NORTH KOREA’S use of the global Internet has leapt 300 percent in the past three years, and not only because the elite are doing more online shopping. The regime, according to a new report solidifying earlier findings, has seized on Web-based weaponry to commit cybercrimes and circumvent international sanctions.
North Korea remains dependent on foreign currency, and especially the dollar, which is what makes sanctions an effective pressure mechanism in the first place. But a study by Recorded Future, a Somerville, Mass., digital security group, shows how the nation’s leadership has devised modern methods to conduct cryptocurrency heists and harness blockchain technology to launder funds undetected. This undermines the tried-and-true ways the West has tried to knock pariahs into line, such as going after banking and restricting oil, coal and other shipments.
Some of North Korea’s tricks for amassing funds in exile are nefarious but relatively familiar: ransomware attacks carried out by hacking into a worldwide financial terminal known as SWIFT, for example. Others are innovative and insidious: stealing from cryptocurrency exchanges at a huge scale, or hijacking individuals’ computers across the globe to mine cryptocurrency unnoticed. North Koreans then route the proceeds through multiple countries and even convert them to multiple blockchain-based coins to skirt tracking, a finding the United Nations Security Council confirmed last summer.
There’s little reason to expect others won’t follow this playbook; already there are indications that Iran is moving money through cryptocurrency exchanges, and terrorist groups are known to rely on anonymous coins such as Monero to solicit donations. One answer for the United States and its allies may be to lean on governments that aid Kim Jong Un’s regime. North Korea has found friends in China, Russia and India to host its online operations, but it also takes advantage of businesses in smaller countries to front its illicit activities or to contract with its burgeoning insurance industry — sometimes even without those countries knowing it. Drawing these nations’ attention to fraud, cybercrimes inflicted on everyday civilians and even the theft of state secrets might encourage them to crack down. North Korea has to convert any cryptocurrency haul into hard currency somehow, or purchase goods with those ill-gotten gains. It’s at these transaction points that the international community will have to learn to strike.
The old approach to restraining North Korea was all about isolation — but isolation is anathema to the Web, so a new approach is in order. Mr. Kim’s regime knows it can’t survive without traveling virtually beyond its borders. The rest of the world needs to realize that, too.