The Treasury Department says the two worked in the United Arab Emirates to launder money, including through the use of cryptocurrency conversion services.
The U.S. Department of the Treasury
sanctioned two Chinese nationals on Dec. 17 for their participation in a money laundering network that funneled money to North Korea and is believed to be part of the regime’s efforts to finance weapons of mass destruction.
According to the Treasury Department, Lu Huaying and Zhang Jian, both Chinese nationals based in the United Arab Emirates, worked in the United Arab Emirates to launder money, including through the use of cryptocurrency conversion services.
The two were part of a network run by Sim Hyon Sop, a China-based banking representative already sanctioned by the United States for money laundering for the North Korean regime.
The United States has determined that the North Korean regime finances its development of weapons of mass destruction through schemes such as this one.
“As the DPRK [Democratic People’s Republic of Korea] continues to use complex criminal schemes to fund its WMD and ballistic missile programs—including through the exploitation of digital assets—Treasury remains focused on disrupting the networks that facilitate this flow of funds to the regime,”
stated Treasury Department Acting Under Secretary for Terrorism and Financial Intelligence Bradley T. Smith.
The sanctions were imposed in cooperation with United Arab Emirates authorities.
U.S. officials have expressed increasing concern that North Korea’s partners have extended West, with cooperation from Russia, in exchange for soldiers in the Russia–Ukraine war.
The North Korean regime uses agents and proxies internationally to finance its military development, with illicit schemes including fraudulent IT work, digital assets heists, and money laundering, according to the Treasury Department.
The department stated that Sim is one such example, setting up shell companies and managing bank accounts to move illicit funds to North Korea.
According to the department, Lu has cashed out cryptocurrency from North Korean projects into fiat cash since at least 2022, laundering several million dollars. Zhang facilitated the exchange of fiat currency and acted as a courier in late 2022 and early 2023.
In November, the Pentagon confirmed the presence of North Korean soldiers in Russia, and on Dec. 17
confirmed that the troops had already engaged in combat.
The Treasury Department has already
sanctioned several North Korean and Russian entities over their military collaboration, including targeting North Korean banks financing military activity.
On Dec. 4, Russian state media reported that Moscow and Pyongyang had signed an official strategic partnership
treaty, which Russian President Vladimir Putin described as “groundbreaking.”
U.S. and international officials have expressed concern over the increased partnership between two nations that have destabilizing intentions.
In November, NATO Secretary-General Mark Rutte
said North Korea, China, Iran, and Russia are working together in a way that poses a threat to Europe, NATO, and the United States. Officials have noted that the nations are cooperating to fill military gaps for their partners.
For example, Russia is likely providing North Korea with technological innovations in return for soldiers, Rutte said.
In another case, China is supplying Russia with weapons and equipment, and Russia is supporting China to develop submarines, aeronautical design, stealth technology, and missile capabilities, according to U.S. Deputy Secretary of State Kurt Campbell. 
