Russian President Vladimir Putin (L) and North Korean leader Kim Jong Un make a toast during a state reception at the Reception House in Pyongyang, North Korea, in June 2024. On Thursday, the United States sanctioned a banking network that facilitated the transferring of funds between the two countries. File photo by Vladimir Smirnov/Sputnik/EPA-EFE
Sept. 20 (UPI) -- The United States has blacklisted a network accused of aiding financial payments between Russia and North Korea, two isolated countries that have grown financially and militarily closer amid the Kremlin's war in Ukraine.
The sanctions, announced by the United States on Wednesday, target banks, front companies and schemes that facilitate the transfer of cash deposits to and from North Korea and Russia, as well as the repatriation of frozen Pyongyang assets held in Moscow.
"The United States remains strongly committed to leveraging all our available tools to disrupt this and other schemes intended to support Russia's war of aggression against Ukraine and enable the DPRK's illicit access to the international financial system," Bradley Smith, acting under secretary of the Treasury for Terrorism and Financial Intelligence, said in a statement.
The Democratic People's Republic of Korea is North Korea's official name.
Companies hit were MRB Bank, which is based in Georgia's Russia-occupied South Ossetia region; TSMRBank; the previously designated Russian Financial Corporation Bank JSC and its subordinate, Timer Bank; and Moscow-based Stroytreyd LLC and TSMRBank.
Dmitry Yuryevich Nikulin, the 49-year-old president of TSMRBank, was also sanctioned.
According to the Treasury, MRB was acting as a cut-out for TSMRBank to establish a secret banking relationship with the Foreign Trade Bank, North Korea's long-U.S.-blacklisted financial institution that serves as Pyongyang's foreign currency exchange.
Through this secret banking chain, Nikulin is accused of overseeing cash deposits from FTB to MRB and millions of dollars and rubles banknotes transferred from MRB to FTB and Korea Kwangson Banking Corporation, a second North Korean financial institution long sanctioned by the United States.
The Treasury said that some of the funds from North Korea were to pay for fuel exports from Russia.
Stroytreyd is accused of being founded by U.S.-designated Russian Financial Corporation Bank to work with FTB to receive frozen North Korea funds held in defunct Russian banks.
Treasury officials said Timer Bank transferred millions of dollars to Stroytreyd who intended to send the funds to FTB.
The relationship between North Korea and Russia has grown since the Kremlin's February 2022 invasion of Ukraine.
Under the weight of U.S. sanctions and a deploying armory, Moscow has turned to Pyongyang for munitions. Though Pyongyang denies the allegations, a recent South Korean intelligence report states the North has sent 13,000 shipping containers believed to be ferrying weapons to Russia since mid-2022.
In exchange, it is believed that North Korea is receiving advanced technology for its space and missile programs, along with funds.
In June, Russian President Vladimir Putin and North Korean leader Kim Jong Un signed a mutual defense treaty.
The sanctions also come as North Korea's top diplomat, Foreign Minister Choe Son Hui, is in Russia this week. It is the second Pyongyang envoy to the country this year, following Choe's visit in January when she held talks with Putin.
"The growing financial cooperation between Russia and the Democratic People's Republic of Korea directly threatens international security and the global financial system," U.S. State Department spokesman Matthew Miller said in a statement. "Russia has become increasingly dependent on the DPRK as it faces mounting battlefield losses and increasing international isolation."