U.S. Imposes Sanctions on North Korean Bankers and Firms Linked to Cryptocurrency Laundering

The U.S. Treasury's Office of Foreign Assets Control (OFAC) has announced new sanctions against eight individuals and two North Korean entities involved in laundering money from cyber activities and technology worker programs. This move was outlined in a Treasury statement released on November 4.

Key Takeaways

The U.S. Treasury has sanctioned eight individuals and two entities from North Korea related to cybercrime and laundering.
The operations are linked to the funding of North Korea's weapons programs and threaten global security.
Financial institutions dealing with these designated parties could face sanctions.
Cryptocurrency businesses need to be vigilant in verifying transactions related to these named individuals and addresses.

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The sanctions primarily target pathways through which stolen digital assets and money from contracting work have been transferred using U.S. dollars. This raises compliance concerns for exchanges, brokers, custodians, and wallet providers that may handle these funds.

The OFAC's announcement emphasizes that these operations are linked to North Korea's weapons development programs and refers to a recent multilateral monitoring report about evading sanctions through cyber theft and IT contracting. Furthermore, it adds new data for screening purposes, including cryptocurrency addresses associated with an already designated bank.

Individuals and Networks Designated in the Sanctions

The designated North Korean bankers, Jang Kuk Chol and Ho Jong Son, have been found to manage funds on behalf of First Credit Bank, which includes $5.3 million in cryptocurrency assets.

The Korea Mangyongdae Computer Technology Company has also been sanctioned for overseeing IT worker delegations in China that utilized proxies for financial transactions. Additionally, U Yong Su was singled out for his role in this operation.

Another entity, Ryujong Credit Bank, was designated for facilitating financial services that enabled sanctions evasion between China and North Korea. This included transactions related to remittances, money laundering, and activities of overseas workers.

Along with these, additional sanctions were imposed on representatives of North Korean financial institutions in China and Russia, detailing transactions in U.S. dollars, Chinese yuan, and euros. The activities are linked to previously sanctioned banks and fraudulent companies.

According to the release, more than $3 billion has been stolen over the past three years, largely in cryptocurrency, highlighting a connection between cyber crime and income from IT projects.

John K. Hurley, Under Secretary of the Treasury for Terrorism and Financial Intelligence, stated, "North Korean state-sponsored hackers steal and launder money to fund the regime’s nuclear weapons program. By generating revenue for Pyongyang’s weapons development, these actors directly threaten U.S. and global security. Treasury will continue to pursue the facilitators and enablers behind these schemes to cut off the DPRK’s illicit revenue streams.”

Implications of the New Sanctions

As a result of these sanctions, any property and interests owned by the designated individuals or entities within the U.S. or controlled by U.S. persons are blocked. Additionally, any entities that are fifty percent or more owned by blocked individuals will also face similar restrictions.

Transactions involving this property are generally prohibited unless specifically authorized or exempted. This places a responsibility on cryptocurrency businesses to verify their counterparties and to halt any transactions involving the listed individuals or associated addresses.

The Treasury Department has warned financial institutions and other entities that engage with the designated individuals may be subjected to further sanctions or enforcement actions. The agency also indicated that there exists a process for removal from the sanctions list, providing a formal route for submissions while current restrictions remain applicable.