A recent suit filed by the U.S. Department of Justice (DOJ) for the forfeiture of nearly $2 million highlights the broad extraterritorial reach of U.S. sanctions laws. On June 14, DOJ filed a complaint to seize funds associated with transactions between several Chinese companies, including Mingzheng International Trading Limited (Mingzheng). Mingzheng and the other companies had been set up as a front and were conducting transactions in U.S. dollars on behalf of North Korea’s Foreign Trade Bank (FTB), a blacklisted Specially Designated National (SDN). The case has two noteworthy lessons, with the latter lesson hopefully more relevant to your company:
Lesson One: Don’t launder money for North Korean SDNs engaged in proliferation schemes. If you want to know more about how North Korea attempts to launder funds, check out this detailed and fascinating report on the topic.
Lesson Two: If you conduct a transaction in U.S. dollars, even if all other aspects of the transaction occur outside of the United States, the U.S. government will likely claim jurisdiction over the transaction.