DPRK and Russian Financial Entities Orchestrated Illicit Payment Mechanisms
WASHINGTON – Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated a network of five entities and one individual-based in Russia and in the Russia-occupied Georgian region of South Ossetia-that have enabled and supported ongoing efforts to establish illicit payment mechanisms between Russia and the Democratic People’s Republic of Korea (DPRK). Today’s action holds accountable parties that have assisted DPRK and Russian sanctions evasion and demonstrates Treasury’s commitment to exposing and disrupting networks that facilitate the funding of the DPRK’s unlawful weapons of mass destruction (WMD) and ballistic missile programs and support Russia’s illegal war against Ukraine.
With mounting losses on the battlefield and deepening international isolation, Russia has become increasingly dependent on the DPRK for weapons procurement and economic cooperation. Today’s sanctions demonstrate the Putin regime’s use of illicit financial schemes to enable the DPRK to access the international banking system in violation of targeted financial sanctions required under United Nations Security Council resolution (UNSCR) 1718 and a ban on correspondent relationships with DPRK banks under UNSCR 2270.
“Today’s action underscores our significant concern with efforts by Russia and the DPRK to deepen financial cooperation, in violation of UN Security Council resolutions,” said Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence Bradley T. Smith. “The United States remains strongly committed to leveraging all our available tools to disrupt this and other schemes intended to support Russia’s war of aggression against Ukraine and enable the DPRK’s illicit access to the international financial system.”
This action targets illicit financial schemes orchestrated by two DPRK state-run organizations, Foreign Trade Bank (FTB) and Korea Kwangson Banking Corporation (KKBC), both of which are designated entities on the 1718 Sanctions List. FTB is a twice U.S.-designated financial institution that serves as the DPRK’s primary foreign currency exchange bank and is vital to the illicit financial networks the DPRK uses to finance its WMD and ballistic missile programs. FTB was designated in 2013for enabling transactions related to the DPRK’s WMD proliferation networks and was subsequently re-designated in 2017 after being identified as part of the Government of the DPRK. KKBC was previously designated in August 2009, pursuant to Executive Order (E.O.) 13382 for providing financial services in support of multiple organizations that were identified as WMD proliferators. FTB and KKBC have continued to expand the DPRK’s access to illicit financial networks with the assistance of the Russian Federation.