Congressional alert

National Security

October 21, 2021

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How Does North Korea Evade Sanctions?

In response to North Korea’s nuclear weapons tests and other destabilizing activities, Congress has passed several bills over the past few years to impose sanctions on North Korea, including the Countering America’s Adversaries Through Sanctions Act and the Otto Warmbier North Korea Nuclear Sanctions and Enforcement Act. The United Nations, European Union, and several foreign governments have also sanctioned North Korea. However, North Korea has become adept at evading sanctions that the international community has imposed on it.

New RAND research provides a detailed analysis of four North Korean sanctions evasion techniques and examines the various entities involved in these activities. The report is intended to serve as a guide to North Korean sanctions evasion methods.

The author explains that North Korea engages in sanctions evasion in four general areas of activity:

activities that generate hard currency income;
activities using the hard currency acquired to buy essential raw materials and dual-use and restricted technologies;
covert transportation of goods that obfuscates North Korean involvement (smuggling); and
movements of hard currency, precious metals, and jewels internationally without North Korea’s beneficial ownership of those funds becoming known (money laundering).

The report finds that there are four types of entities involved in North Korea’s sanctions evasion:

North Korean government officials accredited to North Korea’s embassies;
North Korean overseas workers;
front and shell companies; and
trusted third-party intermediaries.

Sanctions evasion allows North Korea to feed its overriding need for hard currency to maintain the incumbent political regime in power and fund nuclear weapon and ballistic missile programs. Those programs threaten international security, particularly in Africa, where North Korea is active in 38 of 54 countries.

Despite the large number of African countries implicated, the challenge posed by North Korean sanctions evasion activities in Africa is not impossible to overcome. The author finds that the North Korean sanctions evasion-related entities and sanctions evasion-related activities causing the greatest potential harm were concentrated in eight African countries. If the governments of those countries, neighboring countries, and the international community realize the dangers that cooperation with North Korea creates and then decide to enforce sanctions, they could have a significant impact on reducing the security risks created by North Korea.

Jayme Fuglesten
Director, Office of Congressional Relations

Kurt Card
Legislative Analyst

Nathaniel Lutovsky
Legislative Analyst

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