WASHINGTON, Nov 3:Chinese middlemen launder the proceeds of North Korean hackers’ cyber heists while Chinese ships deliver sanctioned North Korean goods to Chinese ports.
Chinese companies help North Koreans workers — from cheap labourers to well-paid IT specialists — find work abroad. A Beijing art gallery even boasts of North Korean artists working 12-hour days in its heavily surveilled compound, churning out paintings of idyllic visions of life under communism that each sell for thousands of dollars.
That’s all part of what international authorities say is a growing mountain of evidence that shows Beijing is helping cash-strapped North Korea evade a broad range of international sanctions designed to hamper Pyongyang’s nuclear weapons programme, according to an Associated Press review of United Nations reports, court records and interviews with experts.
“It’s overwhelming,” Aaron Arnold, a former member of a UN panel on North Korea and a sanctions expert at the Royal United Services Institute, said of the links between China and sanctions evasion. “At this point, it’s very hard to say it’s not intentional.”
China has had a complicated relationship with Pyongyang since the 1950-53 Korean War. Though uneasy with a nuclear menace at its doorstep, China doesn’t want its neighbour’s government to collapse, experts say.
China views North Korea as a buffer against the US, which maintains a significant troop presence in South Korea.
Beijing has long maintained it enforces the sanctions it has supported since North Korea started testing nuclear weapons and forcefully pushed back on any suggestions to the contrary. “China has been fully and strictly implementing the (UN Security Council) resolutions,” a Chinese ambassador said in a recent letter to the UN, adding that his country had “sustained great losses” in doing so.
But in recent years, Beijing has sought to weaken those very sanctions and last year vetoed new restrictions on Pyongyang after it conducted a nuclear test.
This summer a top ruling Chinese party official provided a vivid example of China’s ambiguity on sanctions as he stood clapping next to North Korean Leader Kim Jong Un during a Pyongyang military parade. Rolling past the two men were trucks carrying nuclear-capable missiles and other weapons the regime isn’t supposed to have.
They were joined by Russia’s defence minister, apparently part of a new effort by the Kremlin, struggling in its invasion of Ukraine, to strength ties with North Korea. The US has accused North Korea of supplying artillery shells and rockets to Russia, while new evidence shows Hamas fighters likely fired North Korean weapons during their October 7 assault on Israel.
But while Russia and a handful of other countries have been accused of helping North Korea evade sanctions, none has been as prolific as China, according to court records and international reports.
“China violates North Korea sanctions it voted for and says won’t work because it’s afraid they’ll work. And, also, says it isn’t violating them” said Joshua Stanton, a human rights advocate and attorney who has helped write US sanction laws against North Korea.
A review by the AP found a majority of the people placed on the US government’s sanctions list related to North Korea in recent years have ties to China. Many are North Koreans working for alleged Chinese front companies while others are Chinese citizens who US authorities say launder money or procure weapons material for North Korea.
Besides sanctions, US criminal prosecutions against individuals or entities assisting North Korea’s regime often have links to China.
That’s especially true for cases related to North Korea’s sophisticated hackers, who experts believe have stolen upwards of USD 3 billion in digital currency in recent years. That windfall has coincided with the speedy growth of the country’s missile and weapons programme.
An indictment filed earlier this year alleges that a Chinese middleman helped launder cryptocurrency stolen by the regime’s top hackers into US dollars. And a similar case was filed in 2020 that accused two Chinese brokers of laundering more than USD 100 million in digital currencies stolen by North Korea.
Such “over-the-counter” brokers allow North Korean hackers to bypass know-your-customer rules governing banks and other financial exchanges.
North Korea depends heavily on China’s financial system and Chinese companies to obtain prohibited technology and goods, as well as to acquire US dollars and gain access to the global financial system, records show.
“The (Chinese) banks are less rigorous because the Chinese government is not pushing them,” said former top US Treasury official Anthony Ruggiero.
North Korea imported more than USD 250,000 worth of aluminum oxide, which can be used in processing nuclear weapons fuel, from a Chinese company in 2015, according to customs records cited in a think tank report.
US prosecutors have alleged the same company accounted for a significant share of overall trade between North Korea and China; its customers included the Chinese government’s Ministry of Commerce, which was bidding on North Korean projects.
Images from North Korean military parades have shown the regime’s nuclear missiles being transported on launchers made with Chinese heavy-duty truck chassis. China told the UN panel of experts that North Korea had promised it would use the trucks to move timber.
China regularly ignores reams of satellite photos and vessel tracking data compiled by a UN panel of experts showing Chinese-flagged vessels docking with North Korean ships and transferring goods. North Korean ships are banned by UN sanctions from participating in ship-to-ship transfers, which are often done to obscure the flow of sanctioned goods like coal exports and oil imports.
The US and other leading democracies sent China a letter this summer saying they were “disappointed” that satellite photos continue to show cargo ships that have allegedly been documented breaking sanctions operating in Chinese ports and territorial waters.
“The international community is closely watching China’s commitment to upholding its UN obligations,” the letter warns.
China dismisses such findings, frequently saying that its own investigations uncovered no evidence of wrongdoing, without providing any alternative information or explanation.
Beijing said last year it couldn’t provide Chinese port of call records for several North Korean ships because the UN panel hadn’t provided the ships’ IMO number, a unique identifier painted on large vessels. Those numbers can easily be looked up using a ship’s name.
Eric Penton-Voak, the former coordinator of the UN panel of experts, said such excuses were ludicrous in light of China’s vast surveillance powers and showed the ruling communist party’s contempt for enforcing the sanctions it agreed to.
“It’s just grasping at any straw“ to avoid providing an answer, he said.
When the UN panel urged Beijing to investigate Chinese garment companies that were likely employing North Korean workers, China said there was nothing it could do because the tip was too vague. The UN panel, Beijing said, had only provided the company names in Korean and English. China told the UN panel in a letter that its “business registration system uses only the Chinese language.” (AP)
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