North Korea Hacks Banks, Cryptocurrencies for Funds, UN Finds

(Bloomberg) -- North Korea has mastered hacking into both old and new financial systems to funnel billions of dollars to its nuclear weapons program, a new United Nations report found.

North Korean agents have amassed about $2 billion by stealing money from financial institutions and cryptocurrency exchanges, a panel monitoring the enforcement of UN sanctions said in a report to the Security Council.

In addition, Kim Jong Un's regime has about “30 overseas representatives controlling bank accounts and facilitating transactions, including for illicit transfers of coal and petroleum,” the panel said in the report seen by Bloomberg News.

“Ongoing deficiencies in Member States implementation of financial sanctions combined with DPRK's deceptive practices enabled the country to continue to access the international financial system,” the panel said, using the acronym for the Democratic People's Republic of Korea. “Large scale attacks against cryptocurrency exchanges allow the DPRK to generate income in ways that are harder to trace and subject to less government oversight and regulation than the traditional banking sector.”

Aggressive sanctions enforcement is central to President Donald Trump's effort to get Pyongyang to eliminate its nuclear weapons program. North Korea's foreign ministry on Tuesday renewed its threat to take a “new road” in negotiations with the U.S.

Read More: North Korea Warns U.S. Talks at Risk After Latest Missile Tests

Tensions have steadily increased since Trump became the first sitting American president to set foot in North Korea on June 30 and agreed to restart working-level talks in two to three weeks. North Korea kept its top diplomats away from a chance to meet with U.S. Secretary of State Michael Pompeo at regional conference in Bangkok last week, while repeatedly testing missiles during his trip.

Another source of hard currency for North Korea may be an army of tech workers, according to the UN panel's report.

One UN member state told the panel that hundreds of North Koreans are deployed in Europe, Asia, Africa and the Middle East to work as software programmers and developers. They earn about $3,000 to $5,000 a month and pay most of their salaries to North Korean-controlled entities. To obscure their national identity, local citizens serve as nominal heads of the companies employing them, which are paid in turn by North Koreans, according to this account.

The allegations were made in a draft of a twice-yearly report to a UN committee charged with enforcing sanctions on North Korea. After missile launches and nuclear weapons tests by North Korea in 2017, the UN Security Council imposed three rounds of sanctions on Pyongyang, including bans on exports of iron, coal, lead, seafood and textiles as well as some oil-import restrictions.

To contact the reporter on this story: David Wainer in New York at dwainer3@bloomberg.net

To contact the editors responsible for this story: Bill Faries at wfaries@bloomberg.net, Larry Liebert, Joshua Gallu

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