevertheless, continuing into 2018, Russian bank Agrosoyuz continued to provide services to Han Jang Su, in violation of Russia’s UN obligations.  Agrosoyuz also knowingly opened multiple bank accounts for at least three FTB front companies.  Ri Jong Won also held Russian bank accounts in his name at least as of late 2016.

In addition to Agrosoyuz and Ri Jong Won, OFAC designated two associated FTB front companies — Dandong Zhongsheng Industry & Trade Co., Ltd. (Zhongsheng), pursuant to E.O. 13382, and Korea Ungum Corporation (Ungum), pursuant to E.O. 13722.

Agrosoyuz and North Korea have a long relationship:  from 2009 to 2013, Agrosoyuz processed millions of dollars in transactions through accounts owned by North Korean commercial banks.  In mid-2013, Agrosoyuz transferred more than $5.5 million on behalf of the now UN- and U.S.-designated Korea United Development Bank (KUDB).  In 2014, Agrosoyuz and other Russian banks arranged to move KUDB funds.  As of mid-2016, Agrosoyuz had opened new accounts for a North Korean front company, and it processed over $8 million and held the equivalent of over $3 million on behalf of KUDB.  In 2017, Han Jang Su opened bank accounts for Zhongsheng at Agrosoyuz.  In addition, as of early 2018, Agrosoyuz allowed a North Korean front company to invest almost $2.5 million in Russian rubles into an account with Agrosoyuz.

Today’s action, taken pursuant to Section 4 of E.O. 13810 of September 20, 2017, blocks all property and interests in property of Agrosoyuz that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any U.S. person, and provides that such property and interests in property may not be transferred, paid, exported, withdrawn, or otherwise dealt in.

The sanctions come as Secretary of State Mike Pompeo urges Southeast Asian countries to continue pressuring Pyongyang until North Korea gives up its nuclear weapons.

But some analysts have voiced concern that the country may not have real intentions to disarm. “Commercial satellite imagery from June 21 indicates that improvements to the infrastructure at North Korea’s Yongbyon Nuclear Scientific Research Center are continuing at a rapid pace,” monitoring site 38 North said in June, days after President Trump met with North Korean leader Kim Jong Un.

Intelligence agencies detected activity at a large factory on the outskirts of the capital where North Korea’s first intercontinental ballistic missiles, capable of striking the United States, were produced.

U.S. officials have said that North Korea increased its fuel for nuclear weapons at several secret sites.

It’s unclear when Russia started supporting North Korea’s nuclear and ballistic missile programs and to what extent. A study released in 2017 by the International Institute for Strategic Studies said North Korea’s success with intercontinental ballistic missiles was made possible by black market purchases. Researcher Michael Elleman sid that it seemed that “criminal gangs were able to access something and export it from either Ukraine or Russia.”

There were reports on Thursday that Russia is letting thousands of North Korean laborers into the country and giving them new permits to work.

Congress is urging the Trump administration to tighten sanctions on Russia because of its inference in U.S. elections, activity in Syria and annexation of Crimea

On Thursday, Sen. Cory Gardner said he was putting forth a bipartisan sanctions package with Sens. Lindsey Graham, Ben Cardin, John McCain, Jeanne Shaheen and Bob Menendez. “It is one of the most hard-hitting pieces of legislation ever introduced against the Russian Federation,” Gardner said.

He added that the measure “includes my language requiring the State Department to determine whether Russia merits the designation of a State Sponsor of Terror, joining Kremlin allies Iran and Syria.”

The Treasury Department also imposed sanctions on a China-based trading company, Dandong Zhongsheng Industry & Trade Co. Ltd., and Korea Ungum Corporation.

Author

Ike Obudulu

Ike Obudulu

Versatile Certified Fraud Examiner, Chartered Accountant, Certified Internal Auditor with an MBA in Finance And Investments who has both worked for and consulted with some of the world's largest companies on main street and wall street in over 20 countries, Ike brings his extensive reporting and investigations experience to bear on his role as Chief Editor.
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