Backdoor Financing Techniques Under Sanctions--North Korean Companies in Dandong, China (2016)

Backdoor Financing Techniques Under Sanctions--North Korean Companies in Dandong, China (2016)

In 2016, shortly after North Korea was subjected to the UN Security Council's most stringent sanctions resolution ever (No. 2270), the Chinese border city of Dandong became the front line for "sanctions evasion. In this city across the Yalu River from North Korea, "North Korean companies" under Chinese names such as Dandong Hongxiang Trading Co. There was no sign of life in the abandoned buildings, and only the "Chosun Trading Company" tag left on the door showed any trace of the company's existence. These were "paper companies" that lent their names, and it is believed that they were actually used as relay points for financial remittances and import/export transactions. In the same year, the U.S. designated Dandong Hongxiang Industrial Development Co. Dandong was named as being involved in the flow of North Korean weapons-related funds, but its representative disappeared shortly afterwards. Dandong was a key location for the "underworld economy" to circumvent sanctions, and
was the site of North Korea's relentless efforts to secure funds as a nation by exploiting the gap between diplomacy and economic blockades.