November 30, 2023 | Policy Brief

Treasury’s New North Korea Sanctions Highlight the Problem With North Korea Sanctions

November 30, 2023 | Policy Brief

Treasury’s New North Korea Sanctions Highlight the Problem With North Korea Sanctions

The U.S. Department of the Treasury sanctioned a virtual currency mixer yesterday for serving as a key money laundering tool for North Korean hackers and other cybercriminals. While the department contended that Pyongyang resorts to illicit cyber heists because of “the pressure of robust U.S. and United Nations sanctions,” U.S. sanctions on North Korea sanctions are only as powerful as the administration’s commitment to enforcing them.

A State Department press release noted that the United Nations (UN) Security Council’s Panel of Experts, which monitors implementation of UN sanctions on North Korea, highlighted that Pyongyang’s cyber activities generate funds for its prohibited nuclear weapons and ballistic missile programs. But the department omitted the panel’s dismissive view of the implementation of UN sanctions: North Korea “continues to flout Security Council sanctions in many areas.”

The UN panel has detailed how Pyongyang imports refined petroleum products above the allotted UN sanctions cap. North Korea also continues to export coal, prohibited by the UN sanctions. Much of these activities occur near or in China, which has largely stopped implementing UN sanctions.

From 2016 to 2018, Washington aggressively targeted North Korean evasion schemes, including efforts that involved Chinese banks and other Chinese persons helping Pyongyang circumvent sanctions. Beijing and other countries responded by increasing their vigilance on North Korean activities.

But U.S. enforcement of North Korea sanctions has atrophied since 2018, when President Donald Trump began pursuing summit-level diplomacy with Kim Jong Un. Enforcement has continued to slip under President Joe Biden. The administration has de-prioritized North Korea in favor of other issues and is reluctant to penalize Chinese entities, as Biden is seeking détente with Beijing.

North Korea reportedly accrued $1.7 billion from cyberthefts last year. That does not reflect Pyongyang’s supposed fear of robust U.S. and UN sanctions. Rather, Kim knows he can challenge Washington with few, if any, consequences. Russia and China will protect him from further UN sanctions, and the Biden administration is distracted by other foreign policy priorities.

While yesterday’s sanctions package may look significant, it addresses North Korean cyber heists that occurred in March and June 2022. It is unclear why the administration waited more than 17 months to respond to those heists. Regardless, yesterday’s package should not be confused with sanctions that will actually get Kim’s attention.

The Biden administration’s lackluster response to Pyongyang’s support for Russia’s war against Ukraine has likely further emboldened Kim. According to South Korean intelligence, Pyongyang has sent Moscow over 1 million artillery munitions as well as other materiel — a significant boost for Russia’s artillery-centric military. Moscow is aiding North Korea’s military in return, in violation of UN sanctions. Last week, Pyongyang, allegedly with Russian help, successfully placed a military reconnaissance satellite in orbit after two previous failures.

The U.S. response should have been swift and severe, aimed at destroying Kim’s revenue generation. Instead, the administration sanctioned a Slovakian national and three companies, though it is unclear if this network actually played any role in the Russia-North Korea transfers.

Congress has an important role to play on North Korea sanctions. Lawmakers passed North Korea sanctions laws by overwhelming bipartisan majorities in 2016, 2017, and 2019. Congress should hold oversight hearings probing why the administration has largely stopped implementing North Korea sanctions. Congress should also examine how the Kim regime’s additional revenue has furthered its prohibited nuclear weapons and ballistic missile programs.

The administration is talking a big game on North Korea sanctions. Congress must ensure U.S. sanctions actually live up to that rhetoric. Anthony Ruggiero is a senior fellow and senior director of the nonproliferation and biodefense program at the Foundation for Defense of Democracies. He served as the National Security Council’s director for North Korea (2018-2019) and senior director for counterproliferation and biodefense (2019-2021) in the Trump administration. For more analysis from the authors and FDD please subscribe HERE. Follow Anthony on X @NatSecAnthony. Follow FDD on X @FDD. FDD is a Washington, DC-based, nonpartisan research institute focused on national security and foreign policy.


Cyber International Organizations North Korea Sanctions and Illicit Finance