Dandong "acts as a conduit for North Korea to access the United States and global financial systems, including by facilitating millions of dollars of transactions for companies involved in North Korea's WMD and ballistic missile programs", Treasury said.
The Treasury Department declared the Bank of Dandong a 'primary money-laundering concern, ' proposing to sever it entirely from the USA financial system following a 60-day review period.
The Treasury Department blacklisted Chinese nationals Wei Sun for links to the North's Foreign Trade Bank and Li Hong Ri for ties to North Korean banking executive Ri Song-hyok.
Sanctions were imposed on Dalian Global Unity Shipping Co., which ships coal and steel between China and North Korea, freezing any property or assets in the USA and prohibiting any US citizen from doing business with the company.
"We are in no way targeting China with these actions", Mnuchin said at a White House briefing Thursday.
However he raised eyebrows last week by thanking his Chinese counterpart Xi Jinping for its help before concluding that his efforts had "not worked out", without spelling out what he meant to do next.
Despite multiple UN Security Council resolutions imposing worldwide sanctions, North Korea continues its nuclear and ballistic missile programmes, he said.
"This is an effort by the Trump administration to get China to apply more pressure", Bonnie Glaser, the director of the China Power Project at the Center for Strategic and International Studies, told me.
'This is a strong message to Chinese leaders that the Trump administration will act against North Korea's sanctions evasion in China, ' he said.
A Treasury statement named the bank as the Bank of Dandong and the firm as Dalian Global Unity Shipping Co Ltd. The Treasury said the two individuals have been linked to front or cover companies on behalf of North Korean institutions.
At a recent summit in Washington, D.C., Secretary of State Rex Tillerson said that China has a "diplomatic responsibility to exert much greater economic and diplomatic pressure on the regime if they want to prevent further escalation in the region". But he could also choose to act like he's willing to become a strict enforcer but not follow through on it, something China does with banned goods going into North Korea all the time.
And even as Trump administration officials stressed that a stepped-up campaign of diplomacy and economic pressure remains the administration's preferred strategy, Trump is also keeping military options on the table.