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N. Korea nets $670 mil. via cyberattacks: UN panel

This file photo shows the United Nations headquarters in New York. (Kyodo)

NEW YORK (Kyodo) -- North Korea has hauled in more than $670 million in foreign and virtual currency through cyberattacks to continue flouting international sanctions, according to a report by a U.N. panel of experts published on Tuesday.

The annual document that the panel distributed to the North Korea sanctions committee under the U.N. Security Council came as the isolated state faces harsh economic sanctions over its nuclear and ballistic missile programs.

It points out that North Korea waged the cyberattacks on a number of overseas financial institutions, including cryptocurrency exchanges, in a broad hacking campaign in other nations.

Cryptocurrencies have given Pyongyang a new way to evade sanctions, since "they are harder to trace, can be laundered many times and are independent from government regulation," it says.

Among such cases, Pyongyang is said to have successfully launched attacks on cryptocurrency exchanges in Asia at least five times between January 2017 and September 2018, leading to a total loss of $571 million.

North Korea also stands accused of using blockchain, an online ledger of virtual currency transactions, to circumvent sanctions. An example cited by the panel is the case of the Hong Kong-based Marine Chain, which dealt with the buying and selling of ships globally using blockchain technology and was speculated to have been involved in supplying cryptocurrencies to Pyongyang.

The expert panel urged U.N. member states to "enhance their ability to facilitate robust information exchange" on North Korean cyberattacks with other governments as well as domestic financial institutions, according to the report.

Beginning in 2006 when Pyongyang carried out its first nuclear test and continuing as it conducted five more such tests in the ensuing years, the Security Council has subjected the country to increasingly stringent sanctions, with the most recent round in 2017 capping its imports of petroleum products and crude oil, as well as imposing a coal ban.

The yearly report is compiled by a panel of experts made up of representatives from the five permanent members of the Security Council -- Britain, China, France, Russia and the United States -- as well as from Japan, South Korea and South Africa.

Members of the panel, who have expertise in fields ranging from nuclear nonproliferation to export trade control, analyze findings brought forward during the previous year.

Their report is then turned over in February to the 15 members of the North Korea sanctions committee, which has experts from each Security Council member state and holds its own meetings throughout the year.

The panel has also found that North Korea's nuclear and ballistic missile programs remain intact, with Pyongyang using airports and other civilian facilities to expand and test defensive missiles.

"The panel found that (North Korea) was using civilian facilities, including airports, for ballistic missile assembly and testing with the goal of effectively preventing 'decapitation' strikes," according to the report.

Also contained in the document were other concerns raised with the assessment that North Korea continues to defy past council resolutions "through a massive increase in illegal ship-to-ship transfers of petroleum products and coal" over the course of the last year.

More than 50 vessels and 160 companies are under investigation with reports to the panel coming from Japan, South Korea, Britain and the United States as a jump in transfers, often using foreign-flagged ships, was recorded in 2018.

The United States notified the committee in July that Pyongyang had breached the petroleum cap set out in previous resolutions from January to May with North Korean ships making at least 89 port calls.

In September, Washington reported to the committee that at least 59 more deliveries had been made to North Korea from July through August, bringing the total to at least 148 instances last year of prohibited ship-to-ship transfers.

The United States also provided various estimates of such ships' carrying capacities in support of its theory that the 500,000-barrel cap had been exceeded. Russia, however, disputed the findings, which resulted in the mid-term report being blocked from the public as consensus on its publication could not be reached.

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