U.S. charges Chinese nationals with laundering money for North Koreans

U.S. charges Chinese nationals with laundering money for North Koreans

Top Stories | Mar 19, 2020:


The U.S. Justice Department in March 2020 charged two Chinese nationals with laundering more than U.S. $100 million in cryptocurrency that was stolen by North Korean hackers.

The indictment filed in Washington, D.C., shed new light on how the secretive Pyongyang regime employs computer hackers to circumvent international sanctions and how collaborators in the People’s Republic of China (PRC) shield those illicit proceeds from law enforcement.

“The hacking of virtual currency exchanges and related money laundering for the benefit of North Korean actors poses a grave threat to the security and integrity of the global financial system,” U.S. Attorney Timothy J. Shea said in a news release. “These charges should serve as a reminder that law enforcement, through its partnerships and collaboration, will uncover illegal activity here and abroad, and charge those responsible for unlawful acts and seize illicit funds even when in the form of virtual currency.”

The indictment charged Tian Yinyin and Li Jiadong with money laundering conspiracy and operating an unlicensed money transmitting business. “These defendants allegedly laundered over a hundred million dollars’ worth of stolen cryptocurrency to obscure transactions for the benefit of actors based in North Korea,” Assistant Attorney General Brian A. Benczkowski said in a news release. “Today’s actions underscore that the department will pierce the veil of anonymity provided by cryptocurrencies to hold criminals accountable, no matter where they are located.”

The court documents alleged that North Koreans hacked a virtual currency exchange in 2018 and stole nearly U.S. $250 million of virtual currency. The Chinese defendants, the indictment charges, then laundered the money through hundreds of automated cryptocurrency transactions aimed at preventing law enforcement agencies from tracing the funds, according to a Reuters report.

Some of the laundered money was used to pay for technological infrastructure in North Korea to spearhead future hacking campaigns against the financial industry. The cryptocurrency industry is a ripe target for North Korea as it seeks to bypass international sanctions imposed upon it due to its ballistic missile and nuclear weapons programs.

“North Korea continues to attack the growing worldwide ecosystem of virtual currency as a means to bypass the sanctions imposed on it by the United States and the United Nations Security Council,” said U.S. Internal Revenue Service Criminal Investigation Chief Don Fort. “We will continue to push our agency to the forefront of complex cyber investigations and work collaboratively with our law enforcement partners to ensure these nefarious criminals are stopped and that the integrity of the United States financial system is preserved.”

While actors inside China are helping North Koreans conceal cyber crimes, the U.S. and its partners continue to reach out to the region to help boost cyber defenses to prevent them. A U.S. interagency group representing the Department of Defense, Department of Justice, the FBI and Treasury Department in late June 2019 concluded an engagement in Palau designed to assist the Pacific island nation’s law enforcement and regulatory bodies to investigate and prosecute financial crimes. The program focused on money laundering, cyber crime, cryptocurrency, human trafficking, public corruption and malign foreign influence.