US Treasury and UAE Target North Korean Digital Assets Money Laundering Network

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned two individuals and one entity linked to a network that launders millions of dollars in illicit funds generated by Democratic People’s Republic of Korea (DPRK) information technology (IT) workers and cybercrime, all in support of the DPRK government.

Lu Huaying and Zhang Jian, both based in the United Arab Emirates (UAE), worked through a UAE-based front company to facilitate money laundering and cryptocurrency conversion services that funneled the illicit proceeds back to Pyongyang. This network is led by Sim Hyon Sop, a PRC-based banking representative for the DPRK, who orchestrates money laundering schemes to finance the regime’s activities.

These sanctions are part of ongoing efforts to disrupt the DPRK’s money laundering operations, which fund the regime’s unlawful weapons of mass destruction (WMD) and ballistic missile programs. The U.S. Treasury Department is working closely with the UAE government to target these financial networks.

“As the DPRK continues to use complex criminal schemes to fund its WMD and ballistic missile programs—including through the exploitation of digital assets—Treasury remains focused on disrupting the networks that facilitate this flow of funds to the regime,” said Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence Bradley T. Smith. “The United States, along with the UAE and our other partners, will continue to target the financial networks that enable the Kim regime’s destabilizing activities.”

DPRK’s Use of Digital Assets for Funding

The DPRK continues to use proxies and agents to access the international financial system, including fraudulent IT work, digital asset thefts, and money laundering, all aimed at supporting its WMD and ballistic missile programs. These illicit activities contribute to the DPRK’s destabilizing efforts, which now also extend into Europe as Pyongyang increases military cooperation with Russia.

Sim Hyon Sop, a representative of DPRK’s Korea Kwangson Banking Corp (KKBC), is one such agent. According to the Financial Crimes Enforcement Network, representatives like Sim orchestrate money laundering schemes and set up shell companies to move and disguise illicit funds, ultimately financing DPRK’s WMD and missile programs. OFAC previously sanctioned both Sim and KKBC under Executive Order (E.O.) 13382, which targets proliferators of WMD. KKBC is a state-run DPRK entity listed on the United Nations Security Council 1718 (DPRK) Sanctions List. Operating from China, Sim coordinates extensive money laundering schemes, often involving digital assets, to funnel funds back to the DPRK.