NK estimated to earn billions in illicit funds; Foreign professors back to PUST; Tehran needs USD100 billion in foreign investment; Iran-Pakistan pipeline stalled
Prohibited Transactions for the week of 2 September 2024 (#60)
This image was created in Microsoft Copilot Designer 8 Sep 2024 using the prompt “North Korea casino junket, abstract.”
North Korea
A South Korean state-run think tank estimates that Pyongyang earned more than USD6 billion in illicit funds between 2017 and 2023. This includes USD2.15 billion from illegal coal exports, USD1.87 billion from North Korean workers based in the PRC and Russia, USD1.35 billion from illicit cyber activities, and USD540 million from exporting munitions to Russia.
According to a US official, Russia obtained more than 16,500 containers of munitions and related materials from the DPRK since September 2023, while also having launched approximately 65 North Korean missiles at Ukraine. The US believes that in exchange for the weapons, Pyongyang is receiving fighter aircraft, surface-to-air missiles, armored vehicles, equipment for ballistic missile production, and other military materials.
A Russian company is importing North Korea-produced beer into the country.
Russian state media reports that approximately 600 Russian tourists visited the DPRK since February of this year, and that tourist demand will likely result in regular train service being established between the two countries. Additionally, at least 10 groups of Russian tourists have visited the Masikryong Ski Resort this year.
The US Federal Bureau of Investigation (FBI) released a public alert about North Korean attempts to steal digital assets by engaging in social engineering attacks against the virtual currency sector. The alert includes a number of indicators of potential illicit activity, as well as suggestions for mitigations a company can take.
The Royal United Services Institute (RUSI) released a report about potential North Korean activity in the casino and gaming sectors. The report is geared toward providing policymakers, regulators, and compliance officers with a broader framework for understanding the potential risks from North Korean proliferation finance activity tied to the casino and gaming sectors, as opposed to providing specific details about North Korea’s actions in the sector. The report notes the risks from the DPRK’s links to the junket sector, the use of organized crime networks to hide North Korean involvement in illicit activities, and the development of online casinos by the DPRK. //The financial crime risks described in the report are real, but the ties to North Korean illicit actors are a bit more tenuous. The suggested risk mitigation strategies are good practices that any casino or gaming establishment should implement, regardless if there is a specific North Korean proliferation finance threat or not.
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According to covert reporting from inside North Korea, state-sanctioned smuggling with the PRC has resumed along the Hyesan border area.
According to Seoul, some foreign professors have returned to the Pyongyang University of Science and Technology (PUST), following a four-year hiatus. //Founded in 2010, PUST in the DPRK’s only private university which educates North Korea’s elite.
Washington continues to affirm its commitment to working with allies to develop an alternative to the now shuttered UN Panel of Experts that monitored North Korea’s sanctions evasion activities.
Iran
Iran’s new president Masoud Pezeshkian stated that the country needs between USD200 to USD250 billion of investment to achieve a targeted GDP growth of eight percent, as opposed to the current level of four percent. Pezeshkian stated that Tehran only had USD100 billion in funds available, so they would need an equal amount in foreign investment. He also stated that one way to control the country’s inflation levels involves expanding economic connections with the rest of the world, with a goal of reducing inflation to 30 percent by the end of the year. //No details on where USD100 billion of foreign investment will come from, or how by expanding economic relations with other countries will help bring down rampant inflation. But this does suggest an increase in economic diplomacy in the immediate future, especially with neighboring countries.
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Tehran reportedly paid a ransom of USD3 million to stop hackers from releasing stolen account data from as many as 20 domestic Iranian banks.
Iran is threatening to take Pakistan to an arbitration court over Islamabad’s unwillingness to build its section of the long-planned Iran-Pakistan (IP) pipeline. //Pakistani officials have publicly been pushing for the competition of the pipeline (see Issues #44 and #47), but Tehran’s willingness to go into arbitration suggests that behind the scenes, US warnings about the sanctions risk that Islamabad faces could be giving Pakistan pause.