North Korea Might Be Funding Its Nuke Tests Through State-Directed Online Bank Heists

05.08.17 3 months ago

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Tensions between the U.S. and North Korea seem to escalate every day. The U.S. announces a missile defense system is operational in South Korea; Pyongyang accuses the U.S. of an assassination plot. Another U.S. citizen is taken hostage in North Korea; a sitting governor and former presidential candidate says it’s time to “eradicate” their leadership. At the root of these tensions is North Korea’s commitment to building a nuclear arsenal and continuing frequent testing of missiles. Those missile tests aren’t cheap, though, so it’s curious how one of the poorest countries in the world is able to conduct them in the first place. According to The Daily Beast, North Korea is able to afford all those nuclear tests thanks to the efforts of a crack team of online bank robbers.

Using a mix of sophisticated and rudimentary hacking techniques, North Korean hackers, known collectively as Lazarus, have in recent years, with differing degrees of success, stolen large amounts of money from financial institutions in Asia and Europe, using malware to initiate wire transfers and then move the money around until it “disappears.” The Daily Beast points to a nearly $1 billion heist from the Bank of Bangladesh and the country spending over $1 billion on nuclear testing in 2012 to make an easy connection: North Korea finances its nukes, at least in part, with ill-gotten gains, perhaps the largest aspect of a state-run crime ring, called Office 39, that does everything from selling arms to counterfeits foreign currencies and prescription drugs:

“The money that North Korea makes from illicit activities is 40 percent of their real economy,” said Bruce Bechtol, professor of political science at Angelo State University and the author of four books on North Korea. Criminal proceeds prop up North Korea’s communist government, support the lavish lifestyle of party leaders, and help support the military, he said. “And some of it, no doubt, goes to support both their nuclear program and their ballistic missile program.”

Experts believe that the state-run online heist crew can be as large as 7,000 people in Office 39 and likely includes some of the hackers behind the 2014 Sony Hack. Moreover, because of North Korea’s existing criminal enterprises and money-laundering networks, the crew has the resources to hide large amounts of cash quickly, emboldening them to go after bigger scores. It doesn’t hurt that they’re associated with North Korea either — one bank manager reportedly knew exactly what was happening when mules showed up to withdraw millions of dollars but let it play out rather than risk her or her family’s safety.

So far, the hacks have been linked to 18 countries, but that number is undoubtedly set to go up.

(via The Daily Beast & CNN)

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