The Treasury accused China-based Dalian Sun Moon Star International Logistics Trading Co and its Singapore-based affiliate, SINSMS Pte., of falsifying documents to facilitate shipments of alcohol and cigarettes to North Korea.

Those shipments helped fuel what the Treasury alleged was a huge "illicit" cigarette trade earning the Pyongyang regime $1 billion a year.

It also blacklisted Russia-based Profinet Pte. for violating UN sanctions by providing loading and refueling services to sanctioned North Korean-flagged ships at three eastern Russia ports.

Also named was Profinet director general Vasili Aleksandrovich Kolchanov, whom the Treasury said "was personally involved" in deals with the North Koreans.

"Treasury reminds the shipping industry... of the significant risks posed by North Korea's shipping practices," the Treasury said in a statement.

The Chinese trading company acknowledged that it has shipped cigarettes and alcohol to North Korea but denied any wrongdoing.

"We shipped them through China customs clearance, it's all legal, and we have all the necessary legal formalities," the director of Dalian Sun Moon Star International Logistics Trading, Liang Ye, told AFP by telephone.

"We can only suspend our business now," Liang said. "The company might go bankrupt. The sanctions have a huge impact on us."

Despite having opened direct talks with Pyongyang, Washington continues to enforce the embargo on trade with North Korea in order to put pressure on the country to end its nuclear weapons and ballistic missile program.

"Treasury will continue to implement existing sanctions on North Korea, and will take action to block and designate companies, ports, and vessels that facilitate illicit shipments and provide revenue streams to the DPRK," Treasury Secretary Steven Mnuchin said in the statement Wednesday.

"Consequences for violating these sanctions will remain in place until we have achieved the final, fully verified denuclearization of North Korea."

On Tuesday, State Department spokeswoman Heather Nauert said those talks are making progress "in the right direction," two months after President Donald Trump held a groundbreaking summit with North Korean leader Kim Jong Un in Singapore.