In 2017, SWIFT cut off North Korea’s last banks to limit its nuclear ambitions, but the country still finds ways to earn foreign currency. North Korea engages in smuggling coal and minerals, sending workers abroad, and cyber theft. With China as a key player, North Korea smuggles goods disguised as trash and uses overseas workers to generate income, often sending money back through diplomatic pouches or secret accounts. Additionally, it hacks cryptocurrency, making significant amounts through cybercrime. Monitoring these activities has become more difficult since the UN’s Panel of Experts was disbanded. To effectively enforce sanctions and curb illegal operations, cooperation with China is vital for global security.
In recent years, North Korea has developed a complex system to generate and transfer foreign currency, even after being cut off from the global banking system. Despite international efforts to limit the country’s nuclear ambitions, it has successfully resorted to various methods to bring money into the Democratic People’s Republic of Korea (DPRK).
Key Methods North Korea Uses to Generate Foreign Currency
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Smuggling Activities
North Korea’s primary source of illegal income is smuggling coal and minerals. From 2017 to 2023, it reportedly earned about $2.15 billion through such activities. One popular method involves collaborating with Chinese businessmen to produce fake documents or alter ship tracking systems. North Korean coal, particularly prized for its quality, accounts for a significant portion of China’s coal imports. -
Overseas Labor
Another significant revenue stream comes from sending North Korean workers abroad. Between 2017 and 2023, this method generated approximately $1.75 billion. Many North Koreans continue to work overseas despite sanctions aimed at repatriating workers. A large portion of their wages often goes to the North Korean government. Money is typically sent home using diplomatic pouches or through borrowed accounts, allowing the regime to maintain cash flow. - Cyber Theft
In the digital arena, North Korea is increasingly turning to cybercrime. Between 2017 and 2023, it is estimated that hacking virtual assets netted the regime around $1.35 billion. With the rise of cryptocurrencies, North Korean hackers often target exchanges to steal funds. The anonymity of virtual assets makes them ideal for laundering money, as they can be converted to cash using mixers or other digital methods.
Supporting Tactics for Money Laundering
North Korea uses advanced methods to launder money and move cash into the country. Virtual accounts in Chinese banks often bypass oversight, allowing North Koreans to obscure their transactions. Moreover, underground banking systems enable the regime to complete money transfers without scrutiny, facilitating cash flow into North Korea without alerting international authorities.
Conclusion
As of March 2024, the global community faces challenges in monitoring North Korea’s continued illegal activities, especially after Russia blocked the renewal of a key UN Panel of Experts. The formation of the Multilateral Sanctions Monitoring Team (MSMT) aims to address some of these issues, but the effectiveness of this new group remains uncertain. China’s cooperation is crucial for enforcing sanctions and ensuring that North Korea’s efforts to generate illegal funds are curtailed.
By understanding these mechanisms, the international community can better address the issues surrounding North Korea’s financial activities and work towards more effective sanctions enforcement.
Tags: North Korea, Foreign Currency, Smuggling, Cyber Theft, International Sanctions, Overseas Labor
What are North Korea’s illegal foreign currency transactions?
North Korea’s illegal foreign currency transactions refer to the ways the country conducts business using foreign money in ways that break international laws. This often involves selling goods or services overseas without proper documentation.
Why does North Korea engage in illegal transactions?
North Korea engages in these transactions mainly to avoid economic sanctions and to raise money for its government. They need foreign currency for trade and to support their economy, especially due to restrictions imposed by other countries.
How does North Korea carry out these transactions?
North Korea typically uses a network of front companies and overseas agents to handle these illegal transactions. They may also engage in various methods, like smuggling or using digital currencies, to bypass traditional banking systems.
What are the risks for those involved in these transactions?
Participants in North Korea’s illegal currency transactions face significant risks. They could face legal action from their home countries, sanctions, or even harm from the North Korean regime if the transactions do not go as planned.
What can the international community do about it?
The international community can impose stricter sanctions, monitor transactions more closely, and work together to close loopholes. Cooperation among countries is crucial to effectively counter these illegal activities and limit North Korea’s ability to conduct them.
