Treasury Sanctions Companies Exporting North Korean Labor to Russia

The U.S. Treasury Department sanctioned one Russian and one North Korean company on Thursday for facilitating the exportation of North Korean forced labor to generate revenue for the Kim Jong Un regime. While sanctions are helpful in countering Kim’s illicit financial networks, the latest designations only scratch the surface in targeting North Korea’s ongoing forced labor schemes around the world.

The targets of last Thursday’s designations were Mokran LLC, a Russian construction company, and Korea Cholsan General Trading Corporation, a North Korean company operating in Russia that manages North Korean workers. The Kim regime generates millions of dollars in revenue every year from the wages of its overseas laborers that go directly to official regime accounts to fund Pyongyang’s weapons programs. Several former overseas North Korean workers have revealed how they endured extremely abusive and inhumane conditions in these jobs.

In 2017, the UN Security Council passed Resolution 2397 to require all UN member states to repatriate North Korean workers by December 22, 2019. Although this deadline has now passed, several countries still host North Korean workers – including Russia and China, which voted for the resolution.

In October, a UN Panel of Experts that investigates North Korean sanctions evasion documented the ongoing presence of these workers in Russia. Specifically, the Panel found that North Korea’s Munitions Industry Department – the policy and oversight organization of North Korea’s nuclear weapons and missile programs – likely had three groups of information technology (IT) workers in Vladivostok past the deadline. These workers earned more than $230,000 in the month of March alone.

The Panel also reported that as of March 2020, North Korean IT workers were still operating in China and Vietnam, while factory workers were still present in China. All of them work on behalf of companies affiliated with the Munitions Industry Department. The Chinese government disputed this reporting and claimed it has repatriated all North Korean workers. Vietnam did not respond to the UN Panel’s inquiries.

Additionally, the Panel found another potential sanctions violation after reviewing Russian government data regarding North Korean worker visas. The Panel pointed to a public listing from Russia’s Ministry of Internal Affairs that indicated 753 North Koreans held worker visas this April. This listing only provided aggregate numbers and published no information on individual names. If true, Russia’s authorization of these visas would again violate UN Security Council Resolution 2397. Moscow, however, replied that the data “contained errors concerning nationality and the purpose of entry.” Subsequently, Russia changed its databases to state that no North Koreans entered Russia for the purpose of “work.”

The United States should further press both Moscow and Beijing, notwithstanding their reassurances to the Panel, to explain and correct these unresolved sanctions inquiries. Both Russia and China have a track record of obstructing the UN Panel’s reporting process by disputing the authenticity of evidence that would incriminate them in North Korea sanctions evasion.

Russia and China have actively undermined sanctions against North Korea in this instance and many others. The next administration must continue shining a spotlight on Moscow’s and Beijing’s persistent support of North Korea’s illicit financing to shame both governments into sanctions compliance.

To overcome Moscow and Beijing’s obstruction within the UN Panel, Treasury should further investigate these unresolved overseas IT worker issues related to Pyongyang’s Munitions Industry Department and the potential violations regarding Russian work visas.

It is imperative that the next administration continue to enforce sanctions to build up the economic leverage that will be essential in supporting what presumptive President-elect Joe Biden has called “principled diplomacy” to achieve North Korea’s verifiable denuclearization.

Mathew Ha is a research analyst focused on North Korea at the Foundation for Defense of Democracies (FDD), where he also contributes to FDD’s Center on Economic and Financial Power (CEFP). For more analysis from Mathew and CEFP, please subscribe HERE. Follow Mathew on Twitter @MatJunsuk. Follow FDD on Twitter @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.