The U.S. and UAE coordinated to sanction individuals and companies accused of cryptocurrency money laundering, supporting North Korea, estimated to reach up to $700 million in 2023.
On December 17, the U.S. Department of the Treasury, through the Office of Foreign Assets Control (OFAC), announced new sanctions targeting a cryptocurrency money laundering network believed to be linked to North Korea. The move comes amid close cooperation with the government of the United Arab Emirates (UAE), marking a significant step in international efforts to curb funding for North Korea's weapons of mass destruction and ballistic missile programs.
Specifically, two Chinese citizens, Lu Huaying and Zhang Jian, along with the UAE-based company Green Alpine Trading, have been blacklisted by OFAC. Lu Huaying and Zhang Jian, currently residing in the UAE, are accused of participating in the conversion of cryptocurrency to fiat currency, which was then used to purchase goods and services for North Korea or its regime representatives.
The activities in question are believed to have taken place from early 2022 to September 2023. Zhang Jian is also suspected of being the money transfer agent for Sim Hyon Sop, the director of Korea Kwangson Bank in China, who was sanctioned by the U.S. in April 2023 on charges of money laundering and colluding with North Korean IT experts to generate illegal revenue.
Green Alpine Trading, a company registered in the UAE, has been identified as a front for money laundering activities supporting Sim Hyon Sop. The company's website has now been suspended. Targeting the UAE-based company highlights the extensive operations of North Korea's financial network and the importance of international cooperation in combating these illegal activities.
Impact of the sanctions
This latest sanction decision by the U.S. is not only aimed at specific individuals and entities but also carries broader strategic significance. Mr. Bradley T. Smith, Acting Under Secretary for Terrorism and Financial Intelligence at the U.S. Treasury, emphasized the Treasury's focus on disrupting networks that generate cash flows supporting the North Korean regime, particularly in the context of North Korea becoming increasingly sophisticated in using criminal tactics, including the exploitation of digital assets, to fund its weapons program.
According to TRM Labs, a blockchain analytics company, North Korea-related groups have stolen at least $600 million in cryptocurrency in 2023, and this figure could reach up to $700 million. From 2017 to 2023, the total amount of cryptocurrency seized by North Korea is estimated to reach up to $3 billion.
Source: U.S. Federal Bureau of Investigation
Methods used include impersonating authorized personnel, hacking cryptocurrency exchanges, installing malware into operating systems, and using cryptocurrency mixing services to obscure the origin of funds.