South Korea on Tuesday welcomed the US’ imposition of sanctions on a Chinese firm suspected to have provided financial services and illicit goods that may have helped beef up North Korea’s nuclear and missile program.

The US Treasury on Monday blacklisted Dandong Hongxiang Industrial Development, an industry machinery wholesaler, and four of its executives, including founder Ma Xiaohong. The Department of Justice also laid criminal charges against them for “conspiring to evade” its sanctions and to “launder money instruments.”  


The announcement marks Washington’s first independent penalty of a Chinese enterprise for ties with the North, and its latest step to tighten its economic noose around the wayward regime. 

“The move alerts individuals and entities of not only China but other third countries to the risks of dealings with the North, and is expected to help consolidate the international community’s resolve for a thorough implementation of UN Security council resolutions,” Seoul’s Foreign Ministry said in a statement.

Based in the North Korean-Chinese border city of Dandong, DHID was found to have used front companies, financial facilitators and trade representatives to facilitate transactions on behalf of Korea Kwangson Banking Corp., which is already under UN and US bans for providing financial services in support of the communist state’s proliferation program.

The company and four people are subject to a property freeze in the US, and Americans are prohibited from making transactions involving them. The Department of Justice has also filed a civil forfeiture action for all funds in 25 bank accounts linked with DHID, as well as a request for a related restraining order to China.

“Today’s action exposes a key illicit network supporting North Korea’s weapons proliferation,” Adam Szubin, the Treasury’s acting under secretary for terrorism and financial intelligence, said in a statement.

“DHID and its employees sought to evade US and UN sanctions, facilitating access to the US financial system by a designated entity. Treasury will take forceful action to pressure North Korea’s proliferation network and to protect the US financial system from abuse.”

The firm is a subsidiary of Hongxiang Group, which is under the investigation of Beijing on allegations it has supplied items with potential military uses to Pyongyang.

Early this month, the Asan Institute for Policy Studies in Seoul and the Center for Advanced Defense Studies in Washington said in a joint report that the conglomerate provided aluminum oxide, pure aluminum ingots, ammonium paratungstate, tungsten trioxide and other “dual use” materials used in enriching uranium or building missiles.

The latest announcement came as the UNSC moves to slap a fresh set of sanctions in response to Pyongyang’s fifth nuclear test on Sept. 9.

While crafting independent punitive steps at home, Seoul and Washington are intensifying diplomatic efforts to bring Beijing, Pyongyang’s top diplomatic and economic backer, aboard an even more biting resolution.

A focal point is whether it would include bans on trade of livelihood goods and energy, as well as “secondary boycott” measures calling for penalties for third-party groups and individuals engaging in transactions with the North.

“The recent progress on Hongxiang indicates the resolve of the US and China to tighten its squeeze on North Korea, and would inevitably have some impact on the ongoing UNSC discussions,” a Seoul diplomat said, requesting anonymity due to the sensitivity of the issue.

By Shin Hyon-hee (heeshin@heraldcorp.com)