Countering North Korean WMD Proliferation

The Department of State’s Office of Cooperative Threat Reduction (ISN/CTR) is funding assistance awards for projects that focuses on mitigating Weapons of Mass Destruction (WMD) proliferation risk.

While the United States continues to seek negotiations with the Democratic People’s Republic of Korea (DPRK) to reach the denuclearization of the Korean Peninsula, it maintains the policy that international pressure and sanctions must remain in force until the DPRK fully denuclearizes. ISN/CTR supports the pressure campaign against the DPRK by training partners to implement United Nations Security Council Resolutions (UNSCRs) constraining the DPRK’s WMD proliferation, to detect and halt DPRK-linked sanctions evasion activities, and to impede the DPRK’s material and financial activities that fund the development of WMD and related delivery systems.

ISN/CTR achieves this mission through capacity-building programs, open-source research, and other specialized efforts, all of which help at-risk countries detect and shut down financial and material flows to the DPRK.

North Korea Cyber Theft a Major Source of Funding for the Regime’s WMD Program

North Korea generates substantial revenue for its WMD programs through widespread and increasingly sophisticated cyber operations against vulnerable institutions worldwide. DPRK cyber actors, under the direction of the regime, have committed dozens of cyber-attacks targeting financial institutions, cryptocurrency exchanges, and virtual currency mining entities in at least 17 countries. The use of ransomware is increasingly leveraged by DPRK cyber groups to extort vulnerable organizations, including hospitals and critical infrastructure, for cryptocurrency payments.

ISN/CTR seeks proposals that engage central banks, private financial institutions (FIs), designated non-financial businesses and professions (DNFBPs), and other industries vulnerable to DPRK cyber tactics to reduce the risk of DPRK cyber exploitation for money, including but not limited to:

• Training governmental officials to promote the implementation of effective cybersecurity practices at financial institutions, central banks, and cryptocurrency exchanges to counter DPRK-linked efforts
• Imparting to relevant law enforcement officials the knowledge and tools to successfully investigate malware and other cyber-attacks for links to DPRK activity and report attribution
• Engagements with management representatives of FIs, DNFBPs, and cryptocurrency exchanges to counter DPRK cyber-theft
• Training technical and non-technical staff at FIs, DNFBPs, cryptocurrency exchanges, and likely targets of DPRK ransomware to prevent DPRK cyber-revenue generation by identifying common social engineering techniques such as phishing attacks and adopting enhanced cybersecurity measures including basic cyber hygiene practices
• Ensuring that decision-makers in vulnerable institutions, as well as insurers providing coverage for such cyber incidents, understand the sanctions risk associated with transacting with DPRK-linked cyber actors, i.e., making ransomware payments, etc.

Funding WMD by Money-Laundering Through Foreign Banks and Cryptocurrency Exchanges

North Korea, using a network of shell companies and foreign representatives, is laundering money through foreign banks and cryptocurrency exchanges to fund its WMD programs. Despite being largely cut off from the international financial system, the DPRK uses a complex web of shell companies and facilitators to conduct financial transactions that generate, launder, transfer, or expend revenue used to support its nuclear and missile programs.

ISN/CTR seeks proposals that will enhance the abilities of partner governments and the private sector to identify, report, and disrupt DPRK proliferation finance activities, including but not limited to:

• Training government entities such as financial intelligence units, law enforcement financial supervisors, and law enforcement to identify DPRK-linked proliferation finance activity, implement targeted financial sanctions and conduct proliferation finance risk assessments consistent with Financial Action Task Force Recommendations, and improve public-private information sharing on DPRK money laundering
• Training supervisors and other relevant government officials to ensure that effective counterproliferation finance controls to counter the DRRK are adopted at traditional financial institutions, cryptocurrency exchanges, and designated non-financial businesses and professions operating in their jurisdictions
• Enhancing the ability of national-level prosecutors and judicial officials to prosecute DPRK proliferation finance activities as well as the ancillary crimes that accompany DPRK sanctions evasion activities
• Ensuring financial institutions, DNFBPs, cryptocurrency exchanges, and other relevant private sector stakeholders conduct enhanced due diligence to identify individuals and entities operating on behalf of the DPRK and report suspicious transactions.

Exploiting Maritime Systems to Smuggle Illicit Goods

North Korea exploits shipping registries to evade UN sanctions on maritime commerce and generate revenue for the development of WMD. DPRK-linked entities, including trading partners, evade sanctions by using falsified documents to register vessels, disabling ships’ identification/location transponders to conduct dark voyages, registry-hopping to evade enforcement action, and exploiting the sometimes-relaxed documentary requirements for “provisional” registration. Registries with lax enforcement mechanisms fail to identify, deregister, and report DPRK-linked vessels.

ISN/CTR seeks proposals that enhance the ability of shipping registries to detect and halt DPRK sanctions evasion, including but not limited to:

• Training publicly and privately-operated shipping registries to conduct proper due diligence to identify, deregister, and report DPRK-linked vessels already on, or applying to, their respective registries
• Trainings in both bilateral and multilateral settings to help standardize rigorous compliance practices, as well as trainings that find creative opportunities to reach DPRK-linked registries that ISN/CTR has yet to engage

Exploiting International Sanctions Enforcement

North Korea is exporting and importing sanctioned commodities in violation of UNSCR sanctions: The North Korean regime is exploiting inconsistent implementation of international sanctions to continue its trade in UNSC-prohibited commodities, including the sale of such goods as coal, seafood, and military equipment and the importation of products such as refined petroleum (in excess of UN-imposed limits) and luxury goods.

ISN/CTR seeks effective and innovative proposals designed to halt North Korea’s illicit trade of commodities, including but not limited to:

• Training officials to establish or update national luxury goods lists to ensure that partner governments can interdict luxury good shipments bound for North Korea or prosecute entities operating on behalf of North Korea
• Training law enforcement and customs officials to address the sale of sanctioned commodities while enhancing existing codes of conduct, regulations, and due diligence practices to increase detection of DPRK-linked commerce
• Using trade gap analyses focused on potential revenue losses due to sanctions violations to encourage partners to enhance their documentation review processes
• Training regulatory bodies to leverage existing legal statutes to seize prohibited DPRK-linked commodities and prosecute those associated with the transaction
• Improving existing capabilities to identify and disrupt prohibited DPRK trade through the utilization of commercially and publicly available trade data

Using Overseas Laborers to Generate Revenue Illegally

North Korean overseas laborers generate revenue which is used by the regime to develop WMD and missile systems in violation of UNSCRs: North Korean laborers continue to work outside the DPRK under authority of the regime and for its exclusive financial benefit.

Information technology, building and public arts construction, and putative medical services are the highest-earning and most common fields in which tens of thousands of DPRK nationals work. DPRK laborers continue to work overseas, albeit in declining numbers despite the global health situation and the obligation of all UN Member States to repatriate them in compliance with relevant UNSCRs. ISN/CTR seeks proposals for engaging government bodies, prosecutors, private sector employers, and other relevant audiences to continue pursuing the global repatriation of DPRK workers, including but not limited to:

• Convening labor and health ministry, immigration, foreign affairs, and law enforcement officials to improve inter-agency collaboration to identify and expel DPRK nationals working abroad on behalf of the DPRK regime, including those whose nationality has been obscured or falsified, or whose visa types have been fraudulently changed to evade deportation
• Raising awareness among government and media leaders about financial, health, public safety, network security, and further risks associated with employing DPRK laborers, including putative health, development aid, public arts, and information technology professionals
• Working with prosecutors to develop new approaches to disrupt DPRK laborers working abroad on behalf of the DPRK regime where national immigration or related authorities for their expulsion are not in place
• Training immigration and customs personnel in database analysis and relevant opensource research techniques to identify potential DPRK laborers working abroad on behalf of the DPRK regime in partner countries’ territories.

North Korean Nationals and Diplomats Engaging in Illicit Activity Abroad

North Korean nationals, including diplomats, travel abroad and engage in commerce to generate revenue for the regime’s WMD and missile programs in violation of UNSCRs. North Korean nationals engage in UN and US-sanctioned commercial activities to generate revenue for the regime. This includes North Korean diplomats who use the diplomatic pouch to smuggle illicit goods including, but not limited to, drugs, weapons, cash, luxury items (including gold and cigarettes), and exotic animal parts.

ISN/CTR seeks innovative programmatic solutions to halt these activities, including but not limited to:

• Training customs officers to recognize and inspect the goods of North Korean diplomats abroad, including inspecting baggage that may violate diplomatic pouch standards and privileges
• Training foreign financial institutions to spot red-flag indicators of sanctioned commercial activities being conducted from DPRK embassies through foreign financial institutions
• Ensuring partners understand and work to halt the criminal activities of North Korean government officials traveling abroad, including those abusing diplomatic privileges and immunities.

Open-Source Information Reporting and Sharing

Open-source information on North Korea’s continually evolving sanctions evasion is key to informing ISN/CTR programming. The DPRK employs an evolving network of witting and unwitting individuals, corporate entities, maritime vessels, and diplomatic missions to conduct and conceal its sanctions evasion activities. ISN/CTR seeks to produce reporting based on rigorous collection and analysis of open source and commercially available information for the purpose of providing unclassified information to foreign governments to make them aware of, and assist their investigations into, DPRK sanctions-evasion activity. ISN/CTR is interested in deliverables that provide immediate, actionable information on specific entities or activities to this end, and that serve as case studies to be included in capacity-building programming. CTR does not seek to build an in-house open-source analytical capability and does not seek to fund the development of new analytical tools, nor does CTR seek for its time-constrained staff to be trained in the use of such tools.

Tailored Engagement Strategies

ISN/CTR sponsors projects that respond to each partner country’s needs, capabilities, infrastructure, and existing legal and regulatory structures, rather than a one-size-fits-all approach. We will sponsor trainings that are based on an understanding of technical and human capacity in each partner country, take cultural considerations into account, and build upon experience.

Although complex nonproliferation objectives demand persistent engagement with partner countries, discrete projects should individually advance progress toward a particular objective. Proposals should describe each project’s desired end-state, along with specific, measurable, and realistic benchmarks by which to gauge progress toward that end-state. Compelling project proposals will establish milestones to be met during the training period and describe observable progress in the adoption, implementation, or enhancement of nonproliferation or sanctions implementation and compliance best practices.

Grant Award Information

Total available funding for this effort is anticipated to be $12,000,000. ISN/CTR estimates to make up to 30 awards in the form of Interagency and Cooperative Agreements, each with a 12 month performance period starting 1 October 2022. The funding is projected as part of the FY22/23 Nonproliferation, Anti-Terrorism, Demining and Related Activities Funds under the Foreign Assistance Act.

The following organizations are eligible to apply (both domestic and international):

• Not-for-profit organizations
• Public and private educational institutions
• For-profit organizations
• Federally funded research and development centers
• Public International Organizations

Countering North Korean WMD Proliferation. Department of State Bureau of International Security-Nonproliferation. Funding Opportunity Number: SFOP0008434. Closing Date for Applications: Jan 31, 2022.