This report is the product of a six-month long collaboration between the Center for Advanced Defense Studies (C4ADS) and the Asan Institute for Policy Studies to identify financial vulnerabilities of the Democratic People’s Republic of Korea (DPRK) by using cutting edge data mining methodology and network-centric analysis.
North Korea’s overseas trading networks are evolving, and Pyongyang’s expansive business dealings with China, its biggest trading partner, are driving changes in the character, scope, and methods of these networks. As a result of these changes, North Korea and the entire Northeast Asian region face greater instability as regime elites in Pyongyang become increasingly willing and able to procure the strategic resources they need for regime security and weapons development.
North Korea has maintained a trade deficit since at least 1990, when researchers started to compile reliable data on the country’s international trade volume. Because some form of “invisible” or alternative sources of income are required to offset this deficit, this report argues that a significant portion of alternative revenue derives from overseas procurement and trade networks that have grown rapidly in size, sophistication, and scope. Wage earnings by North Korean workers overseas, revenue from various joint ventures between DPRK and foreign entities, and trafficking in weapons, illicit goods, and wildlife constitute further sources of hard currency. These illicit engagements have spanned the globe to include a range of rogue actors and proliferators, including Syria, Hezbollah, Libya, Pakistan, and Iran.
To map these growing overseas networks, this report used open source databases, including corporate registries; court filings; Equasis maritime database records; customs and trade data provided by Panjiva, a customs trade data aggregator; and real time data on ship activities provided by Windward, a maritime data and analytics platform. The compiled information was consolidated using Palantir’s Gotham network analysis platform. The resulting study consists of two parts.
In Part I, we focused on building bulk datasets on companies, individuals, and ships. By using corporate and tax registries in East Asian countries, we were able to identify significant points of convergence across seemingly disparate networks and identify 562 ships, companies, and individuals within one degree of separation from known DPRK illicit and regime entities.
In Part II, we identified key nodes from our expanded dataset for a more indepth investigation. We focused, in particular, on one Chinese trading conglomerate that has conducted over $500 million of trade with the DPRK in the past five years. Within this network, we were able to identify its subsidiary and affiliated entities that have transacted an additional $300 million with sanctioned Burmese and North Korean entities, helped maintain the cyber infrastructure of the DPRK, and traded in various goods and services that raise serious non-proliferation concerns.
Overseas networks are vital conduits of hard currency for the North Korean regime that remain exposed and vulnerable. Overseas North Korean agents and entities depend on a range of third-party facilitators for core business operations. We assess that this dependence can be leveraged and disrupted if more detailed information on the size, personnel, and modus operandi of such networks, especially the methods employed to circumvent sanctions can be generated. This report aims to bridge this gap by using open source data to map and expose the DPRK’s overseas networks.