US should fine Chinese banks that support Pyongyang, former US official says

The US could impose billions of dollars in regulatory fines against large Chinese banks that fail to limit alleged financial ties with North Korea and its nuclear and missile programmes, a former US Treasury official said on Thursday.

The US would use the fines as a bargaining chip to press Beijing to do more on its own to halt Pyongyang’s nuclear ambitions, instead of enacting economic sanctions to freeze the banks’ assets or cut them off from the American market – moves that would certainly harm US-China investment and trade relations.

Anthony Ruggiero, a former director at the US Treasury’s Office of Terrorist Financing and Financial Crimes, told a think tank event in Washington on Thursday that the US government could declare Chinese banks’ compliance procedures are “not appropriate”, causing them to be hit by “significant” billions of dollars in fines.

“The [US’s] next logical step would be going after Chinese banks if they are not cooperating now,” said Ruggiero, now a senior fellow at the Foundation for Defence of Democracies, a non-profit, non-partisan organisation focusing on US foreign policy and national security. Ordering the banks to forfeit large amounts of money in regulatory “can work ... and get people’s attention,” he said.

Ruggiero’s comment came after the US Treasury on Tuesday sanctioned 16 Chinese and Russian companies and nationals for their alleged support of North Korea’s nuclear and ballistic missile programmes, energy trade, labour exports and sanctions evasion.

“Treasury will continue to increase pressure on North Korea by targeting those who support the advancement of nuclear and ballistic missile programmes, and isolating them from the American financial system,” said US Treasury Secretary Steven Mnuchin in a statement.