North Korea has benefited from record revenue from stolen virtual assets in 2022 and the ongoing activities of illicit maritime trade and sanctions evasion networks, a new U.N. report has found. 

The March 2023 report of the U.N. Panel of Experts overseeing sanctions on North Korea found rising revenues from theft of cryptocurrencies and an increase in illicit maritime activity by North Korea. The U.N. report highlights investigations into reports of North Korea selling ammunition and military equipment to Russia and other member states. The report flags concerns about North Korea's illicit activities and their potential impact on global security, and the country’s ability to bypass international sanctions and continue to finance its nuclear program.  

Cryptocurrency Theft and Money Laundering

Virtual asset theft by state-sponsored North Korean actors took in record-high revenue in 2022, with estimates ranging from $630 million to more than $1 billion worth of cryptocurrency. North Korean cybercrime groups overseen by the Third Bureau of the Reconnaissance General Bureau (RGB) have continued to use ransomware and hacking of cryptocurrency firms and exchanges to generate revenue, using increasingly sophisticated techniques. Non-fungible token (NFT) investors have been among the targets of a campaign attributed to the Lazarus Group, a leading RGB-sponsored cybercrime group.

The Panel of Experts recommended the designation of General Ri Chang Ho, director of the RGB, which the U.N. and U.S. have already designated. The panel also restated their previous recommendation that U.N. member states implement the Financial Action Task Force (FATF) guidance on virtual assets, citing U.S. sanctions against the virtual currency mixers Blender and Tornado Cash in 2022 for showing that “decentralized protocols should also be subject to the compliance obligations to which centralized services adhere.”  

Illicit Maritime Activity

North Korea accelerated its acquisition of shipping vessels (mainly cargo ships) in 2022. After the acquisition of only one ship in 2021, at least 10 ships became officially registered and flagged by North Korea or came under North Korean ownership or control, approaching the 2020 total of 12 ships. These acquisitions used evasive methods including sales through multiple intermediaries, sellers that lack online footprints, and disguised beneficial ownership of the end user. All of these sales occurred in violation of U.N. Security Council resolutions prohibiting direct or indirect supply, sale or transfer of vessels to North Korea. 

Ship-to-ship transfers continued as a leading method for illicit imports and exports. Imports of refined petroleum products, vehicles, and other cargoes used transfers in North Korea’s territorial waters, with ships acquired in 2022 engaging in this illicit trade. Exports of North Korean coal employed ships sailing into Chinese territorial waters without transmitting automatic identification system (AIS) signals. 

The Panel of Experts issued a list of recommended best practices for parties engaged in vessel sales and recommended the designation of 25 vessels–21 for sale to North Korea in violation of U.N. sanctions and four for illicit transfers of refined petroleum or other goods. The last U.N. designation of North Korean ships occurred in 2018.

Ammunition and Military Equipment Sales

U.S. reports of North Korean ammunition sales to Russia – including artillery shells, infantry rockets and missiles that may be used in Russia’s military activities in Ukraine – are under investigation by the Panel of Experts. 

The Panel of Experts confirmed that the North Korean military electronics manufacturer Global Communications (Glocom) is offering a variety of military radios, radars, and software for export. 

Reports of weapons sales to Myanmar and exports of military communications equipment and small arms to a number of U.N. member states are under investigation, the report noted, including with Cyprus, El Salvador, Fiji, the Niger, the Philippines and Trinidad and Tobago.