WASHINGTON—A U.S district judge has ordered three Chinese banks to comply with U.S. investigators’ demands that they hand over records connected to the alleged movement of tens of millions of dollars in violation of international sanctions on North Korea.
In a heavily redacted court opinion released by the U.S. Justice Department on April 30 and dated March 18, Washington’s chief federal district judge Beryl Howell said the subpoenas were for records of dealings between a now-defunct Hong Kong-based front company and a North Korean state-run entity.
The publicly released court document didn’t name the banks, the Hong Kong company, nor the North Korean entity. It stated the front company was established by a North Korean national and a Chinese individual, who also were not named.
It stated the Chinese regime had ownership stakes in all three of the banks, the first two of which have branches in the United States.
The subpoenas were issued in December 2017 as part of a U.S. investigation into violations of sanctions targeting North Korea’s nuclear weapons program, including money laundering and contravention of the U.S. Bank Secrecy Act.
According to the court document, the subpoenas demanded a wide range of bank records dating back to January 2012.
The document highlighted transactions totaling $105.34 million, including $45.78 million that went through a U.S. correspondent account of the first Chinese bank; $1.63 million that went through a correspondent bank account of the second bank, and $57.93 million that went through a U.S. correspondent account of the third.
The judge’s ruling said U.S. Justice Department officials visited China in April 2018 and August 2018 to discuss the failure of the banks to respond to the requests for evidence.
The documents were not produced, and in November 2018, U.S. prosecutors filed a court motion seeking to compel the banks to comply.
Howell ordered the first two banks to produce the records promptly or testify before a grand jury. She ordered the third bank to produce the subpoenaed records by March 28. It was not clear how or if the banks responded.
China is North Korea’s neighbor and main trading partner but has committed to enforcing international sanctions aimed to press Pyongyang to give up its nuclear weapons.
Beijing also has said it opposes unilateral sanctions outside the U.N. framework, and has accused Washington of using “long-arm” jurisdiction in targeting Chinese entities.
In May 2018, news blog The Washington Reporter obtained information that a plan was being formulated by the White House national security adviser John Bolton, Treasury Department, CIA, and State Department to sanction 13 Chinese bank executives for their continued business with North Korea, in violation of United Nations sanction agreements. The U.S. sanctions would freeze their assets and enact travel bans, according to the report.
The list included three executives from China Construction Bank, one of the big four state-run banks in China; three executives from Agricultural Bank of China, another state-run bank; and three executives from the Postal Savings Bank of China, a commercial retail bank, according to The Washington Reporter. The U.S. Department of the Treasury has not confirmed the report.
