Effectively implementing sanctions against North Korea has been a difficult proposition. Despite sanctions, North Korea continues to raise foreign exchange to pay for imports from China. Part of the reason for this difficulty is that the country’s trade and finance networks operate unofficially, largely outside the detection capabilities of regulators, which in turn is partly due to the fact that the country has been under sanction for such a long period of time. The regime has adapted to the realities of the situation, and in some instances has been quite adaptive to circumventing the sanctions.
In order to raise foreign exchange, DPRK sells small arms, military training and other defence services. That has recently included selling ballistic missile technology to Syria and Myanmar. To a lesser extent, the country also relies on coal sales to generate foreign exchange.
North 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, although that has also become more difficult since Swift, the international payments network, cut all connections to the country’s banks in 2017.
The Foreign Trade Bank of North Korea has a presence in Moscow, Dubai and Beijing, and can still carry out transactions on behalf of the government despite being sanctioned by the US.
Analysis: The case of North Korea demonstrates the requirement to have international compliance on all aspects of sanctions. Without this, the sanctions become more of a speed-bump for regimes rather than effective means of cutting them off from the international financial and trade systems.