Since the Russian invasion of Ukraine in February 2022, there has been an increase in relations between North Korea and Russia. They reached their peak in July, when Russian President Vladimir Putin visited Pyongyang for the first time in 24 years. His previous visit was in 2000, when he met with former North Korean leader Kim Jong Il.

The strengthening of ties between two has driven speculation that Russia has helped North Korea to evade UN sanctions, sanctions which were previously supported by Russia. It is undoubtedly clear that Moscow has openly supported Pyongyang, including through diplomatic support and technological assistance. 

There are several signs of this ongoing assistance. 

In early 2024, Russia vetoed an extension of the UN expert panel which monitors the sanctions. It was only a few months later that Vladimir Putin visited Pyongyang and met with Kim Jong Un. This resulted in the signing of various agreements, including defence cooperation.  Recently, there have been reports which suggestthat North Korean troops may be fighting alongside Russian forces in Ukraine.

As concerning as this is, a more pressing issue is Russia’s apparent support for the Hermit Kingdom’s illicit financial transactions and crypto theft. 

North Korea’s increasing involvement in money laundering has seen it lose its observer status with the Asia/Pacific Group on Money Laundering (APG), a status it had held since July 2014. As an observer, it was required to host APG delegates for meetings and share information, while also releasing regular reports on its practices to eliminate money laundering. It failed to fulfil these requirements, as the Pyongyang regime has long been suspected of being involved in money laundering and cryptocurrency theft.

South Korean public news agencies have previously reported that their northern neighbours are responsible for around one-third of the world's digital theft. In May 2024, UN experts believed that North Korea had laundered around $147.5 million which it stole from cryptocurrency exchange in 2023.

The crypto theft operations only appear to be increasing from year to year. A report by Chainalaysis suggested that at least 20 crypto platforms were hacked by the Hermit Kingdom in 2023, with the regime accumulating as much as $1 billion from hacking in that year alone.

According to Microsoft’s Digital Defense Report for 2024, North Korean hackers have stolen an estimated $3 billion worth of cryptocurrency since 2017, using the funds to support the regime's nuclear and missile programme. Of the total, between $600 million and $1 billion was stolen just last year, it added.

North Korea’s increasing involvement in crypto-crimes appears to be driven by several factors.

First, the need for foreign currency to support its nuclear programme. While China and Russia continue to trade with North Korea, the majority of their economic support is agricultural. This ensures the survival of the Pyongyang regime, but does not provide the income needed to support its nuclear programme.

In addition, divisions between the great powers at the UN Security Council have allowed the regime to expand its illegal online operations. Russia and China have shown that they are not prepared to put excessive pressure on North Korea, which prevents the international community from adopting and implementing the mechanisms needed to monitor and reinforce sanctions against their actions.

In addition, increased Russian alignment is likely pushing North Korea to expand its involvement in cryptocurrency. Once crypto is stolen, it must be laundered before it can be used to finance the nuclear programme. Increasing surveillance by the US and its allies has discouraged most cryptocurrency firms from becoming involved.

Against this backdrop, Russia is becoming Pyongyang’s go to for crypto laundering. For instance, it was revealed by Chainanalysis that a North Korean-backed hacker sent 21.9 million to a Russian-based exchange after it was stolen from Harmony Protocol, a US-based blockchain firm, in 2022.

Russia has been North Korea’s destination for money laundering since 2021, but it is believed that Pyongyang’s reliance on Russia for laundering duties was heightened following Putin’s visit. 

Some commentators have speculated that Russian-North Korean cooperation also extends to other illegal digital activities. 

The Russian government allows the use of crypto currency for international payment. This could allow for cryptocurrency exchange between Russia and North Korea, currently deemed illegal by the UN. 

An increase in people-to-people relations, which saw an increase in visits between the two nations, could also be another factor. Recently, the US government placed sanctions on five Russian firms and individuals for their alleged involvement in crypto trade with North Korea.

In conclusion, it appears that the two nations are colluding to conduct illegal online activities, including the laundering of crypto funds which have been stolen by sophisticated North Korean hacking operations. Pyongyang’s profits from these activities appear to be the main source of finance for its nuclear programme.

As their relationship becomes closer, it seems inevitable that these crimes will continue to increase. This trend represents a major concern, especially as the world is increasingly moving towards digitalisation and online banking. International financial watchdogs – like the Financial Action Task Force (FATF) and Asia/Pacific Group on Money Laundering (APG) – must strengthen their monitoring of North Korea’s illegal financial activities, while deepening cooperation and collective efforts among friendly states.

Sokvy Rim is a research fellow at the Cambodian Centre for Regional Studies (CCRS). His research interests focus on Cambodia’s foreign policy and its relations with East Asian countries. He is currently a GKS Scholarship recipient at Yonsei University in Seoul, South Korea.