Secret Deals Exposed: Russia Allegedly Facilitates North Korea’s Financial Escape

Russian President Vladimir Putin (left) is explaining something to Kim Jong Un, Chairman of the State Affairs Commission of North Korea, at the rocket assembly hangar of the Vostochny Cosmodrome in Amur Oblast, Russia on September 13, 2023./UPI·Yonhap News

Russia has unfrozen some of the United Nations Security Council-sanctioned North Korean assets and has allowed them to use its banks, reported The New York Times (NYT) on the 6th.

Citing bureaucrats from US ally intelligence agencies, NYT reported that Russia allowed the withdrawal of $9 million out of the $30 million North Korean funds that were tied up in its financial institutions. These officials revealed that North Korea would use this money to purchase crude oil.

Additionally, Russia seemed to have supported North Korea’s return to the international financial network, from which it was expelled due to sanctions. The UN Security Council and the US government have been applying sanctions such as freezing North Korean assets and blocking international financial transactions due to North Korea’s nuclear tests and missile launches.

These officials mentioned that North Korea’s shell company recently opened an account in another Russian bank located in South Ossetia, a pro-Russian autonomous republic.

This is evidence that Russia is helping North Korea evade UN sanctions that block North Korea’s access to the international financial network, NYT evaluated.

It is explained that North Korea can conduct financial transactions with a few countries like Turkey and the Republic of South Africa, which continue to trade with Russia and do not participate in the international sanctions regime against the war in Ukraine, not only within Russia.

Russian President Vladimir Putin (left) is shaking hands with North Korean Foreign Minister Choe Sun Hee at the Kremlin in Moscow, Russia, on January 16./AP·Yonhap News

Juan Zarate, former US Deputy Secretary of the Treasury, who isolated North Korea from the international financial network with the 2005 Banco Delta Asia (BDA) sanction, interpreted that if Russia allows North Korea to use its banks or unfreezes its assets, it means that the Russian government is willing to cross the Rubicon of becoming a rogue state in finance and commerce with North Korea.

Former Deputy Secretary Zarate emphasized that although the $9 million that Russia released is relatively small, North Korea welcomes any alternative method to access capital.

This support appears to be in return for North Korea’s provision of up to 2.5 million rounds of ammunition and ballistic missiles to Russia. A high-ranking US government official said that this support matches the US’s expectations of what North Korea would demand from Russia in return for weapons support.

Experts told NYT that North Korea wants most from Russia advanced military equipment such as satellite technology and nuclear-powered submarines, but access to the international financial network is also included. The newspaper evaluated that from Russia’s perspective, financial transactions could be more advantageous than providing nuclear and other military-technical expertise.

Sue Kim, a former North Korea analyst at the Central Intelligence Agency (CIA), said that while Russia and North Korea can currently be beneficial friends to each other, Russia does not have enough trust in North Korea to hand over valuable secrets.