Covert money transfers from South to North Korea persist despite restrictions

Since 2020, North Korean leader Kim Jong Un has escalated crackdowns on brokers to curb the flow of money and what he deems as “reactionary ideology and culture” from South Korea. South Korea, too, has tightened regulations on such transfers, leading to increased scrutiny by authorities.

Sending much-needed money from South Korea to North Korea has been a lifeline for many North Korean defectors, but this practice is becoming riskier as both countries intensify efforts to crack down on illegal money transfers. Brokers like Hwang Ji-sung, who himself is a defector, operate in a clandestine world, managing a covert network spanning South Korea, China, and North Korea.

The complex process involves secret calls using smuggled Chinese phones, code names, and high-stakes negotiations. If caught, North Koreans face the threat of being sent to political prison camps. A 2023 survey revealed that around 63% of North Korean defectors had transferred money to their families in the North.

Since 2020, North Korean leader Kim Jong Un has escalated crackdowns on brokers to curb the flow of money and what he deems as “reactionary ideology and culture” from South Korea. South Korea, too, has tightened regulations on such transfers, leading to increased scrutiny by authorities.

While South Korean authorities advise using legitimate banks for money transfers to North Korea, the absence of an institution legally accepting money in North Korea complicates the process. Inter-Korean relations have worsened, making official channels even less accessible.

The illicit cash transfers involve defectors making secret calls to their families in North Korea, facilitated by brokers who navigate long distances and potential surveillance. Brokers in South Korea then deposit money into Chinese accounts, and Chinese brokers bring the funds into North Korea, often disguising remittances as transactions between Chinese and North Korean trading companies.

Despite the risks and increasing crackdowns, defectors continue to send money to their families. Brokers take significant risks, facing the possibility of imprisonment if caught. The intricate network involves aliases, codes, and careful coordination to ensure the safety of everyone involved.

The testimonials of North Koreans receiving money underscore the humanitarian aspect of these transactions, providing essential support for survival. While the crackdown raises concerns about the severing of this lifeline, brokers remain determined, seeing it as a peaceful means to influence change in North Korea by showcasing the prosperity of the South. The ongoing commitment of defectors to send money reflects their resilience despite the growing challenges and risks involved.