# [[North Korea]] [[Remittances]] ## [A growing number of North Koreans refuse to accept money from relatives in South Korea](https://www.dailynk.com/english/growing-number-north-koreans-refuse-accept-money-relatives-south-korea/) [[Daily NK]] on [[2022-02-08]] A North Korean man recently refused to accept money sent by a relative living in South Korea, a situation that reflects a growing trend among North Koreans with family members living abroad, a Daily NK source in North Hamgyong Province has reported. “A man in his 60s surnamed Kim who lives in Hoeryong refused to accept money that his daughter in South Korea had sent him for Lunar New Year,” the source said on Feb. 4. “The money transfer broker sought him out three times, but he never agreed to accept the money.” According to the source, Kim is living with his daughter’s 10-year-old son, whom she left behind in North Korea. Kim has been taking care of his grandson using the money sent by his daughter every now and then. In Oct. 2021, however, the money transfer broker was arrested by the Ministry of State Security (MSS), which led to trouble for Kim as well. Kim was investigated at the MSS for 15 days, and was physically and verbally abused during the process. Not only was his house searched and RMB 5,500 (around USD 864) taken, he was even sentenced to one month in a forced labor camp. Kim reportedly complained of the psychological distress he experienced afterwards, with informants watching his every move and tailing him everywhere he went. After being punished, Kim refused to accept any more of his daughter’s money from the money transfer broker. Through the broker, he told her: “Don’t contact me ever again. Your son is doing well, so I have nothing more to wish for than you living a good life there [in South Korea]. Don’t ask or press me for any explanation, and please don’t send anyone to the house ever again. That’s how you can help us.” Regarding the man’s response, the source made the following comment: “How badly did officials from the MSS threaten a defector’s relative to the point where he refuses to accept money despite his poverty, and even ask the broker to take it back? “Everyone is living in fear, because recently, there have been several _inminban_ [people’s unit] meetings alerting everyone that those in possession of Chinese mobile phones will be sent to re-education camps without question,” he said. “Even if defectors send money, their families are refusing it,” the source continued, adding, “There’s a growing number of North Koreans who would rather live in peace eating only gruel instead of having their family members overseas send money with great difficulty, only to have it stolen by the MSS and get in trouble with the law.” ## North Korean defectors learn quickly how to send money back home https://www.washingtonpost.com/blogs/blogpost/post/north-korean-defectors-learn-quickly-how-to-send-money-back-home/2012/02/06/gIQAgsEeFR_blog.html [[2012-02-15]] for [[The Washington Post]] ### Selected excerpts But as underground systems go, this one is quite functional. Some 50 percent of North Korean defectors have transferred money back home. Those who try once almost always do it again. North Korea scholar [[Andrei Lankov]], in [this April 2011 essay](http://www.eastasiaforum.org/2011/04/21/remittances-from-north-korean-defectors/), estimated that the total money given each years totals $10 million--an enormous influx of cash into the extremely impoverished North. ### The process One recent defector, Ju Kyeong-bae, described during a recent interview at his apartment in Seoul how he transfers money to his friends in the North, who live in a village some 25 miles from the Chinese border. First, one of his friends -- let’s call him Mr. Jeong -- calls Ju from North Korea, using a Chinese cell phone that gets a signal from towers just beyond the border. Mr. Jeong provides a telephone number for a broker in China. Ju calls the broker. ==The broker then gives Ju the name of a bank in South Korea, along with a particular account number.== ==Ju determines the amount of money he wants to send, punches a few buttons on his iPhone, and transfers the money, which then pinballs from the South Korean bank to a Chinese bank, using two brokers.== The Chinese bank account belongs to a businessman (let’s call him Mr. Kim) who does frequent work in North Korea -- and who holds lots of private wealth stashed away in the North. When Ju’s money lands in Mr. Kim’s account, Kim just lets it sit there. He never withdraws it and takes it across the border. Rather, he distributes money he already has stashed in North Korea to Mr. Jeong, who in turn gets it to the person Ju’s payment is intended for. Mr. Jeong then places another call to Ju -- a confirmation. ==“Some of the middle men, I never even know their names,” Ju said. “It’s all based on trust. If you don’t trust the system, you’re better off not even sending money.”== One of every two defectors thinks his or her money transfers will spark admiration toward the South. About one in every 10 thinks the money will raise resistance against North Korean society. ### On violating sanctions South Korea technically bans the transfers, but an official at Seoul’s Ministry of Unification, which handles North Korea policy, says that the government has little incentive to stop the remittances. ==“They fall into a gray area,” said the official, requesting anonymity because he was unauthorized to speak about the policy on record. “We always say no money should be sent to North Korea in case it is diverted for military purposes. But in this case, we’re not talking about huge amounts. And it’s for humanitarian purposes. So long as that’s the case, we won’t pursue it.”== ## North Korea Beats Sanctions on Money Transfers by Placing Remittance Agent in Dandong, China https://www.rfa.org/english/news/korea/nk-money-transfer-agent-dandong-10012019161639.html [[2019-10-01]] for [[Radio Free Asia]] A North Korean remittance agent has been dispatched to the Chinese border city of Dandong to oversee money transfers across the Sino-Korean border, sources familiar with the practice told RFA’s Korean Service. ==By using borrowed Chinese names, she is able to provide North Korean trade workers and Chinese businesses that are involved in smuggling with money remittance services, which have been unavailable to them due to U.S. and U.N. sanctions.== ==The sanctions, aimed at depriving Pyongyang of foreign currency and other resources that could be funneled into its nuclear program, make international banks wary of remitting money to North Korea, but in practice it is being done through private brokers.== Sources told RFA that they believe the Chinese banks in Dandong are aware of the North Korean agent and are even working alongside her to avoid being caught running afoul of sanctions while still reaping the benefits of transferring money across the Yalu River, the border between the two countries. “[The North Korean bank agent], who is in her early 40s, says she is affiliated with the North Korean Changshin Bank,” said an official at a trading company in Dandong in an interview with RFA Saturday. “She runs and manages several borrowed-name accounts at Chinese banks,” the source said. “She mainly works in Dandong and she is a well-mannered friendly person so she makes a good impression with everyone around her,” added the source. **The cost of doing business** There is money to be made in sending money between banks, and although the North Korean agent sends the money quickly, she takes a cut, according to the source. ==“If money is transferred to her borrowed-name bank account from any part of China, she is reportedly able to get that money transferred to North Korea within two to three days at the latest, but she collects 0.5% of the remittances of less than $10,000 and 0.3% of those more than $10,000,” said the source.== ^a918d0 - This would explain how the North Korean broker could receive money from [[China]] in spite of sanctions - Question was raised [[#^e0268f|here]] “The transfer fee she charges is similar to what Chinese banks charge when transferring money to [domestic] banks. Given the fact that she can send cash to North Korea for such low fees, it is clear that the woman was sent directly by North Korean authorities,” the source said. Another trade official from a Chinese border city said that that the woman’s customers are not only North Korean workers sending small-scale remittances. Large Chinese companies hoping to mask their involvement with North Korea also route their cash through her to avoid detection. “If the Chinese trading companies, which would be fined if caught smuggling, send money in the normal way, it would be a sanctions violation. So it is highly likely [they] would just send the money through her,” said the second source. The second source said that in days past, a low-key remittance agent using borrowed names would have been hardly necessary. Prior to sanctions, Korea Kwangson Banking Corp. had set up an office in a fixed location and customers could send money reliably into North Korea. But under sanctions such a banking office cannot exist. “This woman from Changshin Bank is like a moving Korea Kwangson Bank,” the second source said. **Is China in on it?** The second source says he suspects that not only are Chinese banks complicit in the arrangement, Chinese authorities are also facilitating transfers through this agent. “She is in charge of holding a number of borrowed-name accounts and sending a large amount of cash to North Korea. Since all of these processes are violations of U.N. sanctions and against Chinese law, it is impossible without the cooperation of Chinese authorities,” said the second source. Lim Sooho, a senior researcher at the Seoul-based Institute for National Security Strategy, told RFA that the process of sending money to North Korea as described by the sources is plausible, but only if the Chinese bank failed to detect that the woman was sending money into North Korea under Chinese names. Lim added that even if true, the scheme would be difficult on a larger scale. He said that sanctions cannot be avoided because China’s central bank would be aware of suspicious activity at Chinese regional banks, so it would be hard to say concretely that the Chinese authorities are involved. As of Monday afternoon, the UN Security Council’s North Korea sanctions committee did not respond to RFA’s request for comment. Reported by Joonho Kim for RFA’s Korean Service. Translated by Leejin Jun. Written in English by Eugene Whong. ## How North Korean Refugees Send Money Back Home https://www.youtube.com/watch?v=5yvV2qSJRmI&list=WL&index=11 Video by [[LiNK]] - "People here are longing to find their families, but people back in North Korea are wary of it, because if you're in contact with people in [[South Korea]] or [[China]], you could be accused of being a spy." ### Miso Yoon - "Uncle, I'm in China now. Just tell them I'm dead. Report my death, and I'll send you some money. Uncle, I can send you money." - "I kept thinking, I can help my relatives and family to not struggle so much. So I knew I had to make money, no matter what." ### The remittance process - 65.7% of [[North Korean Defectors]] report having sent money back to [[North Korea]] ^06d60c - If you have a **phone**, and the **phone number of a Chinese remittance broker**, then you can send money back to [[North Korea]] - "There are brokers that help people escape, and there are brokers that help facilitate remittances. The latter are known as **remittance brokers**." - Remittance brokers are spread out all along the border with [[China]] - There's usually three people working together: - One person in [[North Korea]] - One person in [[China]] - And usually one more person in [[South Korea]] - These brokers will take a commission of about $30%, and the remaining 70% goes to the family. - "You need to be in contact with your family first. Only then can you send money." - "You make a request to a remittance broker [in North Korea]. You tell them where to find your family, and that if they connect you with them, you'll send money to your family. That request is the first step." - "It's not always possible to be in contact with someone in North Korea. They have to get a good mobile signal to make contact." - "It's only possible to make international calls near the Chinese border, and you have to hide while you do it." - "You can't use North Korean phones for it. You have to use Chinese mobile phones that have been brought in iillegally and use a Chinese phone number to make the calls." - "If the conditions seem too risky or you can't take the call at that time, then it might take a couple of days to make contact." - "I [North Korean remittance broker] used to walk for 5 hours, right to the top of the mountain. From there you might be able to connect to a Chinese cell phone tower." - "If you bring a mother, and connect her with her daughter, they'll both be in floods of tears. Us brokers might even cry a bit as well." - "But how does that money come? North Koreans may not be able to understand it." ==- "Just sending the money is actually quite simple. I use my phone to make a wire transfer directly to a broker in China."== - "First, the money goes to a broker in China. And if they confirm receipt of the money, we (North Korean brokers) receive a confirmation call." - "So my family will be waiting there, and if they confirm the wire transfer went through, the North Korean broker will have Chinese yuan already prepared in cash and will hand it over to my family." - How does the North Korean broker get paid by the broker in China? ^e0268f - It appears that it can get wire transferred in - [[#^a918d0|see above]] - "Each time I send about 1 million won (900 USD). In a single year I might send money twice, or three times if I send a lot." - "If you send for instance 2 million wnon (1800 USD) from South Korea, in North Korea that's enough to buy enough food to feed a family of three for a year." ### The effect of sending money on the people - "People realize that South Korea is a good country to live in. At first they would say, 'Don't mention a word about South Korea.' But then you keep sending money." - "My Auntie's house used to have two rooms, but when things got difficult, they had to split off and sell one of the rooms. But I was able to help them buy it back with the money I sent from China. So from that point, people's awareness changes. If their house changes, and their lifestyle changes, they will come to understand that if you go to South Korea, you can live well." - "When I speak with my cousin, she asks: 'So what's it like there? What do you do there? What places do you go to? It shows she's'" - "For the people receiving money in North Korea, even if they don't wnat to be interested, they can't help wondering 'How are they able to send this money? Is there a lot of money there? What kind of work do they do to send this money?' " - "The people sending money also ask: 'What's it like there these days? If I send this money what can you do with it?'" - "People who couldn't think about it when they weren't receiving money start thinking: 'can I start a business?' Before that, they lack the capital or start-up funds for doing business." - "When business activity expands, or the flow of money increases, it means f lows of information also accelerate. So it means that even at a moment like this, when it seems North and South Korea are completely cut off from each other, there are still these flows of information that persist." - "We're now living in a place with freedom, so we want to help thos ewho live in a place with no freedom." ## A surprising number of North Korean refugees send money home (Paywalled) https://www.economist.com/finance-and-economics/2019/02/21/a-surprising-number-of-north-korean-refugees-send-money-home https://archive.md/h7uc9 ##### But it is risky and expensive [[The Economist]] on [[2019-02-21]] In February 2018 Jessie Kim found out that she had been sending money to a dead man. Ms Kim, now a 27-year-old student in Seoul, fled North Korea for China in 2011. She had been sending her father in Yanggang province in the North around $1,000 a year since she arrived in South Korea in early 2014. Two years later she doubled the contributions, working several part-time jobs, after her aunt told her that her father had been in an accident and needed money for medical bills. But another call from her aunt last winter, claiming that her father was asking for yet more money, made her suspicious. “He wasn’t the kind of man to ask his daughter for money,” she says. Ms Kim made enquiries through the broker who had facilitated the transactions. She eventually found out that her father had died in the accident in 2016 and that the money had gone to her aunt’s family instead. Ms Kim’s case illustrates the pitfalls of supporting relatives in a country that is all but cut off from global communications and financial-services networks. Ordinary North Koreans are not allowed to receive money or even phone calls from abroad. Foreign banks are hesitant to handle any transaction associated with the North, for fear of falling foul of sanctions, intended to curtail its nuclear programme, that have been imposed by America and others. Yet the relationship between the 30,000-odd North Korean refugees in South Korea and their relatives back home shows that the North is much less closed than at first appears. A growing proportion of those who have settled in the South manage to send money home. ==In 2018, 62% of refugees surveyed by the Database Center for North Korean Human Rights (nkdb), an ngo in Seoul, said they had transferred funds to relatives or friends in North Korea, up from 50% in 2013. Most respondents say they sent between $500 and $2,000 a year, which was mostly spent on basic living expenses, health and education. The annual total may run into the tens of millions of dollars.== ^025d57 - Only tens of millions of dollars... hmmm **That is low compared with remittances from workers sent abroad by the state, which are estimated to be in the hundreds of millions. (Sanctions require that these overseas workers return home by the end of this year.)** But it is substantial both relative to North Korean gdp per person, reckoned to be between $1,000 and $2,000 a year, and as a share of income earned by North Koreans in South Korea, who make around $1,300 a month on average. The majority of recipients live in North Hamgyeong and Yanggang on the northern border with China, the home provinces of most of those fleeing the North. (The proximity to the Chinese border also enables communication using smuggled Chinese sim cards.) - See also: [[North Korean Foreign Currency Extraction]] ### Finally some details on how it works - "The money is sent through a sophisticated network of brokers in South Korea, China and North Korea. Like the majority of refugees, these are usually women; often less compelled to work for the state, they are more active in the North’s informal economy than men." - =="If a refugee in South Korea wants to make a transfer, she may contact a broker in the North who owes a smuggler in China. The refugee may offer to pay some portion of the broker’s debt; in return, the intermediary gives an equivalent amount to the refugee’s family in the North, usually in dollars or Chinese yuan. The system is based on trust—and extravagant fees."== - "The broker who facilitates the transaction takes a cut of around 30%." - =="Uninitiated participants with weak networks may fall victim to scams, says Ms Kim, though she claims they are rare: wronged customers can get their brokers into trouble by reporting them to the Chinese or North Korean authorities."== #### Thoughts - So according to this article, no cash actually moves across the border - Why does the broker in [[North Korea]] owe money to a Chinese smuggler? What transaction created that debt? - Is the total amount of remittances that a broker can facilitate limited by the size of their outstanding debt to parties outside of [[North Korea]] (e.g. [[China]])? Yet, another account stated that these brokers have typically operated for a long time. - It was cited elsewhere that - It appears that defectors in [[South Korea]] can somehow get access to brokers within North Korea - Send [[Bitcoin]] to the broker - and let them sell it to a smuggler who specializes in bringing cash into the country - Source of the cost: the broker themselves - ## [[SWIFT]] Codes for banks in [[North Korea]] (!!) https://bank-code.net/country/NORTH-KOREA-(KP).html ![[Screen Shot 2021-12-14 at 7.13.55 PM.png]] ## North Korean Phone Brokers Take Huge Risk to Resume Remittances https://www.rfa.org/english/news/korea/broker-08302021191858.html ##### The government crackdown is as intense as ever, but people are becoming desperate, including the brokers themselves. By [[Jeong Yon Park]] for [[Radio Free Asia]] on [[2021-08-30]] Despite a harsh crackdown on contacting people outside the country, **people who facilitate overseas remittances in North Korea are returning to work at great risk** as the economic situation in the country worsens, sources in the country told RFA. Phone brokers make a living by putting North Korean families in touch with relatives who have escaped the country. They provide a channel for which the escapees can send money, usually through China, to their families inside North Korea. ### Fees 30% but crackdown due to pandemic **The brokers usually charge fees as high as 30 percent of the remitted amount for taking on the risk. But since the start of the coronavirus pandemic in January 2020, the North Korean government has been cracking down on any and all contact with people outside the country, especially in the border regions, where the brokers use their Chinese cell phones on the Chinese cellular network.** Though the risk is now higher than usual, families who depend on remittances from abroad have no other choice but to try to get money from overseas as a matter of survival, sources said. “Phone brokers who make connections between North Korean refugees and their families in North Korea and set up money transfers between them have resumed their activities here in [[Ryanggang Province]] these days,” a source from the central northern province told RFA’s Korean Service Aug. 24. **“The reason why they have no choice but to resume their work in the face of harsh crackdown and the threat of severe punishment is because the refugees’ families and the brokers themselves are going through severe economic hardship,” said the source.** According to the source, the entire country has been affected by more than a year and a half of economic hardship brought on by the coronavirus. North Korea in January 2020 closed down its border with China and suspended all trade, a move which devastated the entire economy. Food prices have gone up as shortages become more pronounced with no imports to cover the gap. Recent flooding has only made the situation worse, and people are more desperate than ever to get money to survive in any way that they can. “For North Korean refugees’ families who cannot get help from anyone here, their family members in South Korea or China are their last resort,” said the source. “It seems like residents who have family members who have escaped the country and settled abroad are determined to risk their lives to contact them and get help, rather than dying of hunger,” the source said. **And as the authorities have stepped up their crackdown on refugee families and phone brokers, most of the brokers disappeared for a while.”** ##### Returning to work But now they are returning to work, requesting more for the increased risk. ### Fees are now 50% ==“They are resuming their phone connection services, but the remittance fee, which used to be 30 percent of the total amount is now 50 percent,” said the source.== **“Although the remittance fee has risen so much, the families of the refugees are begging the brokers to connect with them, even saying they are fine with getting only half of the money being sent to them. The brokers also have a hard time making a living, so they cannot help but take the risk,” the source said.** The source said that the authorities are working hard to maintain the crackdown by increasing surveillance over the border area, but the residents will still find a way to call out because of their will to survive. Another source, from the northeastern province of [[North Hamgyong]], confirmed to RFA on Aug. 23 that brokers there were returning to work at great risk. “Thanks to them, a significant number of residents have been able to escape dire living situations with the help of their relatives abroad,” said the second source. **“It’s very different from last year when the brokers were making personal appeals to the refugee families to peddle their services. Now the families are seeking out the brokers, albeit cautiously because of the crackdown.”** ##### 'It's a risky job' Though many of the brokers have been in the industry for a long time, newcomers from other areas of the country have moved to the border region, lured by the high brokerage fees, according to the second source. “It’s a risky job, but a lot of the new brokers are people who have no other way to make money in a difficult time like this,” the second source said. **“A broker in his 20s, who first started working at the beginning of this month, was able to connect a 30-something man in Hwanghae province with his brother in South Korea," the source said.** ### The work is bidirectional. The broker is the one with access to an illegal Chinese cell phone - It appears that the work is bidirectional: - North Korean asks broker in [[North Korea]] to contact family in [[South Korea]] or [[China]] - South Korean defector asks broker (assuming also in [[South Korea]]) to contact family in [[North Korea]] - The broker is the person with access to an illegal cell phone, with which they coordinate messages with the wider world "When the brother in the South heard that his family in the North was in big trouble, he quickly sent them 6,000 yuan (U.S. $927). The broker got to keep 50 percent, so he earned a huge amount for just the one transaction." **The high fees are becoming more standard as people become more desperate, according to the second source.** “Even though brokers are aware of the potential dangers, they cannot stop working because they are themselves in a terrible economic situation,” the second source said. While the exact number of illegal phone users in North Korea is unknown, the Database Center for North Korean Human Rights, which interviewed 414 North Koreans in the South, reported that 47 percent of them were in constant contact with their families in the North in 2018. Of those, about 93 percent said they called their families on the phone. In the same survey, 62 percent said they had sent money to North Korea. Based on their answers, the center estimated that refugees in the South who send money to North Korea do it about twice per year, sending around 2.7 million South Korean won (U.S. $2,260) each time. Each time they had to pay an average broker fee of almost 30 percent. According to South Korea’s Ministry of Unification, more than 33,000 North Koreans have settled in South Korea since 1998, though only 229 entered the South last year due to the coronavirus pandemic. ## North Korea Arrests Remittance Broker on ‘Espionage’ Charges https://www.rfa.org/english/news/korea/phone-broker-09202020135929.html By [[Sewon Kim]] on [[2021-09-20]] for [[Radio Free Asia]] Authorities in North Korea have arrested a phone broker on charges of espionage, saying the man shared information about domestic conditions in the reclusive country while helping a North Korean refugee in South Korea communicate with family members in the North, sources told RFA. **The accused, a resident of North Hamgyong province on the Chinese border, was caught after printing photos taken by the refugee in South Korea at a local photo studio.** ==Phone brokers in North Korea’s border region earn money using mobile phones connected with the Chinese cellular network to facilitate communications and remittances between people who have escaped North Korea and their relatives still living there. They shuttle the remittances sent to China into to North Korea, charging high fees to get the money to intended recipients.== ==Communication with the outside world is illegal in North Korea, but has been tolerated by authorities, who often demand bribes from brokers.== ... “He confessed while he was being questioned by the provincial security department. **He said he had made a living by bringing residents from inland areas of the country to the border with China over a period of several years, so they could make phone and video calls to members of their families who had escaped to South Korea or China,” the source said.** ### Communications trade **Brokers living near the Sino-Korean border usually conduct business using illegal mobile phones that can connect to the Chinese network across the border.** According to the source, authorities found two Chinese phones in the man’s house. ==“The provincial security department secured all the text messages he had sent and received over WeChat,” said the source.== - This is a recurring theme - there needs to be a way to make one's involvement with remittances / Bitcoin plausibly deniable “**They found that he had been sending out information about the current situation in North Korea very frequently.** So, the provincial security authorities are now saying that the money transfer was merely a cover and that he actually was a spy that provided information to South Korea,” the source said. ==“It’s extremely likely that he will be executed by firing squad or sent to a political prison camp,” the source said.== Another source, a resident of the province, confirmed the arrest to RFA, saying provincial security agents led away the espionage suspect in handcuffs and put him into a car. “He had received photos of a North Korean refugee living in South Korea on his Chinese mobile phone and had printed them at a local photo studio. A local resident working as a security agent reported it, so that’s why they arrested him,” said the source, who requested anonymity to speak freely. “But since he exchanged messages about the domestic situation on his Chinese mobile phone, they now have evidence of espionage activities,” said the source. - "evidence" - sharing any information about [[North Korea]] is considered "[[Espionage]]" ### Everyone a spy **The second source questioned how someone that seemed so ordinary could possibly know any national secrets, but the charges are a life or death risk that all phone brokers take.** “Many of the residents living in the border areas of North Korea will have family members or relatives in China or South Korea. These days, if you see the security authorities' behavior toward the residents of the border area, it’s like they are just accusing everyone of espionage.” **The source said that espionage charges are on the rise because authorities want to scare the public to discourage them from complaining about harsh living situations brought on by the double squeeze of U.N. and U.S. sanctions over North Korea’s nuclear and missile programs and the closure of the border and shutdown of all trade with China.** A North Korean refugee who settled in South Korea in 2019 told RFA Thursday that authorities often hit residents of the border region with espionage charges. **“Many people in North Korea’s border areas make a living by contacting China or South Korea. They are accused of being spies and are subjected to misfortune,” the refugee said.** “North Koreans don’t want anything as grand as what people living in the free world enjoy every day. We cannot help but ask the North Korean regime if it has the right to oppress its people, who only long to satisfy their simple desire to eat three meals a day and sleep in a warm bed.” #### 47% were in constant contact with families back home ==While there is no way to know exactly how many illegal phone users there are in North Korea, the [[Database Center for North Korean Human Rights|NKDB]] ([[Database Center for North Korean Human Rights]]), which interviewed 414 North Koreans in the South reported that 47 percent of them were in constant contact with their families in the North in 2018. Of those, about 93 percent said they called their families on the phone.==^2178d6 #### Defectors typically send money twice a year, avg 2.7mm South Korean won each time **In the same survey 62 percent said they had sent money to North Korea. Based on their answers, the database center estimated that refugees in the South who send money to North Korea do it about twice per year, sending around 2.7 million South Korean won (U.S. $2,260) each time.** #### 30% cut **Each time they had to pay an average broker fee of almost 30 percent.** According to South Korea’s Ministry of Unification, 32,000 North Koreans have settled in South Korea since 1998, including 1,047 last year. ## North Korea bolsters its crackdown on remittance brokers https://www.dailynk.com/english/north-korea-bolsters-crackdown-remittance-brokers/ ##### Ministry of State Security officials are supposed to crack down on illegal remittances from overseas, but many have long been taking bribes to look the other way ### Crackdown due to ideology In a telephone conversation with Daily NK on Thursday, a source in North Pyongan Province said the Ministry of State Security has been arresting “people who handle remittances” since May. “Because the ministry is engaged in an intensive crackdown, the people who are caught are receiving heavy punishments as a way to set an example to others,” he said, speaking on condition of anonymity. According to the source, the security agency is stressing that offenders “will be unconditionally punished” if caught because “receiving remittances from the outside world when the entire people are engaged in self-reliance is non-socialist behavior, and such behavior erodes the spirit of socialist society.” - That's so retarded, remittances into your country can only be a good thing ### Some hints into the mechanics ==As further evidence of what is going on, a source in China who recently spoke with Daily NK said: “I received a remittance request and tried to contact North Korea, but I couldn’t make any contact at all. When I asked somebody else to find out [what had happened], I was told the remittance agent had already been dragged off by the Ministry of State Security.”== - A broker in China contacts an agent in North Korea, who then contacts the family in North Korea - I get the impression that it is fairly reliable - The problem here is that the agent in North Korea is not safe - they were discovered somehow. How do they advertise their services? Is it overt, like a shop with a billboard in the black market, or is it covert, like mostly working with the Chinese broker abroad and contacting only the families inside North Korea? As late as last year, the money sent back by defectors in China to families back in North Korea was serving as a decent source of income for not only defectors’ families and the brokers who cater to them, but even to the Ministry of State Security agents supposedly tasked with cracking down on them. ### 10% to 40% cut **Remittance brokers take a 10% to 40% cut of the money sent by defectors, which has made it a popular way to earn money. ** Ministry of State Security officials are supposed to crack down on illegal remittances from overseas, but many have long been taking bribes to look the other way. In North Hamgyong and Yanggang provinces, where a lot of defectors hail from, local economies had been flourishing on remittances from abroad. Remittance-related activities were widespread and even surveillance agencies openly condoned what was going on. Following the closure of the China-North Korea border as part of efforts to fight COVID-19, along with strict crackdowns on smuggling and defections, however, North Korean authorities have apparently drawn their knives on remittances from defectors as well. In fact, North Korea’s leadership has accused the Ministry of State Security of corruption, given the fact that the ministry’s agents have long overlooked illegal international phone calls and remittances despite being tasked with curbing such crimes. “The crackdown on remittances is aimed at carrying out orders set out by the Eighth Party Congress,” said the source. “It began as part of a wider crackdown by the judiciary and prosecutors, along with the security and police agencies.” In fact, in the assessment report of the Eighth Party Congress held early this year, North Korean authorities called for eradicating “non-socialist and anti-socialist phenomena” and “thoroughly establishing socialist lifestyles throughout the entire country.” They also stressed that “prosecutors, social security agencies, and state security agencies” must perform “their entire mission and responsibility” to” secure the nation’s system, policies, and people. However, the Ministry of State Security — the agency tasked with cracking down on remittances — will apparently find it difficult to completely root out the phenomenon with the institution itself involved in the business. “The Ministry of State Security is now cracking down on remittance brokers, but because its agents can make money from both the targets of the crackdown and the ministry conducting the crackdown, remittances won’t disappear from North Korea,” the source speculated. *Please direct any comments or questions about this article to [email protected].* ## North Korean state security agents extort borderland cash brokers (2018) https://www.dailynk.com/english/north-korean-state-security-agents/ ### Intensification of extortions -> higher costs North Korean Ministry of State Security officers are reportedly extorting wire-transfer brokers in the border region of North Hamgyong Province. Defectors who escape the country often try to send money back to their relatives inside North Korea, but such transactions are complicated and difficult. - "Wire-transfer"? **To assist with the transfers, a clandestine industry of wire-transfer brokers has emerged to facilitate the cash infusions. Ministry of State Security (MSS) officers have long understood the opportunity for personal gain by threatening these brokers, offering to look the other way in exchange for bribes.** - **Cash** infusions **“Just two months ago, brokers were charging about 25-30% commission to process wire transfers coming from South Korea or China, but it has now increased to 40%,” explained an inside source in North Hamgyong Province, speaking to Daily NK by phone on February 22. “Ministry of State Security officers are offering to ignore these ‘illegal transfers’ in exchange for bribes.”** Elaborating on the development, the source said, “The transfer brokers here [in North Korea] are almost all being tracked by Ministry of State Security investigators. The MSS agents will openly demand bribes from brokers in exchange for not reporting them.” When asked about the history of interactions between the brokers and the police, the source explained, “The MSS agents have evolved past simply conducting surprise raids and **confiscating all the money**. Now they emphasise the ‘cooperative’ nature of the exchange, calling it a safe way for both sides to make money. They are no longer apprehending the same brokers over and over because they have figured out how to get more of the profits.” - "Confiscating all the money" appears to imply that they operate on cash ### A big proportion of the cost is due to middle men. ~50% in total costs is typical The new approach means that a larger portion of the money being sent by defectors to their families is getting eaten up by middle men. In the past, defectors could expect that their families would receive about 700,000 KRW if they sent one million Korean Won (roughly US $925). But these days, most are content if their families end up receiving about 500,000 KRW from the original amount. ### The money flow: Defectors -> Brokers -> Low level authorities -> Central agencies The MSS agents themselves are also under duress, as they are required to contribute a significant proportion of their earnings to their senior officers. They are unable to outwardly voice any discontent for fear of punishment. “MSS agents need to get their cut no matter what, so they are raising their demands to the brokers. In the end, it’s the defectors and their families that lose out,” a source in Ryanggang Province said. ^a819b2 As coordinated international sanctions begin to have an impact on funding streams for North Korea’s central agencies, the authorities are looking for alternate ways to keep the money flowing, including new approaches to extortion. ^7e97cf - Sanctions are making things worse... as always, power politics hurts the people **“Every unit in Pyongyang [the central government], is responsible for their own [foreign currency earning] tasks, and so the units with power are using threats and intimidation to enter into ‘cooperative’ arrangements with the residents, which means the residents have to turn out their pockets.** Until we no longer have to worry about securing enough food to eat, our country [North Korea] will never be rid of this sort of mentality,” the Ryanggang-based source explained. According to the North Korea Database Center (NKDB) for Human Rights, the majority of North Korean defectors have sent money to relatives in North Korea. A survey conducted in 2016 with a sample population of 400 respondents revealed that 63.6% had experience sending money. 29.3% of respondents sent an average of 2.65 million KRW per transfer. Most tended to send money once or twice per year. ## General Research ### [[Western Union]] offers money transfer services to literally every country on Earth... except Iran and North Korea https://corporate.westernunion.com/ ![[Screen Shot 2021-12-01 at 10.06.49 PM.png]] ### 2011 article from [[World Bank]] with some details https://blogs.worldbank.org/peoplemove/is-it-possible-to-send-remittances-to-north-korea https://archive.md/owFAs ==However, remittances are being sent from South Korea and China through informal channels (hand carried to the border by informal operators or wired).== According to the Ministry of Unification in Seoul, North Koreans living in Seoul remit around 10 million dollars per year. Other estimates indicate that the annual amount is within the range of \$5-\$15 million per year. ==North Korea’s informal remittance transfer system is operated by Chinese-Korean individuals/companies residing in South Korea and China. The system relies on mobile phones. The majority of the transactions take place in the border because the Chinese cell works there. Transfers are fast and made with great efficiency. If the person lives close to the border, it can take 20 minutes to complete the transaction. However, the commission fee is between 20-40% since there are five people involved in the transaction from the time the remitter sends the money until the recipient gets the funds. All the transactions pass by China. The recipient gets the money in local currency. Most North Korean remittances are used for consumption purposes and followed by investment purposes to run small businessess. In certain cases, the funds are also used for family reunification purposes.== It is interesting to see some similarities between North Korea and Somalia on how private sector activities emerge in money transfer services in a controlled state economy and in a stateless conflict economy: i) both systems relied on telecommunications to make their transfers; and ii) both systems have not faced competition from the likes of Western Union and Money Gram which have not been set up in North Korea yet. #### Details summarized - Sent informally - hand carried to the border or wired - ~$10MM per year as of 2011 - Operated by Chinese / Koreans in [[South Korea]] and [[China]] - Transactions take place at the border because Chinese cell phones work there - Transfers are fast and efficient - can be done in 20 minutes - 20-40% commission - All transactions pass by [[China]] - Recipient gets money in local currency - Interesting - they receive North Korean Won rather than foreign currencies. Maybe because that's the currency used day to day - Money is used for consumption then investment, and sometimes family reunification - Transfers rely on telecommunications