North Korea Country Summary

FATF Status

North Korea is subject to a FATF call on its members and other jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing (ML/FT) risks emanating from the jurisdictions.

Latest FATF Statement - 21 February 2025

Building upon the FATF statements over the past decade, the FATF remains concerned by the DPRK’s continued failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threats posed by the DPRK’s illicit activities related to the proliferation of weapons of mass destruction (WMDs) and its financing.

The FATF has continually reiterated since 2011 the need for all countries to robustly implement the targeted financial sanctions in accordance with UNSC Resolutions and apply the following countermeasures to protect their financial systems from the money laundering, terrorist financing, and proliferation financing threat emanating from DPRK:

Terminate correspondent relationships with DPRK banks;

Close any subsidiaries or branches of DPRK banks in their countries; and

Limit business relationships & financial transactions with DPRK persons.

Despite these calls, DPRK has increased connectivity with the international financial system, which raises proliferation financing (PF) risks, as the FATF noted in February 2024. This requires greater vigilance and renewed implementation and enforcement of these countermeasures against the DPRK. As set out in UNSCR 2270, DPRK frequently uses front companies, shell companies, joint ventures and complex, opaque ownership structures for the purpose of violating sanctions. As such, FATF encourages its members and all countries to apply enhanced due diligence to the DPRK and its ability to facilitate transactions on its behalf.

The FATF also urges countries to adequately assess and account for the increased proliferation financing risk with the greater financial connectivity reported, particularly since the next round of assessments requires countries to adequately assess PF risks under Recommendation 1 and Immediate Outcome 11. The ability to obtain reliable and credible information to support the assessment of PF risks relating to the DPRK is hampered by the recent termination of the 1718 Committee Panel of Experts mandate. Thus, the FATF will monitor the measures to comply with DPRK targeted financial sanctions and the implementation of countermeasures against DPRK.

European Commission list of countries with strategic deficiencies in their AML/CFT regimes

North Korea is on the EU Commission list of high risk countries

Compliance with FATF Recommendations

North Korea has not yet undertaken a Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards.

The Democratic People's Republic of Korea (DPRK) is a major source of human trafficking, particularly involving women and girls, and is heavily engaged in various criminal activities, including arms trafficking, drug production, and cybercrime. The government itself acts as the primary criminal organization, deeply involved in illicit trade and corruption, while the judicial system lacks independence and fails to protect citizens' rights. With a totalitarian regime that suppresses civil society and prioritizes control over economic development, the DPRK faces significant challenges due to international sanctions and limited foreign trade.

North Korea has one of the most closed and centralized economies globally, characterized by significant inefficiencies, chronic food shortages, and economic stagnation due to its Soviet-style model. The economy remains heavily nationalized, with the state controlling most production means and prioritizing military expenditure, resulting in a low GDP per capita and ongoing infrastructure and energy supply challenges.

The investment climate in North Korea is severely constrained by its isolationist policies and international sanctions, which restrict foreign investment opportunities. Although the government has created special economic zones to attract foreign businesses, these initiatives have largely failed due to ongoing political tensions and economic instability. Furthermore, the country's strict economic controls and focus on military priorities create a high-risk environment for potential investors.