North Korea Sidesteps UN Sanctions To Help Its Economy

North Korea-Sanctions-U.S.-China

North Korea, hurt by U.S. and U.N. sanctions, has found creative workarounds to aid the country’s economy, according to a report in The Wall Street Journal.

In one instance, North Korea earned $100,000 by selling wood to a Chinese company. The country needed the money to pay oil suppliers, but its access to the global financial system is hampered by sanctions meant to force the country to end its nuclear program.

To get around the imposition, North Korea asked someone in China to wire the money to a trader in Singapore, who would use it on the country’s behalf.

Schemes like this, prosecutors allege, are used repeatedly by the country. In fact, North Korea has built a whole financial network to evade the sanctions — the country has bought oil, coal and tobacco all outside rules created to make sure it doesn’t do so.

The regime of Kim Jong-un has used complicated shipping maneuvers to move goods, has created fake companies to hide activities and has made millions selling military training and computer-based programming services.

The main thrust of activity is moving around U.S. dollars by keeping money with overseas associates, hiding the connection to the country. The associates are the ones who move the money through U.S. banks.

Joshua Stanton, a lawyer who helped draft U.S. sanctions against North Korea, said this technique helps the country hide the money.

“Only a small amount of money enters North Korea,” Stanton said. “Most of it sits in foreign banks and moves around.”

Washington has taken action. It’s gone after some companies it’s accused of conspiring with North Korea, and it’s looking into some Chinese banks. In 2016, prosecutors in the U.S. said a number of banks processed transfers that were involved with North Korea.

The problem, according to U.S. prosecutor Zia Faruqui is that North Korea is very good at hiding these transactions.

“When you find a good blackjack table that is paying out, everyone goes and tries to cash that out,” Faruqui said. “When you find a front company that you can push U.S. dollars through, and you’re a North Korean bank, you’re going to use it for everything.”



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.