Four Chinese Nationals, Company Charged With IEEPA Violations, Sanctions Evasion

Four Chinese nationals and a Chinese company were charged with violating the International Emergency Economic Powers Act and U.S. sanctions after they did business with sanctioned North Korean companies, the Justice Department said in a July 23 press release. The charges were brought against Ma Xiaohong, her company Dandong Hongxiang Industrial Development Co. Ltd. (DHID) and three of the company’s top executives: general manager Zhou Jianshu (Zhou), deputy general manager Hong Jinhua (Hong) and financial manager Luo Chuanxu (Luo).

Ma, Zhou and Hong conspired to create more than 20 front companies to do business with North Korea-based Korea Kwangson Banking Corporation (KKBC), which was sanctioned by the U.S. in 2009, the press release said. Between 2009 and 2015, they allegedly established front companies in the British Virgin Islands, the Seychelles, Hong Kong, Wales, England and Anguilla. They also created bank accounts in the names of the front companies at Chinese banks that then maintained “correspondent accounts” in the U.S., the press release said.

Ma, Zhou and Hong used the accounts for financial transactions through the U.S. banking system when completing sales to North Korea, the Justice Department said. This hid KKBC’s involvement with the U.S. banks, and transactions were processed without being detected by the U.S. banks or blocked by the Weapons of Mass Destruction Proliferators Sanctions Regulations program.

DHID’s “core business” was trade with KKBC, which provided financial services for North Korea-based Tanchon Commercial Bank and Korea Hyoksin Trading Corporation. Both Tanchon and Hyoksin had ties to the Korea Mining Development Trading Company, the country’s “premier arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons,” the Justice Department said.

Ma, Zhou and Hong each face a maximum prison sentence of 20 years and a $1 million fine for charges of violating the IEEPA, a maximum five-year prison sentence and $250,000 fine for conspiracy to violate the IEEPA and defraud the U.S., and a maximum 20-year prison sentence and a $500,000 fine for “conspiracy to launder monetary instruments,” the press release said.