Shocking Ways North Korea Makes Money, From Cybercrime To Slave Labor

The money flowing into North Korea

Cut off from the rest of the world, North Korea's trade with foreign territories has largely been severed as a result of global sanctions. But Supreme Leader Kim Jong-un and his elite still manage to enjoy luxury lives while also funding the state's "irreversible" nuclear mission. So where's all the money coming from?

Kim Jong-un’s much-publicized meeting with Russian president Vladimir Putin hints at a relationship that North Korea may be benefiting from financially, but it’s not the only avenue that allows cash to flow into the so-called Hermit Kingdom.

Read on to find out how the tightening of ties with Russia could provide a lucrative boost to North Korea, and discover the other ways it makes money, from simple exports to more sinister methods. All dollar values in US dollars.

Arms deals (and more) with Russia

Long before Kim Jong-un set off on a rare trip outside of North Korea in his infamous armored train, Western intelligence agencies were clear about the purpose of his visit – the sale of arms to Russia. According to an official from the US military, the Hermit Kingdom has already been supplying Russia with weapons for its ongoing war with Ukraine.

President Putin is believed to have bought millions of rockets and shells from the rogue state to bolster stockpiles depleted by the lengthy conflict, as Western sanctions have prevented him from buying them elsewhere. US intelligence has also claimed that the Russian mercenary group Wagner received a shipment of arms from North Korea in 2022.

North Korea has denied supplying Russia with ammunition. But the isolated country’s desperation for food, cash, and missile technology to bolster its nuclear mission, coupled with Russia’s need for a steady supply of weaponry, has laid the foundations for a mutually beneficial relationship.

Burgeoning relationship with Russia

Ties between the two nations had already been tightening. Russia apparently supplied Kim Jong-un with 30 thoroughbred horses in 2022 via the Tumangang Friendship Bridge, the only land link between the two countries, which had closed during the COVID-19 pandemic. At the time, speculation was rife that North Korea had shipped artillery shells the other way in payment. It was also reported that Russia would start shipping medicines to the nation.

In May this year, Russia's Defence Minister Sergei Shoigu was pictured in Pyongyang, where Kim personally showed off North Korea’s latest weapons. The armaments on display included the Hwasong intercontinental ballistic missile (ICBM) and two new drone designs. Both countries denied trading weapons, insisting their meeting was simply a discussion of “matters of mutual concern” around national defense and international security. Shoigu also reportedly handed Kim “an autographed letter” from Putin.

A public meeting, but private discussions

This appears to have laid the groundwork for Vladimir Putin and Kim Jong-un’s very public meet and greet at the Vostochny Cosmodrome in Russia’s Amur Region. However, discussions between the two took place behind closed doors, with no public announcement of any deals, hardly surprising if a suspected arms deal was indeed being discussed.

Comments made public by Russian media appeared to show Kim endorsing the war in Ukraine: “We will always support the decisions of President Putin and the Russian leadership... and we will be together in the fight against imperialism.” Putin also hinted that Russia would help North Korea build satellites.

Arms deals (and more) with Russia

Any arms deal between the two countries could be short-lived. A New York Times report claims Russia has managed to bypass sanctions and is currently ramping up its weapons production beyond prewar levels. Meanwhile, North Korea is unlikely to want to part with too much of its military stockpile. However, analysts have suggested the country has vast reserves of arms at its disposal, having not fought a war since 1953.

While a deal with Russia could prove lucrative in the short term, it’s far from the only revenue stream the Hermit Kingdom can call upon. Read on to discover the other ways North Korea generates cash, and how its economy is showing signs of life despite punishing sanctions.

GDP grows despite sanctions...

The best way to measure a country's economic success is via its gross domestic product (GDP), and while North Korea doesn't make its economic information public, data released by Trading Economics and the World Bank put the country's GDP at $18 billion by the end of 2020, and says that it's been growing year on year. Meanwhile, Statista data pegs North Korea's GDP at 36.2 trillion South Korean Won in 2022, the equivalent of around $27.3 billion.

This is only a fraction of neighboring South Korea's GDP, which the World Bank reported as $1.67 trillion in 2022. But the fact that North Korea has seen growth suggests that the international sanctions imposed to try and damage its ballistic missile and nuclear weapons program have had a limited impact...

GDP grows despite sanctions...

According to analysis by Reuters, economic sanctions imposed by countries such as the United States have "abjectly failed to halt its nuclear and missile programs or to bring the reclusive northeast Asian state back to the negotiating table." North Korea's nuclear program has gone from strength to strength, with the nation firing more than 60 missiles in 2022. A record 23 of these launches were carried out in a single day: November 2.

The missile launches have continued apace in 2023, with North Korea firing two short-range ballistic missiles toward its eastern seas while Kim was traveling to meet Putin in Russia. It's still a clear sign the country has the budget to continue investing in new weaponry. However, a senior member of the Biden administration doesn't believe this is a result of failing sanctions, saying: "I would disagree with the idea that sanctions have failed. Sanctions have failed to stop their programs – that's absolutely true. But I think if the sanctions didn't exist, it would be much further along, and much more of a threat to its neighbors, to the region, and to the world." 

...but exports are falling

While North Korea's GDP is apparently growing, the value of its exports and imports has fallen, according to the latest data quoted by Statista.

Excluding any goods transported between North and South Korea, North Korea's exports amounted to just $192 million in 2022, the most recent year for which data is available. That's a significant decrease from 2015, when its exports reportedly rose by 4.6% to $2.82 billion.

Exporting coal

The country might be breaking into the arms trade, but coal is North Korea's main export, bringing in more than $370 million a year in illegal shipments, it's been estimated. In February 2017, China announced that it would be ending all coal imports from North Korea for the year in a bid to comply with UN sanctions. However, North Korea's coal industry has been thriving, and it was reported in a confidential United Nations report that coal has been delivered to China via ship-to-ship transfers. 

According to Kim Kuk-song, a North Korean defector interviewed by the BBC in 2021, he was responsible for selling rare metals and coal to raise extra funds for the country. He would sell the commodities for millions in cash and carry the money back to North Korea in a suitcase. 

Smuggling oil

And it's not just coal that North Korea has managed to trade with its east Asian neighbors. According to an investigation by the Financial Times, North Korea has a network of "shell companies, triad networks, underground financing channels and sprawling family connections" that enables it to smuggle oil, particularly with mainland China, Hong Kong, and Macau. This is despite the UN Security Council imposing a 500,000-barrel annual cap on oil deliveries to North Korea back in 2017.

James Byrne, director of analysis research at the Royal United Services Institute think tank, described the investigation as "the most detailed evidence ever put into the public domain to show how North Korea uses people with high-level connections to criminal networks like the triads to evade sanctions and finance their weapons programmes." 

Information from World's Top Exports shows that processed petroleum oils accounted for 6.8% of the country's exports in 2021 (the most recent year for which there's data). While this might not sound like much, it's significant considering UN caps should mean North Korea barely has enough oil to cover its energy needs.

Exporting seafood

North Korea has become known for its pine mushrooms after Kim Jong-un gifted two tons of the fungus to the South Korean government in 2018, but there are also other foodstuffs that the country exports to boost its income. Molluscs, for example, brought in a respectable $137 million in 2017, and North Korea was responsible for 1.3% of the world’s mollusc exports.

Processed fish was also a reasonably big seller for the country, with North Korea exporting $2.69 million-worth a year to China, according to MIT's Observatory of Economic Complexity (OEC).

Exporting textiles

Clothing made up a total of $584 million of North Korea’s exports in 2017, according to the OEC, including non-knit coats, suits, and activewear. In recent years there's been a lot of controversy regarding clothing made in the socialist state, and a lot of it is said to have been labelled with "Made in China" tags before being exported.

In 2021, North Korea's exports included $219,000-worth of plastic-coated textile fabric, $184,000-worth of used clothing, and $147,000-worth of non-woven textiles. The nation's most important textile exports, though, are in silk. In 2021, raw silk accounted for 1.51% of North Korea's exports – valued at $2.72 million – while its silk waste exports were worth $1.03 million. 

Trading with China

Despite using "Made in China" tags on its textiles exports, North Korea is thought to do most of its trade – around 80% in fact – ​with its northern neighbor. According to the OEC, North Korea exported $44.1 million-worth of goods to China in 2020 and $56.3 million in 2021. Meanwhile, Senegal took 20.4% of North Korea's exports in 2021, followed by Poland (5.48%), and Tanzania (4.63%). 

After declaring victory over COVID-19 in August 2022, North Korea reportedly eased some of its border restrictions. According to an article in Daily NK, many locals believe this had economic motivations, as Kim Jong-un wanted to "quickly reinvigorate trade with China". Last September, the nation restarted its freight train service with China after a five-month hiatus, the Associated Press reported. 

Sharing Korean cuisine and entertainment

North Korea isn't just sending its products abroad and has gone one step further and opened restaurants in other countries. Keen to monetize its popular cuisine and style of entertainment, the North Korean government has opened over 100 cafes – all called 'Pyongyang' after the country's capital – across China, as well as in Thailand, Vietnam, and even the Netherlands. 

The chain is known for being mysterious, and there are restrictions on photography of the performances that the waitresses put on between serving customers. The establishments are staffed by North Koreans, and all profits feed straight back into the government. However, the pandemic and its impact on global trade and the restaurant industry meant that the nation allegedly turned towards other more illegal money-making efforts...

Corruption is rife

It's unsurprising that Transparency International, the global coalition against corruption, ranks North Korea as the joint-sixth most corrupt country in the world in its 2022 Corruption Perceptions Index, only behind some of the world's most war-torn countries such as Syria, South Sudan, and Somalia. 

With permission being required for nearly every human move in North Korea, bribery is said to be commonplace between officials and citizens, and the money most likely lines a government pocket or two. 

Dealings on the Third Floor

Most of that corruption is said to be government-led. According to North Korea Leadership Watch, a site that monitors the country's leadership, there are three bureaus in North Korea known as Office 35, Office 38, and Office 39, collectively known as the Third Floor. These offices run intelligence operations, legally and illegally source foreign currency for the party and core elites, and manage some of the party’s and Kim Jong-un's family’s money.

Making and trafficking drugs

Among the alleged illegal activity of the Third Floor is the production and selling of drugs. It's long been believed that North Korea has both manufactured and trafficked narcotics for cash, and it may continue to do so as sanctions are ramped up, restricting the trading of legitimate goods.

It's unlikely that the state will clean up its act any time soon, given that lenient border controls and a high demand for drugs make it an easy and lucrative means of making money. Former North Korean spy Kim Kuk-song's claims corroborate this. He told the BBC that he built an illegal drugs lab in the Workers' Party office to raise "revolutionary" funds, primarily through producing and selling crystal meth. 

Forging banknotes

Not all illegal activity in North Korea is drug-related. Some North Koreans have also become quite the experts at banknote forgery. A lot of knowledge and expensive machinery goes into replicating notes to such an exacting standard, and the fact that multiple experts have been needed to spot that the reproductions aren't real notes suggests that government resources were most likely responsible.

The $100 bills have been branded as "supernotes" thanks to their likeness to genuine paper money, and North Korea has gained a reputation for trading in the counterfeit cash for real money for the regime.

Stocking up on cryptocurrencies

North Korea hasn't limited itself to hard cash, and cryptocurrency offers another major income stream for the state. According to the 2022 Crypto Crime Report from Chainalysis, the regime stole nearly $400 million in cryptocurrency in 2021, which is thought to have funded the country's weapons program. In the first five months of 2022 alone, this figure rose to $840 million. That's more than $200 million more than the nation stole in 2020 and 2021 combined, with data since revealing the country stole more cryptocurrency in the whole of 2022 than ever before: as much as $1 billion-worth overall.

Last March, North Korean hackers also allegedly stole cryptocurrency worth more than $600 million from users of the video game Axie Infinity. US officials later announced they had seized back $30 million of the funds – the first-ever recovery of cryptocurrency stolen by North Korean hackers.

Additionally, it's thought the government has been legally buying up assets such as Bitcoin, which isn't controlled by governments or banks and is hard to trace. This makes it a perfect investment and source of income for the secluded state.

Hacking through LinkedIn

One of the most prominent North Korean Bitcoin scandals came to light in August 2021. The cyberattacks involved sending seemingly innocent messages via professional networking site LinkedIn. Finnish cyber security firm F-Secure unveiled the hack, where North Korean hackers known as the Lazarus Group had created fake job profiles targeted at employees working for aerospace and military companies they were looking to infiltrate in more than 12 countries, including the US, UK, China, Russia, and South Korea.

Personal information and private data were then easily accessible to the criminals, which in turn was used to steal Bitcoin and other cryptocurrencies. Despite being found out, security companies warn that this wasn't the first – and won't be the last – malicious cyberattack to come out of North Korea, especially as COVID-19 has impacted other revenue streams. It's now thought that North Korean hackers are trying to get remote interviews for jobs in the US in an attempt to siphon money into the country. 

Hacking is allegedly big business in North Korea

And it's not just cryptocurrencies that are being hacked. According to defector Kim Kuk-song, former leader Kim Jong-il began training cybercriminals in the 1980s "to prepare for cyberwarfare." Although most North Koreans are denied internet access and even cell phones, previous defectors have claimed that there are around 6,000 professional hackers in Pyongyang – and it's believed they were behind the WannaCry ransomware attack that targeted organizations, including the UK's National Health Service (NHS), in 2017.

Kim Kuk-song claimed that the hackers work in the 414 Liaison Office, known within the government as "Kim Jong-il's Information Centre." A confidential UN report in 2019 revealed that these hackers had stolen $2 billion to fund the country's nuclear weapons program. The Biden administration has since estimated North Korea spends around a third of its illegal cryptocurrency on nuclear weaponry. 

Luxury goods are for sale

While many people survive on the bare necessities, Supreme Leader Kim Jong-un is renowned for living a life of luxury. The same goes for his elite inner circle, some of the few "comrades," as the communist country's citizens are known, who can afford to shop at the two well-stocked luxury department stores in North Korea's capital Pyongyang.

The cash-only stores serving the ruling upper class reportedly sell designer items such as Montblanc watches worth over $4,000. These stores are also thought to provide a revenue stream for the regime. 

Slave labour abroad

And it isn't just in their home country that North Korean workers are being underpaid and mistreated to benefit the wealthy elite. There have been rumors of North Korea profiting from slave labor for years. In 2015, a United Nations press conference held by rapporteur Marzuki Darusman spelt out just how bad the situation was.

Between 50,000 and 100,000 North Korean citizens have been sent abroad – predominantly to China and Russia, but also to countries across Asia, Europe, and Africa – to work in various labor industries, including mining, construction, and textiles. Working conditions are harsh and salaries are virtually non-existent, with constant surveillance ensuring that laborers are worked to the bone. Money is exchanged for the excruciating work, but it goes straight to the North Korean government. As Kim Kuk-song said: "All the money in North Korea belongs to the leader." 

Bringing in the tourists

Given its secretive and scandalous reputation, it's unsurprising that people are keen to sneak a peek into North Korean life. Those wanting a close-up look at the day-to-day lives of North Korean citizens will be disappointed, however, as the few tourists allowed into the country are closely watched at all times and are only permitted to visit places that have the government seal of approval.

It's uncertain exactly how much money North Korea was making from foreign visitors pre-COVID, but it's estimated that it could have been bringing in as much as $175 million a year.

Now find out about the legal and illegal jobs North Koreans do to survive