Axis of Evil

China Just Helps North Korea Steal $81M From The Fed
By Gordon G. Chang 

Last February, cybercriminals stole $81 million from the account of the central bank of Bangladesh at the New York Federal Reserve Bank, one of the biggest bank heists ever. 

U.S. officials are now pointing the finger to North Korea as the culprit.
North Korea certainly did not act on its own. 

The Wall Street Journal is reporting that Federal prosecutors are investigating Chinese middlemen, who have helped the North orchestrate the theft.
If such middlemen were involved, Chinese financial institutions were certainly complicit. 

If these institutions were complicit, Beijing must be supporting the criminal attacks.
There is one way for the United States to counterattack. 

The U.S. should cut complicit Chinese financial institutions off from their dollar accounts in New York.
The Journal reported that sources familiar with the matter expect American prosecutors in the Bangladesh case to adopt an approach “similar to that used in September against a Chinese businesswoman, Ma Xiaohong.”
Ma was at the center of a number of American enforcement actions last September. 

Then, the Treasury Department’s Office of Foreign Assets Control added her, three co-workers, and her company, Dandong Hongxiang Industrial Development Co. Ltd., to its list of Specially Designated Nationals. 

Treasury, therefore, effectively imposed sanctions on her and the other listed parties. 

The offense? 

Ties to the nuclear weapons program of the Democratic People’s Republic of Korea.
North Korea sanctions expert Joshua Stanton told me that the reason for the designations was their assistance to Korea Kwangson Banking Corp., itself under sanctions, to launder money for the North.
At the same time, the Justice Department announced the unsealing of indictments of the same four individuals and Hongxiang for, among various crimes, “conspiring to evade U.S. economic sanctions and violating the Weapons of Mass Destruction Proliferators Sanctions Regulations through front companies.” 

The indictments allege the laundering of money through the U.S. financial system for the North Korean regime.
The Justice Department also initiated civil forfeiture actions to seize funds in 25 Chinese bank accounts.
The Obama administration deserves credit for imposing on Chinese individuals and entities its first set of secondary sanctions relating to North Korea, but it gave China a pass. 

The Justice Department, when announcing the forfeitures of the Chinese bank accounts, stated “There are no allegations of wrongdoing by the U.S. correspondent banks or foreign banks that maintain these accounts.”
Obama undoubtedly intended to send a signal to China that it was time to cut its financial links to the Kim regime. 

Unfortunately, Beijing obviously heard another message, that its banks, as the Wall Street Journal noted in a September 29 editorial, “are untouchable.”
So American prosecutors in the Bangladesh caper should not, as the Journal reported, be following the Ma Xiaohong model. 

They should instead be going further up the chain of culprits. 

All roads in this large crime lead to Pyongyang—and then to Beijing.
The Journal reported last week that U.S. investigators think North Koreans were the ones behind the theft from Bangladesh because of the similarity of the code used in that cyberattack to the code employed in the 2014 attacks on Sony Pictures Entertainment. 

The Sony attacks have been attributed to, among others, North Korean hackers based in China.
Moreover, as the New York Times reported Saturday, failed attempts last year to steal money from Polish banks, through a cyber intrusion into the network of Poland’s financial regulator, are linked to the successful theft of Bangladesh’s central bank and the attack on Sony Pictures.
The cyberthieves hitting the Polish financial institutions had big ambitions. 

They left clues they were also targeting more than a hundred other organizations from central banks to multilateral institutions to money center banks.
Among the intended targets were the World Bank, the European Central Bank, Bank of America, State Street Bank and Trust, and Bank of New York Mellon.
There was, however, only one Chinese target: Bank of China. 

Given that many of the world’s largest banks are Chinese, including the largest, the Industrial and Commercial Bank of China, the absence of these institutions from the list of intended victims is curious.
If the cyberthieves were successful, their crimes could have been the biggest series of thefts in history. 

Worse, the hacking, if it had accomplished its goals, would have exposed the vulnerabilities of the global financial system, shaking confidence everywhere. 

Therefore, if China’s untouchable banks are involved in Pyongyang’s bank heists, they are threatening the world’s financial architecture.
Chinese enterprises and banks are tightly controlled by the state. 

Beijing must know about their sensitive relationships, like those with North Korea. 

If it does not in fact know about them, it is only because it does not want to. 

Beijing cannot run a police state and then disclaim responsibility for what happens inside that state, especially when state institutions are involved.
For decades, American administrations have not enforced American money laundering and other laws against Chinese entities, apparently for fear of angering China’s Communist Party. 

Beijing has taken advantage of the laxity.
The Trump administration should act accordingly. 

At a minimum, complicit Chinese banks should be cut off from their dollar accounts in New York, immediately.
Richard Ledgett of the National Security Agency said, in connection with the theft from Bangladesh, that there is a possibility that “a nation-state is robbing banks.”
He was making the statement with North Korea in mind, but there is one other nation-state that has to be involved. 

That is China.