Treasury Targets IT Worker Network Generating Revenue for DPRK Weapons Programs

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

The DPRK dispatches thousands of highly skilled information technology (IT) workers around the world with orders to generate revenue for the DPRK government to circumvent U.S. and United Nations (UN) sanctions. These IT workers obfuscate their identities and locations to fraudulently obtain freelance employment 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 overseas workers, thereby generating annual revenues of hundreds of millions of dollars for the Kim regime's weapons programs to include weapons of mass destruction (WMD) and ballistic missile programs. More information about the use of IT workers to generate revenue for the DPRK can be found in the May 16, 2022 IT Worker Advisory, issued by the Departments of State, Treasury and Justice.

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

ILLICIT IT WORKER REVENUE GENERATION

OFAC's action today designates a network that consists of a DPRK government weapons-trading department, two of its front companies that employ DPRK IT workers in Laos, two DPRK leaders of those front companies, and a Chinese company supplying the DPRK government with electronics equipment:

Department 53 of The Ministry of The People's Armed Forces (Department 53) is a DPRK weapons-trading entity subordinate to the DPRK Ministry of National Defense. In addition to selling advanced conventional weapons and military grade communications equipment, Department 53 generates revenue using front companies in a variety of industrial sectors, including IT and software development.Department 53 is being designated pursuant to Executive Order (E.O.) 13687 for being an agency, instrumentality, or controlled entity of the Government of North Korea or the Workers' Party of Korea.

Department 53 front company Korea Osong Shipping Co (Osong) has maintained delegations of DPRK IT workers in Laos since at least 2022. As directed by their on-site supervisors, these workers have used aliases to communicate with clients and generate revenue for the DPRK regime, on IT projects such as cryptocurrency exchanges, website and mobile applications. OFAC is designating Osong pursuant to E.O. 13722 for having engaged in, facilitated, or been responsible for the exportation of workers from North Korea, including exportation to generate revenue for the Government of North Korea or the Workers' Party of Korea.

Since at least 2021, Department 53 front company Chonsurim Trading Corporation (Chonsurim) has also directed an additional group of DPRK IT workers in Laos to use falsified identification credentials to undertake software development and other IT work for companies around the world. Chonsurim is being designated pursuant to E.O. 13722 for having engaged in, facilitated, or been responsible for the exportation of workers from North Korea, including exportation to generate revenue for the Government of North Korea or the Workers' Party of Korea.

Jong In Chol is the president of Chonsurim's DPRK IT worker delegation in Laos, the revenue of which is used exclusively to support the DPRK's munitions sector. Jong in Chol is being designated pursuant to E.O. 13722 for acting or purporting to act for or on behalf of, directly or indirectly, Chonsurim, a person whose property and interests in property are blocked pursuant to E.O. 13722.

Son Kyong Sik is the Shenyang, China-based chief representative of 53 Department's Osong. OFAC is designating Son Kyong Sik pursuant to E.O. 13722 for acting or purporting to act for or on behalf of, directly or indirectly, Osong, a person whose property and interests in property are blocked pursuant to E.O. 13722.

Liaoning China Trade Industry Co., Ltd (Liaoning China Trade) is a China-based company that has shipped to Department 53 equipment that enables it to conduct its IT worker activities abroad. These shipments include notebook and desktop computers, graphics cards, HDMI cables, and network equipment. OFAC is designating Liaoning China Trade for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Department 53, a person whose property and interests in property are blocked pursuant to E.O. 13687.

These actions were also undertaken in the spirit of the North Korea Sanctions and Policy Enhancement Act of 2016 (NKSPEA), including as amended by the Otto Warmbier North Korea Nuclear Sanctions and Enforcement Act of 2019 within the FY 2020 National Defense Authorization Act (NDAA) (P.L. 116-92).

SANCTIONS IMPLICATIONS

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, any entities that are owned, directly or indirectly, individually or in the 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 exempt, U.S. sanctions generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons.

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

The power and integrity of OFAC sanctions derive not only from OFAC's ability to designate and add persons to the Specially Designated Nationals and Blocked Persons (SDN) List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC's Frequently Asked Question 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.

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

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