The DPRK uses a variety of schemes to circumvent sanctions and obtain the goods and services it requires. Recent reports reveal the details of one such procurement network in Malaysia.

North Korean operatives abroad are known to engage in international trade in order to generate cash and obtain goods. Ri Jong Chol was one such operative. He is believed to have exported palm oil and soap to a military-controlled (and sanctioned) trading company. In this particular scheme, some of the goods were shipped form Malaysia via Dalian (China) to North Korea.

Some of the methods that Ri used to evade detection include structuring transactions below US$ 10,000 and nominees (a Malaysian shareholder was nominally in charge of one of the companies, but the actual beneficiaries were from the DPRK). Ri may have also investigated the possibility of using hackers to steal intellectual property that could then be sold for a profit.

Analysis: This network is likely one of many DPRK procurement networks operating in and around Malaysia. To evade sanctions, the country likely uses and discards procurement agents, companies, and networks regularly. Disruptions to these networks likely reduce the regime’s ability to procure goods and services, but only for a period of time. While the DPRK likely does not have significant redundancy in these networks, establishing more is a relatively straightforward process for a country so practiced in illicit financial activity.

 

 

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  1. […] Korea also continues to generate foreign exchange through remittances and trade networks. Many North Koreans live abroad, and they can send foreign remittances back to the country, […]

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Category

Compliance, illicit financing, sanctions evasion

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