DOJ indicts Singaporean businessman for conspiring to violate North Korea sanctions

The U.S. Attorney’s office for the Southern District of New York has indicted Singaporean national Tan Wee Beng for laundering money on behalf of two sanctioned North Korean banks—Daedong Credit Bank of Panama Papers infamy, and Korea Kwangson Banking Corporation of Dandong Hongxiang infamy. Both banks have been designated and blocked for years under Executive Order 13382, for proliferation financing. Both banks are also designated by the U.N. Security Council. You can read the indictment here and the Justice Department’s press release here. The counts include conspiracy to violate the IEEPA (the statutory authority for U.S. national sanctions), bank fraud, money laundering, and more conspiracy counts. There are also civil and criminal forfeiture counts. The latter (along with the fact that the indictment says so) is a clue that DOJ intends to extradite, which it totally can. There’s just one small problem.

Tan isn’t too well hidden to have contacted the BBC to deny the allegations. The indictment alleges that he caused transactions inside the United States (ie., cleared through a New York correspondent bank) with the sanctioned banks, through a network of front companies in Hong Kong, Singapore, Thailand and elsewhere. The indictment does not mention Wee Tiong, but only mentions “Company-1.” Why? I don’t speak from direct knowledge, obviously, but it’s probably because of a long-standing Justice Department policy against naming unindicted co-conspirators in indictments, a practice that the Supreme Court has previously criticized.

In 2015, the Straits Times wrote this flattering story about Mr. Tan’s dad leaving the family business, Wee Tiong Limited, which was then valued at about half a billion dollars, to the “good hands” of his son (womp, womp). The indictment alleges conduct going back to 2011, right around the time Tan would have taken over the family business. Now, in tandem with Tan’s indictment, the assets of both Tan and Wee Tiong have been frozen by the Treasury Department and added to the SDN List. That means any person on Earth who knowingly opens a dollar account for him, wires dollars for him, or converts local currency to or from dollars for him, risks a prison sentence. Worse yet, the 18 U.S.C. 982 (criminal) forfeiture count uses the broader “all property involved in” language, rather than the narrower language in the 981(a)(1)(C) (civil) “proceeds of” count. In theory, this could mean that the feds will try to seize “facilitating property”–that is, ships or other substitute assets. Yes, I’m afraid that means it’s too late to sell your stock.

A more interesting question *would* be whether Tan’s foreign bank complied with this regulation, requiring enhanced due diligence to block North Korea out of the financial system entirely … except for the fact that the regulation only became a final rule several weeks after the transaction that’s charged in the indictment. Double womp, womp. (Someone remind me to research whether financial regulations can apply ex post facto.)

All of which is interesting to me, but not as interesting as the discussions within Mr. Tan’s banks right now. They could be facing serious legal jeopardy or even the loss of their correspondent accounts for their part in facilitating the wire transfers on behalf of Tan and Wee Tiong. It all depends on what the evidence shows, of course. No doubt, the foreign banks’ New York correspondents are going over their wire transfers with fine-toothed combs to see just how forthcoming the foreign banks were about the wires’ and counterparties’ potential links to North Korea. It’s frankly hard to see how any bank within 500 nautical miles of Singapore could have been this sloppy about AML and Know-Your Customer Rules by 2016, especially after the Chinpo Shipping case. It’s a sore point with me that the Bank of China was never prosecuted for its willful laundering of North Korean money in that case. Chinpo was convicted by a Singaporean court in that case, but the conviction was reversed in part because Singaporean prosecutors had nothing to charge but violations of a sanctions law that was years out of date. Fortunately, Singapore has since updated the law. If we don’t see any action on the AML compliance problems at Tan’s bank or banks, it will be another sign that Treasury still isn’t serious about “maximum” pressure.