Chinese and Russian Entities Sanctioned for Assisting North Korea

August 22, 2017

On August 22, the U.S. Treasury Department sanctioned 10 new entities and 6 individuals found to be assisting North Korea with its development of nuclear weapons and ballistic missiles.  The entities are primarily Chinese and Russian-based individuals and/or companies that help North Korea to evade United Nations and U.S. sanctions and facilitate North Korea’s export of coal and minerals that generate money for weapons development. Persons and entities who have provided illegal financial services to North Korea and assisted in the exploitation of North Korean workers who build statutes overseas to earn foreign currency were also designated.

• This is the first major action by the Treasury Department against a Chinese entity since the sanctioning of a Chinese financial institution and two Chinese individuals on June 29, 2017.
• The Trump administration is likely signaling that it will take unilateral action to close down the channels used to procure illegal materials or launder money for North Korea’s WMD programs in third party countries if serious action is not taken by those countries themselves.
• This action follows two North Korean tests in July of a new intercontinental ballistic missile, the Hwasong-14, which drew condemnation from countries around the world.  The action also follows closely on the heels of United Nations Security Council Resolution 2371 passed on August 5^th which is intended to cut off $1 billion worth of North Korean export earnings per year.
• The U.S. Treasury Department sanctions are likely to draw strong initial responses from both China and Russia. Both countries voted for the new UN sanctions resolution and oppose unilateral U.S. action. China is likely to be particularly upset since it has taken action in the last week to cut off seafood imports from North Korea in line with the recent UN sanctions and has vowed to strongly enforce the multilateral sanctions.
• Regardless of official government responses forthcoming from China and Russia, it still remains to be seen whether the entities in third party countries will continue to assume the large risk of doing business with North Korean organizations and individuals if the costs continually increase.
• This action will be most effective if the U.S. works with its allies in South Korea, Japan, and Europe to maintain significant economic and diplomatic pressure and to signal that there are costs to helping North Korea develop its WMD and ballistic missile programs.