China is “highly concerned” about a reported ship-to-ship transfer on the high seas that could violate U.N. sanctions on North Korea and has launched an investigation, the foreign ministry said Thursday.

Spokesman Geng Shuang said China would “seriously deal” with any Chinese individuals or enterprises found to be involved in the incident reported earlier this week by Japan.

“China is highly concerned about the situation and we are in the middle of an investigation,” Geng said at a regularly scheduled news conference.

Punishment of any Chinese entities found to have been involved would be carried out “based on solid evidence and in accordance with Chinese laws and regulations,” he said.

A Japanese maritime Self-Defense Force PC-3 surveillance plane and an escort ship saw a North Korean-flagged tanker alongside a smaller ship on Feb. 16 about 250 kilometers (150 miles) off Shanghai in the East China Sea, Japan’s foreign ministry said late Tuesday.

Photos posted on the ministry’s website show the two ships with what appear to be hoses running between them. The ministry identified the North Korean tanker as the Yu Jong 2. It said the other vessel is of unknown nationality, but had “Min Ning De You 078” written in Chinese on its bow, which is shorthand for an oil ship from Ningde city in China’s coastal Fujian province.

It was the third such incident reported by Japan in the past month.

China has signed on to increasingly tough United Nations sanctions on North Korea over its nuclear weapons program, and Geng said Beijing recently issued a statement explicitly banning ship-to-ship transfers in accordance with U.N. resolutions.

China is North Korea’s biggest trading partner and a traditional ally, but ties between them have soured over the North’s nuclear and missile tests and its refusal to return to Chinese-hosted denuclearisation talks.