The Democratic People's Republic of North Korea announced last week through state media that it was severing diplomatic relations with Malaysia. The next day, Malaysia followed suit by giving North Korean diplomats and their dependents 48 hours to leave the Southeast Asian country.
At the center of the tiff with the DPRK was the fate of Mun Chol Myong, a North Korean businessman who Malaysia had arrested in May 2019, at the request of the United States, for allegedly evading U.N. sanctions over Pyongyang’s nuclear weapons program. Mun, who had lived in Malaysia since 2008, was charged with multiple counts of money laundering and attempted money laundering.
After exhausting his appeals in the Malaysian courts earlier this month, Mun on March 17 was quietly deported to the United States, where he will become the first North Korean to stand trial after being extradited stateside. Through agreeing to send him to the U.S., Malaysia had committed an "unpardonable crime," Pyongyang said.
The North Koreans had demanded that the Malaysian government intercede in the courts to have Mun freed and returned to North Korea. They argued he was engaged in lawful trade and that the United States was bullying Malaysia into handing him over.
It was a self-defeating move by North Korea, which has few friends. The communist state, which is led today by Kim Jong Un, has formal diplomatic ties with more than 160 countries but mostly on paper.
Only 24 countries have embassies in Pyongyang, while North Korea has a few dozen diplomatic missions abroad. Beyond serving basic functions of diplomacy, Pyongyang’s embassies have an essential function of procuring hard currency, evading sanctions, and procuring technology and luxury goods for the regime, as well documented by reports.
They are essential sources of funding – largely illicit – for the cash-strapped and constantly sanctioned government in Pyongyang. They have functioned as vehicles for the laundering of Pyongyang’s famed “super notes,” high-quality forgeries of U.S. $100 bills, as well as illegal narcotics.
The embassy in Malaysia was no exception. It was long suspected for both illicit business activity and money laundering. The embassy assisted in the marketing of North Korean military communications equipment, among other activities. But most important, the embassy was tied to the procurement of communications and computer equipment for Pyongyang.
Mun’s extradition to the U.S. was “very important” because the businessman was “part of Kim Jong Un’s illicit activities network,” as David Maxwell, an expert with the Foundation for Defense of Democracies, told Radio Free Asia, a BenarNews sister entity.
And, according to an indictment unsealed in a U.S. federal court on March 22, “Mun was affiliated with the DPRK’s primary intelligence organization, the Reconnaissance General Bureau, which is the subject of U.S. and U.N. sanctions.”
2017 assassination
Malaysia’s shuttering of the embassy was long overdue.
In 2017, North Korean agents hired two women, Vietnamese and Indonesian nationals, to take part in assassinating Kim Jong Nam, the North Korean dictator's half-brother, with VX, a nerve agent, at the Kuala Lumpur International Airport.
Using an internationally banned weapons-grade nerve agent on foreign soil is an act of war. While several North Korean agents quickly slipped out of the country, the Malaysian government could not take more aggressive action against the embassy staff, including suspects in Kim’s murder, because Pyongyang was effectively holding Malaysian diplomats and their dependents there hostage.
Ultimately, all nine North Korean suspects were able to leave Malaysia. Only the two women were ever arrested and tried, though in both cases the government eventually dropped the charges against them.
Though both countries withdrew their ambassadors, diplomatic tensions were largely papered over. So why has Pyongyang escalated the situation today? The over-reaction to the extradition is telling.
The best answer is that it demonstrates just how important money laundering is to the regime. Mun is an experienced operative with nearly 20 years of experience in money laundering, procuring luxury items, and technology that is essential to keeping the Kim family in power.
On an individual level, should Mun negotiate a plea bargain with U.S. prosecutors, he could fill in important details in the American government’s understanding of how North Korea funds itself, procures high technology, and evades sanctions.
But Mun’s extradition is emblematic of a larger concern for Pyongyang. North Korea is a criminal state, not just in terms of its proliferation of weapons of mass destruction, but the fact that it survives through crime.
In the past few years, North Korean hackers have stolen some $670 million in currencies and virtual currencies, including $81 million from Bangladesh's central bank. But no cyber fraud is too small.
And the economy has been hard hit. In a speech last October, Kim Jong Un broke down in tears and acknowledged a significant economic slowdown, “grave challenges,” and “unprecedented disasters.”
Which makes the evasion of sanctions and the import of luxury goods so important to Kim: it is how he buys loyalty to the regime.
Geopolitical stakes
The new administration in Washington will need to ratchet up sanctions if it hopes to force North Korea back to the negotiating table.
Once formidable, with broad international support, international enforcement of the sanctions quickly ebbed after President Trump’s June 2018 summit with Kim in Singapore.
After the collapse of the Hanoi summit in February 2019, the sanctions regime was never fully reinstated, with countries like Malaysia all too willing to continue low levels of trade and allow North Korea to conduct commercial activities.
The United States and China, meanwhile, have a host of contentions issues, as was played out in last week’s testy bilateral meeting in Alaska. The rival superpowers desperately need to find issues upon which they can cooperate.
North Korea, however, is not one of them. Beijing has too much to lose should Pyongyang collapse. Which means the United States under the Biden administration has no choice but to target North Korean operations in the 45 other countries where their diplomats are laundering money, peddling drugs, and skirting sanctions.
Expect North Korea to retaliate in the way it knows how: through provocations. North Korea has tested nuclear weapons six times since 2006, including four during Kim Jung Un's tenure. We are likely to see a resumption of missile tests by North Korea, which were scaled back in 2020.
North Korea has been a challenge for every U.S. president, and things are unlikely to change for the Biden administration in stepping up sanctions on Pyongyang. Countries like Malaysia, where North Koreans have operated with relative impunity, will be key to sanctions enforcement.
Zachary Abuza is a professor at the National War College and an adjunct at Georgetown University in Washington. He is a regular expert commentator for BenarNews, an RFA -affiliated online news service.