A South Korean newspaper reported Monday that China has begun investigating executives at a North Korean bank believed to be involved in illegal trade activities that finance the procurement of arms and ammunition for North Korea’s banned nuclear program.

According to the JoongAng Daily, executives of the Dandong branch of North Korea’s Kwangson Banking Corporation, North Korean employees living in China and Chinese trade-related officials are under investigation. The news follows last week’s agreement between the U.S. and China to boost efforts in cracking down on the institutions funding North Korea’s nuclear program following its fifth nuclear test early this month.

China happens to be the isolated country’s only major ally but disapproves of its repeated nuclear and missile tests.

“The Dandong branch of Kwangson Bank in March was pinpointed as an entity to be closed down under the UN Security Council Resolution 2270 but until recently moved offices and continued to secretly operate without a signboard,” a source told the JoongAng Daily on Saturday. “The head of the branch, Ri Il-ho, temporarily returned to North Korea, so the deputy executive is being investigated.”

The Korean Kwangson Banking Corporation is affiliated to the state-run Foreign Trade Bank, which is North Korea’s main foreign exchange bank. In 2009, the U.S. Treasury designated the KKBC under an order targeting institutions that support North Korea’s arms trafficking and alleged that the bank was involved in supplying dual-use equipment to Pyongyang.

Following North Korea’s fourth missile test, the latest round of U.N. sanctions in March moved to freeze all funds held abroad by the KKBC. The bank’s Chinese branch is believed to have been working from the 13th floor of a building that also houses Liaoning Hongxiang Industrial in Dandong city in northeast China.

A Chinese trading conglomerate headed by a Communist Party cadre, Liaoning Hongxiang Industrial is also under investigation following last week’s U.S.-China agreement. The Obama administration believes that the organization has a role in funding North Korea’s nuclear program. The company’s chairwoman, Ma Xiaohong, who is believed to be close to North Korean leader Kim Jong Un’s late uncle, Jang Song-thaek, was arrested last month.

“A Dandong customs official, as well as other Dandong city officials who were charged with granting favors to Hongxiang’s Ma, are also being investigated in a group,” a Chinese source told the South Korean daily. “There are over 20 of them being investigated.”