Introduction:

North Korea’s military prowess is undeniable—it boasts the fifth-largest army in the world, a growing arsenal of nuclear weapons, and an outsized influence on regional geopolitics. But behind the show of strength lies a shadowy reality: a nation heavily sanctioned, isolated, and desperately reliant on unconventional revenue streams. How does a country with so few legitimate businesses and near-total international isolation fund its vast military and nuclear ambitions? The answer lies in the notorious Office 39, a secretive department tasked with generating foreign currency through any means necessary—legal or otherwise. From hacking cryptocurrency to exporting wigs and even smuggling drugs, North Korea’s fundraising tactics are as bizarre as they are alarming.

The Cost of a Militarized Monarchy

Military spending is the backbone of North Korea’s regime, consuming an estimated 30-40% of the nation’s meager GDP. Despite limited resources, the country sustains one of the world’s largest armies and a nuclear program capable of threatening global stability. But sanctions, especially those imposed by the United Nations in 2017, have slashed the country’s ability to fund these operations through traditional exports like coal, iron, and seafood. As trade revenue dwindled, the regime turned to increasingly unorthodox—and often illegal—methods to fill the gap.

The Rise of Office 39: North Korea’s Secret Moneymaker

At the heart of North Korea’s illicit fundraising is Office 39, a shadowy department responsible for generating hard currency to fund the regime’s priorities. Their operations span everything from counterfeit currency to cybercrime, with each scheme designed to skirt sanctions and exploit loopholes in global systems.

1. Cybercrime: The Digital Heist Revolution

North Korea has become a global leader in cybercrime, training hackers—dubbed “IT Warriors”—to steal millions from international banks, cryptocurrency exchanges, and private companies.

  • Notable Attacks:
    • Sony Hack (2014): Leaked internal documents after extorting the company.
    • Bangladesh Bank Heist (2016): Almost $1 billion was stolen, though most funds were recovered.
    • Cryptocurrency Thefts (2024): North Korea stole $1.3 billion in cryptocurrency, funding nearly 40% of its nuclear program.
  • Favorite Methods: Phishing scams, fake job offers on LinkedIn, and hacking through compromised private keys have become hallmarks of North Korea’s approach.

2. Counterfeit Currency: The Supernote Scheme

In the 1980s, North Korea produced high-quality counterfeit $100 bills, known as “supernotes.” Laundered through banks in Macau, this operation brought in $15-25 million annually until the U.S. redesigned its currency in 1996, effectively ending the scheme.

3. Drug Trade: A State-Sponsored Narco-Economy

For decades, North Korea has manufactured and distributed drugs, including meth and opium, using its embassies as hubs for smuggling. At its height, the drug trade brought in $700 million annually, though much of this activity has shifted to small-scale domestic production in recent years.

Legal Trade: Sanctions Loopholes and Weird Exports

Despite sanctions cutting off most of its traditional trade, North Korea still finds ways to engage in global markets:

1. Unusual Exports

  • Wigs and Fake Eyelashes: In 2023, wigs made up 60% of North Korea’s exports to China, generating $165 million.
  • Minerals: Non-sanctioned materials like tungsten and molybdenum also contribute to the country’s export earnings.

2. Sanctions Evasion

  • Ship-to-Ship Transfers: Satellite imagery has revealed North Korean ships conducting covert cargo exchanges at sea, circumventing sanctions on coal and oil.
  • Shell Companies: A web of subsidiaries and businessmen in Macau and Hong Kong funnel funds back to the regime.

Economic Zones: A Gateway to Foreign Investment

North Korea has established 29 “economic development zones” to attract foreign investment, despite international sanctions.

Rason Economic and Trade Zone

  • Located near the Russian border, Rason features North Korea’s only casino and even offers debit cards via its Golden Triangle Bank.
  • Though it has attracted $150 million in investment since 1991, much of this is from Chinese businesses seeking to exploit cheap labor and resources.

Mount Kumgang Tourist Region

  • Jointly developed with South Korea, this region once hosted nearly 2 million visitors before a 2008 shooting incident led to its closure.

Kaesong Industrial Complex

  • This joint North-South industrial zone generated $560 million annually at its peak before shutting down in 2016 due to missile tests.

Labor Exports: Workers as Revenue Streams

North Korea has long sent workers abroad to earn hard currency, with wages funneled back to the regime:

  • Where They Work: Construction and mining projects in Russia, China, and the Middle East.
  • Conditions: Workers must remit most of their wages to the government, sometimes paying up to $11,000 annually.

North Korea’s Partnerships: China and Russia

China: An Uncertain Partnership

China remains North Korea’s largest trading partner, accounting for 95% of its total trade. Despite sanctions, China continues to import goods like wigs and minerals while exporting vital resources like rice and fertilizer.

Russia: A Growing Ally

  • After a recent meeting between Kim Jong-un and Vladimir Putin, trade between the two countries has surged.
  • North Korea has reportedly sent ammunition and soldiers to support Russia’s war in Ukraine, while importing sanctioned goods through this partnership.

The Human Cost: Defectors and Remittances

While the regime focuses on funding its military, ordinary North Koreans face harsh economic realities. Many depend on remittances from defectors abroad, who risk severe punishment to send money back home:

  • The Process: Money is smuggled via broker networks, with families sending photos or videos as proof of receipt.
  • The Costs: Brokers take up to 50% of the funds, and anyone caught participating faces harsh penalties, including prison camps.

FAQs

What is Office 39?

Office 39 is a secretive department tasked with generating foreign currency for North Korea through both legal and illegal means, including cybercrime, drug trafficking, and sanctions evasion.

How does North Korea fund its nuclear program?

A significant portion of funding comes from cybercrime, particularly cryptocurrency theft, which generated $1.3 billion in 2024 alone.

Why is China still trading with North Korea?

China sees North Korea as a strategic buffer state and continues limited trade to maintain stability in the region.

What are economic development zones in North Korea?

These zones are semi-open areas designed to attract foreign investment. However, most have seen limited success due to sanctions and poor infrastructure.

Conclusion

North Korea’s ability to sustain its regime despite crippling sanctions is a testament to its adaptability and willingness to engage in shadowy activities. From hacking cryptocurrency to selling wigs and exporting labor, the regime’s resourcefulness comes at a high cost to its people. As the international community grapples with this elusive threat, the question remains: how long can North Korea’s shadow economy continue to prop up its militarized monarchy?

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By Ryan Hite

Ryan Hite is an American author, content creator, podcaster, and media personality. He was born on February 3, 1993, in Colorado and spent his childhood in Conifer, Colorado. He moved to Littleton in 2000 and spent the remainder of his schooling years in the city. Upon graduation from Chatfield Senior High School in 2011, he attended the University of Colorado at Boulder. He graduated from the university in 2015 after studying Urban Planning, Business Administration, and Religious Studies. He spent more time in Colorado in the insurance, real estate, and healthcare industries. In 2019, he moved to Las Vegas, NV, where he continued to work in healthcare, insurance, and took his foray into media full time in 2021. His first exposure to the media industry came as a result of the experiences he had in his mid to late teens and early twenties. In 2013, he was compelled to collect a set of stories from his personal experiences and various other writings that he has had. His first book, a 365,000-word epic, Through Minds Eyes, was published in collaboration with Balboa Press. That initial book launched a media explosion. He learned all that he could about creating websites, marketing his published works, and would even contemplate the publication of other works as well. This book also inspired him to create his philosophy, his life work, that still influences the values that he holds in his life. Upon graduating college, he had many books published, blogs and other informative websites uploaded, and would embark on his continued exploration of the world of marketing, sales, and becoming an influencer. Of course, that did not come without challenges that would come his way. His trial-and-error approach of marketing himself and making himself known guided him through his years as a real estate agent, an insurance agent, and would eventually create a marketing plan from scratch with a healthcare startup. The pandemic did not initially create too many challenges to the status quo. Working from home did not affect the quality of his life. However, a series of circumstances such as continued website problems, social media shutdowns, and unemployment, caused him to pause everything between late 2020 and mid-2021. It was another period of loss of momentum and purpose for his life as he tried to navigate the world, as many people may have felt at that time. He attempted to find purpose in insurance again, resulting in failure. There was one thing that sparked his curiosity and would propel him to rediscover the thing that was gone from his life for so long. In 2021, he started his journey by taking on a full-time job in the digital media industry, an industry that he is still a part of today. It was at this point that he would also shut down the rest of the media that he had going at the time. In 2023, he announced that he would be embarking on what has become known as PROJECT30. This initiative will result in the reformation of websites, the reinvigoration of social media accounts, the creation of a Youtube channel and associated podcast, the creation of music, and the continued rediscovery of his creative potential. Unlike past projects, the purpose of this would not expound on the musings of a philosophy, the dissemination of useless news and articles, or the numerous attempts to be someone that he was not. This project is going to be about his authentic self. There are many ways to follow him as he embarks on this journey. Most of all, he wants everyone to be entertained, informed, and, in some ways, maybe a little inspired about the flourishing of the creativity that lies within the mind and soul of Ryan.

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