Treasury Disrupts North Korean Digital Asset Money Laundering Network

The measures taken in partnership with the United Arab Emirates target a key node in the Kim regime's illicit revenue-generating programs.

WASHINGTON Today, the Treasury's Office of Foreign Assets Control (OFAC) sanctioned two individuals and one entity involved in a network that laundered millions of dollars in illicit funds generated by the Republic's information technology (IT) Democratic People's Republic of Korea (DPRK). ) workers and cybercrime to support the DPRK government. Based in the United Arab Emirates (UAE), Lu Huaying and Zhang Jian worked through a UAE-based front company to facilitate money laundering and cryptocurrency conversion services that redirected illicit proceeds to Pyongyang. This network is led by OFAC-sanctioned Sim Hyon Sop (Sim), a PRC-based DPRK banking representative who orchestrates money laundering schemes to finance the regime.

Today's sanctions are part of ongoing efforts to disrupt the DPRK's money laundering operations, which fund the regime's illegal weapons of mass destruction (WMD) and ballistic missile programs. These sanctions are part of a close cooperative effort with the government of the United Arab Emirates.

As the DPRK continues to use complex criminal schemes to finance its weapons of mass destruction 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, said the acting Treasury undersecretary for terrorism and finance. Information Bradley T. Smith. The United States, along with the UAE and our other partners, will continue to target the financial networks that enable the Kim regime's destabilizing activities.

DPRK laundering digital assets to finance regime activities

The DPRK continues to use agents and proxies to access the international financial system to conduct illicit financial activities, including fraudulent computer work, digital asset theft, and money laundering, to support its illegal financial programs. weapons of mass destruction and ballistic missiles. These illicit activities contribute to efforts to destabilize the DPRK, which are now expanding into the European theater as Pyongyang strengthens its military cooperation with Russia.

Sim Hyon Sop, a representative of Korea Kwangson Banking Corp (KKBC) based in the PRC, is one such DPRK agent. According to the Financial Crimes Enforcement Network, officials like Kim act as agents for DPRK financial institutions. In this capacity, these officials orchestrate schemes, create shell companies, and manage bank accounts to move and conceal illicit funds that can then be used to finance the DPRK's weapons of mass destruction and ballistic missile programs. OFAC previously designated Sim Hyon Sop and KKBC pursuant to Executive Order (EO) 13382, an authority that targets proliferators of weapons of mass destruction and their supporters. KKBC is a state-run organization of the DPRK and a designated entity on the United Nations Security Council (DPRK) 1718 Sanctions List. From his safe haven in the PRC, Sim Hyon Sop orchestrates extensive money laundering schemes, often involving digital assets, in order to redirect money to the DPRK for use in its weapons of mass destruction and missile programs ballistics.

Since at least early 2022, Lu Huaying, a Chinese national based in the United Arab Emirates, has cashed out cryptocurrencies derived from obscure DPRK revenue-generating projects into fiat cash in the name of OFAC-sanctioned Sim Hyon Sop. Between early 2022 and approximately September 2023, Lu Huaying laundered several million dollars of Sim Hyon Sops money through a combination of cryptocurrency withdrawals and money mules. The laundered funds were then used to pay for purchases of products and services deemed intended for use by the DPRK or its proxies.

In late 2022 and early 2023, Zhang Jian (Zhang), a Chinese national based in the United Arab Emirates, also helped facilitate the exchange of fiat currency for Sim. Additionally, Zhang himself allegedly acted as a courier for Sim Hyon Sop.

OFAC designates Lu Huaying and Zhang Jian as being owned or controlled by or having acted or purported to act for or on behalf of, directly or indirectly, Sim Hyon Sop, an individual whose property and interests in property are blocked pursuant to EO 13382.

Green Alpine Trading, LLC is a shell company based in the United Arab Emirates that played a key role in this money laundering ring. OFAC designates Green Alpine Trading, LLC for providing, or attempting to provide, financial, material, technological or other support, or goods or services in support of Sim Hyon Sop, an individual whose ownership and interests in the property are blocked under EO 13382.

IMPLICATIONS OF SANCTIONS

As a result of today's action, all property and interests in property of the designated persons described above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, all entities that are owned, directly or indirectly, individually or in aggregate, 50 percent or more by one or more blocked persons, are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempted, OFAC regulations generally prohibit all transactions by U.S. persons or within (or in transit) of the United States that involve property or interests in property of designated or otherwise blocked persons.

Additionally, financial institutions and other individuals that engage in certain transactions or activities with sanctioned entities and individuals may be subject to sanctions or enforcement action. Prohibitions include making any contribution or supply of funds, goods or services by, to or for the benefit of any designated person, or receiving any contribution or supply of funds, goods or services from 'such a person.

Non-U.S. persons are also prohibited from causing or conspiring to cause U.S. persons to knowingly or unintentionally violate U.S. sanctions, as well as engaging in conduct that evades U.S. sanctions. OFAC's Economic Sanctions Enforcement Guidance provides more information on OFAC's enforcement of U.S. sanctions, including factors that OFAC generally considers in determining an appropriate response to an apparent violation .

OFAC's sanctions power and integrity derive not only from OFAC's ability to designate and add individuals to the SDN List, but also from its willingness to remove individuals from the SDN List in accordance with the law. The ultimate goal of sanctions is not to punish, but to bring about positive change in behavior. For more information on the process of requesting removal from an OFAC list, including the SDN list, please refer to OFAC Frequently Asked Questions 897 here. For detailed information on the process of submitting a request to be removed from an OFAC sanctions list, please click here

Click here for more information on the individuals and entities designated today.

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