‘Where Is The Money Coming From?’ North Korea’s Methods for Funding its Nuclear Program

North Korea earns $3 billion through cryptocurrency hacking
North Korean workers dispatched to China and Russia generate foreign currency through restaurant work
North Korea successfully launches hypersonic missile using solid fuel

According to UN experts, North Korea has amassed approximately $3 billion through hacking numerous cryptocurrency-related companies over seven years from 2017 to 2023. This substantial sum is believed to have funded about 40% of the development costs for modern weapons of mass destruction, including nuclear weapons.

On the 20th (local time), the UN Security Council’s North Korea sanctions committee released an expert panel report containing this information. The report stated, “North Korea generated 50% of its total foreign currency income through malicious cyber activities”.

North Korean hacking groups primarily targeted defense companies. The report revealed that from 2021 to 2023, North Korean hacking organizations such as Lazarus intensively hacked aerospace and defense companies in the Netherlands, Spain, and Poland, stealing data such as satellite component designs.

The panel also pointed out that around 100,000 workers illegally dispatched by North Korea to more than 40 countries worldwide are earning foreign currency in various fields such as restaurants, tailoring, construction, medical, and information technology (IT). It was said that North Korean IT workers earn a substantial amount of $250 million to $600 million annually. Workers dispatched by the North Korean Reconnaissance General Bureau are known to operate North Korean restaurants in five countries, including China, Russia, and Laos. These restaurants are not only in the food service business but are also primarily used as bases for laundering money to be sent to North Korea.

The report also showed evidence of North Korea consistently exporting weapons to Russia, which has been at war with Ukraine for two years. As a prominent example, satellite images confirmed that four Russian ships were seen loading containers at North Korea’s Najin Port between August and December 2023 and then heading to Vladivostok, Russia. Furthermore, during his visit to Russia in September last year, North Korean Chairman Kim Jong-un reportedly received high-end Russian rifles and other gifts from President Vladimir Putin, according to the panel.

The UN report released on the 20th dedicates a substantial 70 pages to the issue of North Korean restaurants.

Considering that the entire report is 615 pages, a significant portion is allocated to the issue of North Korean restaurants. This suggests that the UN Security Council has focused more on violations of sanctions by North Korean restaurants than in previous years.

The UN’s efforts to curb North Korean restaurants operating overseas are known to be due to the potential for North Korean workers to earn foreign currency.

Previously, the UN Security Council, in Resolution 2397, introduced in December 2017, requested all countries to repatriate all North Korean workers in their countries by December 2019, two years from the time of the resolution. In addition, the operation of North Korean restaurants, where the North Korean regime and local businessmen conduct joint ventures, causes controversy over violations of UN Security Council resolutions. This is because it violates the content of Resolution 2270, adopted in 2016, which warned all UN member states not to conduct any business connected with the North Korean regime.

However, the expert panel predicted in this report that North Korean restaurants still operate in China, Laos, Russia, and other countries. The income earned through these restaurants reaches $700 million annually.

One of the changes in North Korean restaurants, seemingly aware of the UN’s resolutions, is that many instances have been found where signs indicating that they are North Korean restaurants, including North Korean flags, have been removed from building exteriors and signboards.

The scale of foreign currency that North Korea earns through cyber hacking and restaurant operations is staggering. Kim Jong-un is predicted to step up efforts to earn foreign currency as he needs funds to showcase his military power as a strategy to strengthen his regime further.

With the money earned in this way, North Korea recently announced the successful ground test of an engine for solid fuel for a new type of medium-range hypersonic missile. The North Korean Rodong Sinmun reported on the 20th that under the guidance of Chairman Kim Jong Un, the Missile General Bureau, and the subsidiary Propulsion Research Institute conducted a ground jet test of a medium-range missile according to the new weapon system development plan at the Sohae Satellite Launching Station.

In response, the Ministry of National Defense is on high alert, and the U.S. State Department has stated that North Korea should return to diplomacy, not military provocation.