Treasury targets network of IT workers generating revenue for DPRK arms programs

WASHINGTON Today, the U.S. Department of Foreign Assets Control (OFAC) sanctioned two individuals and four entities for generating illicit revenue for the government of the Democratic People's Republic of Korea (DPRK).

The DPRK sends thousands of highly skilled information technology (IT) workers around the world with the mission of generating revenue for the DPRK government to circumvent US and UN sanctions United Nations (UN). These IT professionals conceal their identity and location to fraudulently obtain freelance work contracts from clients around the world for IT projects, such as software and mobile application development. The DPRK government withholds up to 90 percent of the wages earned by these foreign workers, generating hundreds of millions of dollars in annual revenue for the Kim regime's weapons programs, including weapons of mass destruction ( WMD) and ballistic missile programs. Further information on the use of IT professionals to generate revenue for the DPRK can be found in the May 16, 2022 Notice to IT Professionals, issued by the Departments of State, Treasury, and Justice.

The DPRK continues to rely on its thousands of overseas IT employees to generate revenue for the regime, finance its illegal weapons programs and enable its support for Russia's war in Ukraine, said Bradley, the undersecretary of the Acting Treasury for Terrorism and Financial Intelligence. T. Smith. The United States remains committed to disrupting these networks, wherever they operate, that facilitate the regime's destabilizing activities.

GENERATION OF ILLICIT INCOME FOR IT WORKERS

OFAC's action today names a network consisting of a DPRK government arms trading department, two of its front companies that employ DPRK IT workers in Laos, two executives of the DPRK of these shell companies and a Chinese company supplying the DPRK government with electronic equipment:

Department 53 of the Ministry of the People's Armed Forces (Department 53) is an arms trading entity of the DPRK subordinate to the Ministry of National Defense of the DPRK. In addition to selling advanced conventional weapons and military-grade communications equipment, Department 53 generates revenue through the use of front companies in various industry sectors, including IT and software development. Department 53 is designated pursuant to Executive Order (EO) 13687 as an agency, instrumentality, or controlled entity of the Government of North Korea or the Workers' Party of Korea.

Department 53's front company, Korea Osong Shipping Co (Osong), has maintained delegations of IT employees from the DPRK in Laos since at least 2022. Pursuant to instructions from their on-site supervisors, these employees used pseudonyms to communicate with customers and generate revenue for the DPRK regime. , on IT projects such as cryptocurrency exchanges, websites and mobile applications. OFAC designates Osong pursuant to EO 13722 for participating in, facilitating, or being responsible for the export of workers from North Korea, including export to generate revenue for the government of North Korea or the Workers' Party of Korea.

Since at least 2021, Department 53's front company, Chonsurim Trading Corporation (Chonsurim), has also ordered an additional group of DPRK IT workers in Laos to use falsified credentials to undertake software development and other IT work for companies around the world. Chonsurim is designated pursuant to EO 13722 for participating in, facilitating, or being responsible for the export of workers from North Korea, including export to generate revenue for the government of North Korea or the Party of workers from Korea.

Jong In Chol is the chairman of the DPRK Chonsurim IT Delegation in Laos, whose income is used exclusively to support the DPRK's munitions sector. Jong in Chol is designated pursuant to EO 13722 for acting or purporting to act for or on behalf of, directly or indirectly, Chonsurim, a person whose property and real estate interests are blocked pursuant to EO 13722.

Son Kyong Sik is the chief representative of Osong Department of Department 53, based in Shenyang, China. OFAC designates Son Kyong Sik pursuant to EO 13722 for acting or purporting to act for or on behalf of, directly or indirectly, Osong, a person whose property and real estate interests are blocked pursuant to EO 13722.

Liaoning China Trade Industry Co., Ltd (Liaoning China Trade) is a China-based company that has shipped equipment to Department 53 that enables it to carry out its overseas IT business. These shipments include laptops and desktops, graphics cards, HDMI cables and networking equipment. OFAC designates Liaoning China Trade for materially assisting, sponsoring, or providing financial, material, or technological support, or goods or services to Department 53, a person whose property and interests in property are blocked pursuant to the EO . 13687.

These actions were also taken in the spirit of the North Korea Sanctions and Policy Improvement Act of 2016 (NKSPEA), including as amended by the Otto Warmbier Sanctions and Enforcement Act. North Korea Nuclear Sanctions of 2019 as part of the National Defense Authorization Act (NDAA) of Fiscal Year 2020. (PL 116-92).

IMPLICATIONS OF SANCTIONS

As a result of today's action, all property and interests in property of the designated persons described above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, all entities that are owned, directly or indirectly, individually or in aggregate, 50 percent or more by one or more blocked persons, are also blocked. Unless authorized by a general or specific license issued by OFAC or exempted, U.S. sanctions generally prohibit all transactions by U.S. persons or within (or in transit) of the United States that involve property or interests in property of designated persons or otherwise blocked.

Violations of U.S. sanctions may result in the imposition of civil or criminal sanctions against U.S. and foreign persons. OFAC may impose civil penalties for sanctions violations on a strict liability basis. OFAC's Economic Sanctions Enforcement Guidance provides more information on OFAC's enforcement of U.S. economic sanctions. Additionally, financial institutions and other individuals may be at risk of exposure to sanctions for engaging in certain transactions or activities with designated or otherwise blocked individuals.

The power and integrity of OFAC sanctions derive not only from OFAC's ability to designate and add individuals to the Specially Designated Nationals and Blocked Persons (SDN) list, but also from its willingness to remove people from the SDN list in accordance with the law. The ultimate goal of sanctions is not to punish, but to bring about positive change in behavior. For more information on the process of requesting removal from an OFAC list, including the SDN list, please refer to OFAC Frequently Asked Questions 897 here. For detailed information on the process of submitting a request to be removed from an OFAC sanctions list, please click here.

Click here for more information on the individuals and entities designated today.

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