U.S. seeks funds tied to North Korea from eight big banks

By Jonathan Stempel
REUTERS

U.S. authorities have tried to seize millions of dollars associated with several companies that deal with North Korea, including the country’s military, from eight large international banks, according to court filings made public on Thursday.

The effort was revealed two days after North Korea tested a long-range missile capable of reaching Alaska, ratcheting up tensions with the United States and adding to worries about North Korea leader Kim Jong Un’s nuclear weapons plans.

Thursday’s filings show that Chief Judge Beryl Howell of the federal court in Washington, D.C. on May 22 granted U.S. prosecutors’ applications for “damming” seizure warrants against Bank of America Corp, Bank of New York Mellon Corp, Citigroup Inc, Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase & Co, Standard Chartered Plc and Wells Fargo & Co.

Prosecutors believe the banks have processed more than $700 million of “prohibited” transactions on behalf of entities tied to North Korea since 2009, including the period after Donald Trump was elected U.S. president, the filings show.

Some of the transactions were processed for Dandong Zhicheng Metallic Material Co and four affiliated “front” companies that prosecutors said tried to evade sanctions through transactions that would benefit North Korean entities, “including the North Korea military and North Korea weapons programs,” according to the filings.

A person answering the telephone at Dandong Zhicheng Metallic Material Co in northeastern China said the company was not aware of the case, and declined to comment.

The company is based in Dandong, a city on the border with North Korea, where the majority of trade between the two countries takes place.

On its Alibaba page, the company says annual revenue exceeds $100 million, and it has 12 years of experience in dealing with anthracite, briquettes and graphite.

In a 2013 online profile for an industry conference in China, Dandong Zhicheng said it imported 1.8 million tonnes of North Korean anthracite coal, worth about $250 million.

Although it did not give a timeframe, that figure makes the company one of the largest suppliers of North Korean coal to major steel producers such as China Minmetels and Hesteel Group.

On February 18, China banned the import of North Korean coal for the rest of the year, and in April ordered trading firms, including Dandong Zhicheng, to return their North Korean coal cargoes, sources said at the time.

Dandong Zhicheng and the alleged front companies were not the named defendants in the court papers made public.

The filings did not say any of the banks knowingly violated sanctions against North Korea.

Asked about the issue, Chinese Foreign Ministry spokesman Geng Shuang reiterated that any infringements of U.N. resolutions on North Korea would be dealt with according to Chinese law, and that China opposed “long-armed jurisdiction”.

In her decision, Howell authorized warrants requiring the eight banks to accept incoming transactions but not allow outgoing transactions involving the five companies for 14 days, and thereafter to seize what they collected.

Howell, an appointee of President Barack Obama, overruled a federal magistrate judge’s May 2 refusal to authorize the warrants, saying prosecutors had probable cause to obtain them.

She cited a government affidavit describing in “80 pages of detail” how the five companies conduct transactions “designed to conceal the true origin and destination” of funds being wired, “consistent with generalized patterns of North Korean money laundering” identified by multiple sources, including two North Korean defectors.

Bank of America, Deutsche Bank, JPMorgan and Wells Fargo declined to comment. The other banks had no immediate comment or did not immediately respond to requests for comment.

(Reporting by Jonathan Stempel in New York; additional reporting by Meng Meng and Ben Blanchard in Beijing and Adam Jourdan in Shanghai; Editing by Cynthia Osterman and Clarence Fernandez)

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http://www.reuters.com/article/usa-northkorea-banks-idUSL1N1JY06A