WASHINGTON, June 25 — A US judge has found three large Chinese banks in contempt for refusing to comply with subpoenas in a probe into North Korean sanctions violations, The Washington Post reported, adding one of them could lose access to the US financial system.
The banks were not identified by the judge, but details in the ruling align with a 2017 civil forfeiture action against Bank of Communications, China Merchants Bank and Shanghai Pudong Development Bank, the newspaper reported.
The US Justice Department at the time accused the banks of working with a Hong Kong company, which allegedly laundered more than US$100 million (RM414.3 million) for North Korea’s sanctioned Foreign Trade Bank, the paper said.
The Washington Post report comes as the United States and China have waged a year-long trade war marked by tit-for-tat tariffs on each other’s goods.
The newspaper said the bank at risk of losing access to US dollars appeared to be Shanghai Pudong Development Bank whose ownership structure, limited US presence and alleged conduct with other banks matched with the details disclosed in the court rulings.
Shanghai Pudong Development Bank doesn’t have US branch operations but maintains accounts in that country to handle dollar transactions, the report said, adding the subpoena battle will go before a federal appeals court in Washington on July 12.
“The ruling means that Attorney General William P. Barr or Treasury Secretary Steven Mnuchin can terminate the bank’s US account and ability to process US dollar transactions.”
National joint-stock lender China Merchants Bank said today it complies with related United Nations resolutions and Chinese laws, and is not involved in any investigations related to possible violations of sanctions.
Bank of Communications, China’s fifth-largest bank, said the case involved US courts seeking to obtain customer information that is stored outside the United States from Chinese commercial banks.
It said the bank carries out business activities in compliance with laws and regulations and currently it was not under any investigation involving suspected sanctions violations.
Shanghai Pudong Development Bank, asked about the report that it could lose access to the US financial system, said in a statement that it will strictly abide by the relevant laws and regulations.
Shares in China Merchants Bank were trading down 4.8 per cent at 0712 GMT, having fallen 8.5 per cent earlier in the day, while Shanghai Pudong Development Bank fell 3 per cent and Bank of Communications dropped 3.02 per cent.
In May, a US district judge ordered three Chinese banks to comply with US investigators’ demands that they hand over records connected to the alleged movement of tens of millions of dollars in violation of international sanctions on North Korea.
The publicly released court document did not name the banks, the Hong Kong company, or the North Korean entity at that time.
The subpoenas were issued in December 2017 as part of a US investigation into violations of sanctions targeting North Korea’s nuclear weapons programme, including money laundering and contravention of the US Bank Secrecy Act.
China is North Korea’s neighbour and main trading partner but has committed to enforcing international sanctions aimed at pressing Pyongyang to give up its nuclear weapons.
The Group of 20 summit in Japan this weekend will be the first meeting between US President Donald Trump and Chinese President Xi Jinping since trade talks between the two countries broke off in May. They will discuss issues such as tariffs, subsidies, technology, intellectual property and cyber security, among others.
The US government has put some Chinese firms including telecoms equipment maker Huawei Technologies Co Ltd on a trade blacklist while China is also drawing up its own “Unreliable Entities List” of foreign firms, groups and individuals. — Reuters