In Asia

Beyond Banco Delta Asia: North Korea’s Continued Money Laundering Through China by Jende Huang

Though Macau’s Banco Delta Asia may be the most well known example of North Korean money laundering, the bank is hardly the only illicit conduit used by the North Koreans. In March 2013, the US Treasury Department sanctioned North Korea’s Foreign Trade Bank for their missile and nuclear proliferation activities.  Though the Treasury Department’s release does not specifically mention money laundering, it would be virtually impossible for the North Koreans to subvert the sanctions imposed by the United States—as well as those in UN Security Council resolutions 1718 (2006), 1874 (2009), 2087 (2013) and 2094 (2013)—without doing so.

After the Treasury Department sanctioned the Foreign Trade Bank, the Bank of China—the biggest bank for foreign transactions in China—also decided to close their accounts with the North Korean bank. The Chinese leadership is beginning to show more signs of displeasure with their North Korean allies, and their decision to end their banking relationship with Foreign Trade Bank was a surprising sign of this. However, if China truly wishes to put pressure on Pyongyang, Beijing should do more than just cut off formal banking contacts, they must also work to lessen the illicit financial contacts between the two nations.

As the Korea JoongAng Daily reported in June 2013, North Korean representatives of an affiliate of the Foreign Trade Bank, called the Kwangson Banking Group, have laundered money though loan sharks in Guangdong Province in southern China, which is the province adjacent to both Hong Kong and Macau. The article highlights the necessity for China to take strong actions if they really want to stop North Korean money laundering from taking place in their territory.




Jende Huang is a candidate for a Masters in Nonproliferation and Terrorism Studies at the Monterey Institute, and his research focuses on illicit networks and AML/CTF issues in Northeast Asia.