The U.S. government has attempted to seize funds from accounts within eight major financial institutions linked to North Korea and its military, a Memorandum and Order (MO) document published on Thursday shows.
The document, published by the District Court for the District of Columbia, reveals that the U.S. government filed applications for “damming” seizure warrants for the eight banks, which it claims to have processed $700 million dollars on behalf of entities with links to North Korea over the last eight years.
The documents do not say the banks did so knowingly.
According to the MO, the U.S. Government places a Chinese company, Dandong Zhicheng Metallic Material Co, and a network of front companies it identifies as the “Chi Yu Peng Network”, at the center of the case. The network, it says, is named after the majority shareholder of Dandong Zhicheng.
The network, it is alleged, was involved in purchasing North Korean coal with U.S. currency and did so while employing “obfuscation tactics”.
“The front companies engage in these transactions in support of purchases ultimately benefiting sanctioned North Korean end users, including the North Korea military and North Korea weapons programs,” the U.S. Government affidavit states, according to the MO.
While the document did not specifically identify the institutions involved, both Reuters and Bloomberg report that they are 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.
“These banks individually have each processed more than $20 million for the Chi Yu Peng Network” and “collectively processed more than $700 million from January 2009 to the present,” the U.S. Government affidavit states, according to the MO.
It adds that the banks “have collectively processed more than $52 million in the past seven months.”
The MO also adds that the affidavit has detailed numerous transactions between the network and “other entities known to conduct business with or on behalf of North Korea.”
It also reveals that the U.S. Government enlisted the testimony of two North Korean defectors in its application for the “damming” warrants.
The testimony pertained, it says, to North Korea’s use of revenue made from coal exports in its military programs and also general patterns of North Korean money laundering activities.
According to the document, the U.S. Government made the “damming” seizure application in April but initially had the request denied by a Magistrate Judge on May 2.
The document published on Friday but dated May 22, confirms the reversal of that decision – on appeal – and the granting of the damming seizures, which allow money to enter the accounts in question, but not to exit them, for a period of 14 days.
Edited by Oliver Hotham
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Featured Image: Dollars by KJGarbutt on 2011-11-20 20:54:33