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Treasury Sanctions North Korea and China while Russia Escapes

Treasury Sanctions North Korea and China while Russia Escapes


24th January 2018 - FDD Policy Brief

Today, the Treasury Department issued sanctions against 15 North Korean overseas representatives, two Chinese firms facilitating sanctions evasion, and five North Korean shipping companies. These actions come during a visit to Beijing and Hong Kong by Treasury’s chief sanctions enforcer, Under Secretary Sigal Mandelker, a signal the Trump administration is pushing ahead with its “maximum pressure” policy even during the inter-Korea talks.

The individuals that Treasury sanctioned include 10 overseas representatives located in China, Russia, and Abkhazia, a separatist region of Georgia under Moscow’s control. All are representatives of the UN- and U.S.-designated Korea Ryonbong General Corporation, which according to Treasury, works on acquisition for North Korea’s defense industries, probably including support to Pyongyang’s chemical weapons program. The seven representatives located in China provide direct support to North Korean proliferators and the Kim regime.

Treasury also designated five North Korean overseas financial representatives, four of them located in China. Two representatives hold accounts at Chinese banks and one “is affiliated with several Chinese bank accounts and companies.”

Treasury Secretary Steven Mnuchin warned Chinese banks in late September 2017 that “sanctions will be forward looking, and applied to behavior that occurs following the date of the Executive Order [13810]. Foreign financial institutions are now on notice that, going forward, they can choose to do business with the United States or with North Korea, but not both.” While targeting North Korean commercial and financial representatives is an important step, Chinese banks escaped punishment yet again. If the Trump administration is unwilling to target Chinese banks because it fears retaliation, its efforts will fall short of “maximum pressure.”

The two Chinese companies hit with sanctions on Wednesday were Beijing Chenxing Trading Co. Ltd. and Dandong Jinxiang Trade Co. Ltd., which were engaged in trade with North Korea as far back as 2013. The companies traded with two North Korean proliferation entities – the aforementioned Ryonbong and the UN- and U.S.-designated Tangun Trading Corporation. Today’s action is significant as it signals to Beijing that it must stop Chinese firms from facilitating Pyongyang’s sanctions evasion.

Finally, five North Korean shipping companies and six vessels were sanctioned today, including vessels that delivered North Korean coal to Russia, which violated UN sanctions.

Russian individuals and companies escaped today’s action, which is surprising given President Trump’s comments last week that Moscow has stepped in to help North Korea evade sanctions in situations where China no longer wishes to do so. Thus, future sanctions should target Russian banks working with North Korean commercial and financial representatives and other Russia-North Korea activities.

The Trump administration’s latest actions increase the pressure on Pyongyang as it tries to sabotage the “maximum pressure” policy during the inter-Korea talks. But the administration must escalate these sanctions to the next level, including targeting Chinese banks, in order to have a true “maximum pressure” policy.

Anthony Ruggiero, a senior fellow at the Foundation for the Defense of Democracies, was the nonproliferation advisor to the U.S. delegation to the 2005 rounds of the Six-Party Talks and spent more than 17 years in the U.S. government. Follow him on Twitter @_ARuggiero.

Follow FDD on Twitter @FDD. FDD is a Washington-based, nonpartisan research institute focusing on national security and foreign policy.

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