- October 18, 2019 7:56 AM
- October 6, 2023 3:59 PM
- January 25, 2023 11:20 AM
In October 2023, the international financial observer known as the Financial Action Task Force (FATF) released a report showing that Cambodia is improving its implementation of the UN sanctions against North Korea and other illicit financial activities associated with North Korea.
It designated Cambodia as “mostly met” in criteria 7.1 in establishing mechanisms regarding targeted economic sanction (TFS) and proliferation and financing (PF) in responding to the UN's sanction against North Korea. As stated, “Cambodia issued The Guideline on Procedure of Forwarding Without Delay UNSCR Lists which establishes a mechanism for forwarding changes or updates in designations to reporting entities.” The performance has removed Cambodia from the Grey List,
The report accurately captures the effort of the Cambodian government in responding to the UN's resolution against North Korea, as well as the spreading of nuclear weapons. The effort can be seen via the Cambodian government's action to close North Korean business operations in Cambodia, including the recent shutting down of North Korea's Blue Flower Restaurant in Phnom Penh.
Cambodian's action indicates that the Cambodian government is trying to maintain stability and peace in the international arena by preventing a rogue state from developing nuclear weapons to threaten other states. However, the North Korean regime can still sustain its effort to acquire foreign currency. Recently, it has been reported that North Korea is exploiting the loophole of the UN sanction by being involved in crypto mining and theft. In August this year, the US government charged Tornado Cash for transferring around US$1 billion to Lazarus Group.
This North Korean hacking group has been actively funding nuclear programs in North Korea. The case indicates that the North Korean government has been utilizing modern technology to earn foreign currency, which is beyond the control of the state. Recently, it was revealed by TRM, a company involved in fighting against money laundering, financial crime and fraud, that North Korean hackers earned around US$300 million from their 30 hacks in 2023 and stole over US$5 billion in the last five years.
This should be a concern for the Cambodian government as technological development in Cambodia remains weak, and there have been numerous media reports of online scammers operating in Cambodia, particularly in Preah Sihanoukville Province. North Korea could exploit these opportunities.
It was reported that North Korean IT workers were detected to be mainly located in China, Russia, Africa and Southeast Asian countries, where they can earn around US$300,000 each year. The North Korean IT workers were estimated to be about 1,000 in Korea and 3,000 in foreign countries.
The National Bank of Cambodia, the Securities and Exchange Commission of Cambodia, and the General Commissariat of National Police issued a joint statement indicating that the use of cryptocurrency, including KH Coin, Suncion, K Coin, One-coin, Forex coin, and any cryptocurrency is illegal in Cambodia, the Cambodian government has not been implementing strict law to restrict and crackdown on the using of cryptocurrency.
A survey conducted by Standard Insight in November 2022 of over 500 Cambodian people shows that one in every 10 Cambodian people use cryptocurrency, and the number will keep increasing of tech-savvy among Cambodian people. By early 2023, there were around 11.37 million internet users and 10.95 social media users in Cambodia, which amounted to 67.6% and 65%, respectively, of the total Cambodian population.
Against this backdrop, the Cambodian government should pay close attention to the vulnerability of Cambodia’s cyber security and the unregulated crypto business in the kingdom, as the Southeast Asian region is identified to be under the threat of North Korea's cyber army. While mining cryptocurrency is illegal in Cambodia, some could find it profitable as cryptocurrency can change to the US dollar, and some ASEAN countries, including Singapore, Thailand, and Vietnam, have legalized that currency.
Banning cryptocurrency with no strict law enforcement means that the Cambodian government cannot regulate the flow of cryptocurrency. Therefore, Cambodia could be at risk of North Korean IT workers.
Firstly, the Cambodian government has no intention of legalizing cryptocurrency shortly. In that case, the government should enact vigorous law enforcement to prevent the unregulated flow of cryptocurrency in Cambodia. Secondly, the Cambodian government should strengthen Cambodia's digital infrastructure and the capabilities of Cambodian's Department of Cybercrime to prevent North Korea's IT workers and maintain the kingdom's digital security. Finally, the Cambodian government should cooperate with regional and international actors to share information and track North Korean IT workers. It should be noted that the nature of North Korean IT workers is transboundary, and they frequently fake their identities and names to get involved in cryptocurrency.
Furthermore, the Cambodian government should implement a law discouraging individuals from having business relations with North Korean people and businesses in Cambodia, including purchasing goods or using North Korean services in Cambodia, either online or offline.
The North Korean government has significantly benefited from its business operations in foreign countries. Those businesses only help to enhance North Korea's armed modernization and destabilize and violate the international system and international law.
It has previously been revealed that the North Korean government has built diplomatic relations and provided arms support to many authoritarian and failed states, including Myanmar and Palestine.
The Cambodian government's record on implementation of the UN sanction against North Korea has been praised. However, the Cambodian government should put more effort into North Korea's cryptocurrency theft and money laundering.
Rim Sokvy is a Cambodian Institute for Cooperation and Peace research fellow, whose research focuses on Cambodia's foreign policy.