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Korean Financial Markets Face New Fraudulent Activity Threats

Washington, D.C. - Sanctions Imposed on Individuals Supporting North Korea’s Illicit Financing

The United States Treasury’s Office of Foreign Assets Control (OFAC) has imposed sanctions on three individuals for supporting North Korea’s illicit financing and malicious cyber activities. The Democratic People’s Republic of Korea (DPRK) has been using stolen virtual currency to fund its unlawful weapons of mass destruction (WMD) and ballistic missile programs.

Sanctioned Individuals

The sanctioned individuals are:

• Wu Huihui, who provided material support to the Lazarus Group, a cybercrime organization linked to North Korea’s military intelligence agency.
• Cheng Hung Man, who provided material support to Wu.
• Sim Hyon Sop, who acted on behalf of the Korea Kwangson Banking Corp (KKBC), an entity that has provided financial services in support of North Korea’s WMD and ballistic missile programs.

The Lazarus Group

The Lazarus Group is a cybercrime organization linked to North Korea’s military intelligence agency. They have carried out major virtual currency heists and fraudulent activities in the financial sector.

The DPRK’s Virtual Currency Theft and Fraud Schemes

The DPRK has been engaged in virtual currency thefts and fraud schemes since at least 2017, generating revenue for its unlawful activities. The regime uses a network of over-the-counter (OTC) virtual currency traders to launder stolen funds and evade sanctions.

Sim’s Accusations

Sim is also accused of receiving tens of millions of dollars in virtual currency from fraudulent IT development work conducted by North Korean individuals abroad. He has directed OTC traders to send payments to front companies using funds derived from stolen virtual currency, which are then used to purchase goods for the DPRK regime.

US Government Action

The US government has taken action against the sanctioned individuals and entities, imposing sanctions that will block their assets in the United States and prohibit US persons from engaging in transactions with them. Any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for these designated individuals or entities could be subject to correspondent or payable-through account sanctions.

Ongoing Effort

The OFAC sanctions are part of an ongoing effort to disrupt North Korea’s illegal activities and prevent the flow of funds to its WMD and ballistic missile programs.