The alleged illicit activities of the North Korean state include manufacture and sale of illegal drugs, the manufacture and sale of counterfeit consumer goods, human trafficking, arms trafficking, wildlife trafficking, counterfeiting currency (especially the United States dollar and Chinese yuan), terrorism, and other areas. It is alleged many of these activities are undertaken at the direction and under the control of the North Korean government and the ruling Workers' Party of Korea, with their proceeds going towards advancing the country's nuclear and conventional arms production, funding the lifestyles of the country's elite, and propping up the North Korean economy.

Overview Unlike criminal syndicates, the extensive nature of these illegal endeavors, and the claim that they are directed and sanctioned by the highest levels of government, has led to the nature of the North Korean state being defined as a form of "criminal sovereignty" by Paul Rexton Kan and Bruce Bechtol.

However, there are questions remaining about the level of government involvement in each of the criminal enterprises. Many commentators agree that the North Korean state has been behind counterfeiting currency, human trafficking, the arms trade, etc., but the level to which it has been involved in the drug trade after the collapse of the Public Distribution System in the 1990s is not clear as semi-private and private black markets have arisen since then and some high-ranking officials may only be engaged in illicit trade for personal benefit.

The British academic Hazel Smith has argued that the allegations have a weak foundation, being largely based on the claims of a few US officials and North Korean defectors. She has pointed out that there have been very few criminal convictions. She has queried the assumption that all the activities are directed by North Korea's government.

According to North Korea scholar Andrei Lankov, the country's illicit activities never developed into lucrative hard currency earners. Instead, these activities exposed the country to international condemnation in exchange for marginal gain. Lankov suggests that smuggling was never intended to earn currency for the regime, but was simply a means of survival for diplomats whose funding was cut.

Room 39

Room 39 (or Office 39) is the primary government organization that seeks ways to maintain the foreign currency slush fund of North Korea's leader. Room 39 oversees many of the government's illegal activities (although the military also has its own illegal activity division) such as counterfeiting and drug production. In 2010, the department was reported to have had 17 overseas branches, 100 trading companies and banks under its control. By 2009, the office allegedly had upwards of $5 billion in assets, much of which was spread in banks throughout Macau, Hong Kong, and Europe.

In August 2014, Yun Tae-hyong, a senior representative of North Korea's Korea Daesong Bank, which is suspected of being under control of Room 39, was reported to have defected to Russia taking $5 million with him.

In 2015, the European Union placed the Korean National Insurance Company (KNIC) under sanctions and added that the KNIC had links to Room 39. The KNIC (which had offices in Hamburg, Germany and London, United Kingdom) was reported to have had assets of UK£787 million in 2014 and had been involved in scamming insurance markets and making investments in property and foreign exchange.

Zainichi Koreans in Japan The Japanese government accused the General Association of Korean Residents in Japan of conducting illicit trade and espionage on its soil to raise funds back to North Korea.

Evading sanctions

According to the United Nations Panel of Experts in April 2019, North Korea had developed a number of techniques and a complex web of organisations to enable it to evade the sanctions against it, particularly with regard to coal and oil. The techniques included falsification of documents and covert ship-to-ship transfers of cargo at sea.

In May 2019, the United States announced it had seized a North Korean cargo vessel for carrying a coal shipment in defiance of sanctions. The Justice Department said the 17,061-tonne Wise Honest is one of the North's largest cargo ships and it was first detained by Indonesia in April 2018 but is now in the possession of the United States.

Hacking

According to cybersecurity experts, North Korea maintains an army of hackers trained to disrupt enemy computer networks and steal both money and sensitive data. In the previous decade, it was blamed for numerous cyber-attacks and other hacking attacks in South Korea and elsewhere.

The Lazarus Group, having strong links to North Korea, were reported to have stolen US$12 million from the Banco del Austro in Ecuador and US$1 million from Vietnam's Tien Phong Bank in 2015. They have also targeted banks in Poland and Mexico. The 2016 bank heist included an attack on the Bangladesh Bank, successfully stealing US$81 million and was attributed to the group. In 2017, the Lazarus group was reported to have stolen US$60 million from the Far Eastern International Bank of Taiwan although the actual amount stolen was unclear, and most of the funds were recovered.

After the Sony Pictures hack in 2014, U.S. government officials stated that the North Korean government was "centrally involved" in the hacking. White House officials treated the situation as a "serious national security matter", and the Federal Bureau of Investigation (FBI) formally stated that they had connected the North Korean government to the cyber-attack.

Hacking has also emerged as an important source of income for North Korea. Although all estimates are considered rough, it is understood that thousands of hackers rake in hundreds of millions of dollars each year. This would make hacking a bigger source of income than weapons sales and related military services. Targets include foreign banks, microtransactions, and cryptocurrencies, from which money is first stolen and subsequently laundered. On 8 October 2018, Bloomberg reported a North Korean hacking group had tried to steal at least $1.1 billion in a series of attacks on global banks from 2014–2018, as uncovered by cybersecurity company FireEye.

In 2019, the UN panel of experts on North Korea released a report stating that $2 billion USD were raised through cybercriminal operations.

North Korean groups reportedly stole over $1.3 billion worth of cryptocurrency in 2024 alone, accounting for two thirds of global cryptocurrency thefts worldwide.

Trafficking Drug trade It is alleged that North Korea's illegal drug trade dates back to the 1970s and includes the manufacturing, selling, and trafficking of illicit drugs. Production began in the mountainous Hamgyong and Ryanggang Provinces, particularly in the village of Yonsah, where Kim Il Sung sanctioned the creation of an opium farm.

To provide a cover of legitimacy, the North Korean government uses front companies, like the Ryugyong Corporation under the control of the Korean Workers Party's Foreign Relations Department, to conduct clandestine activities. The company also holds large tracts of land within the country for the sole purpose of growing opium and each year the company sent tens of thousands of dollars in hard currency to Kim Jong Un for his use. Unlike most companies, Ryugyong Corporation has no import or export quota restrictions.

According to defector Yoon Yong-sol, during the famine "[t]here were some complaints that during the famine we should be growing grain, not poppies, but the instruction from the central government was that if we grow poppies we can sell the product for 10 times as much to buy grain. ... The only way to earn hard currency is by drugs."

Reports of methamphetamine (known as "ice drug" in North Korea) use in the country surfaced in the late 1990s. According to Isaac Stone Fish writing in Foreign Policy, the production of methamphetamine in North Korea is done by chemists and other underemployed scientists. Methamphetamine is often taken as a "medication" within North Korea, which has helped to fuel its spread. As the production and sale of opium declined in the mid-2000s, methamphetamine became more pervasive. To bring in much-needed cash, the international methamphetamine trade began, spreading first to China, and with the drug being made in state-run laboratories. However, Isaac Stone Fish admitted with regard to his report: "I have no idea what is actually happening inside North Korea".

China officially admitted to the drug problem stemming from North Korea in 2004, with Jilin Province being the most important transhipment point from North Korea. The production, storage, financing, and sale of the North Korea's methamphetamine trade reaches multiple countries from the Philippines, the United States, Hong Kong, Thailand, western Africa and others. In 2010, five foreign nationals were prosecuted as part of a conspiracy involving North Korea to smuggle 40 pounds of methamphetamine into the United States and to sell it for $30,000 a pound.

In 2001, income from illegal drugs amounted to between $500 million and $1 billion. In a 2013 Washington Post article, annual revenues from methamphetamine sales are estimated at $100 million to $200 million.

Between 1977 and 2003, more than twenty North Korean diplomats, agents, and trade officials have been implicated, detained, or arrested in drug-smuggling operations in more than a dozen countries. In 2004, two North Korean embassy employees were caught smuggling 150,000 tablets of clonazepam in Egypt, and in that same year, embassy employees from Bulgaria were arrested in Turkey in possession of over 500,000 tablets of Captagon (the brand name for the synthetic stimulant fenethylline, or phenethylline), with an estimated street value of $7 million. The government of North Korea has only admitted that individuals undertook such acts, and not at the direction of the state.

According to the Committee for Human Rights in North Korea, since 2001 drug trafficking operations by diplomats had ceased, with the focus then becoming the production of drugs to be smuggled by other criminal organizations.

In 2003, the North Korean owned cargo ship Pong Su was intercepted importing heroin into Australia. The ship was suspected of being involved in smuggling almost 125 kilograms (276 lb) of heroin into Australia with an estimated street value of A$160 million. While four men who had landed pleaded guilty, the ship's four officers were acquitted on all charges.

Human trafficking

North Korea is a "Tier 3" country (those who do not comply with human trafficking laws) as listed by the US Department of State and has retained this ranking since 2007."North Korea". Trafficking in Persons Report 2019. U.S. Department of State (June 17, 2020). The country is a source country of men, women, and children for sex trafficking and forced labor. Forced labor is used both internally and externally. Countries which have North Korean forced laborers include Poland, Malta, Russia, China, Mongolia, and other places in Central Asia, Europe, Africa, and the Middle East.

While the North Korean government claims these are "contract workers", reports claim that they are actually subjected to forced labor, that their movements and communications are subjected to strict surveillance, and that workers sent overseas do not have a choice in the type of work they will be doing nor do they receive pay for their work.

It is estimated that there are thousands of North Koreans working in logging, construction, and agriculture industries in Russia. These workers reportedly only receive two days of rest each year and face punishment if they fail to meet quotas.

North Korea is not a party to the 2000 UN TIP Protocol.

Arms trade