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The North Korean economy was collapsing, but its ruling family still needed dollars. In the 1990s, fuel shortages brought factories to a standstill, the public food-distribution system broke down, and a famine killed hundreds of thousands of people. Kim Il Sung died in 1994, leaving his son Kim Jong Il to govern a country deprived of its Soviet benefactor. Outside observers wondered whether North Korea would reform as China had done or fall apart as the Soviet Union had.
Neither happened. The regime survived, and the people around its leader continued to receive privileges unavailable to ordinary citizens: imported goods, superior housing, access to foreign travel, and the protection of belonging to an indispensable political elite. Maintaining those privileges required resources that the collapsing civilian economy could scarcely provide.
One answer lay in Office 39, a secretive department of the Workers’ Party of Korea whose business was acquiring foreign currency for the leadership. Its network mixed ordinary trading companies with opaque financial arrangements and activities alleged or documented by foreign governments to include narcotics trafficking and other crimes. The larger North Korean state later developed additional ways to earn or steal money, including arms exports, overseas labor, and cyber operations.
Office 39 is not a master switch controlling every illegal act committed in North Korea’s name. Its real significance is more revealing: it shows how a government could be economically disastrous for much of its population while maintaining a surprisingly resourceful financial apparatus for those who ruled it.
Why North Korea Needed a Secret Foreign-Currency Economy
North Korea’s economic predicament was not inevitable from the beginning. After the Korean War, the country inherited an industrial base with mines, factories, and hydroelectric facilities, while Soviet and Chinese assistance helped reconstruct cities and industry. For a period, North Korea’s industrial performance compared favorably with the poorer, war-damaged South. Its government promised that centralized planning and national self-reliance would deliver prosperity without the uncertainties of capitalism.
But the system was never as self-sufficient as its propaganda suggested. Imported oil powered factories and transport; foreign machinery supported industrial expansion; socialist trading partners provided essential inputs on favorable terms. Inside the planned economy, production quotas could reward reported output rather than useful goods, while collective agriculture suffered from poor incentives, shortages of fertilizer, and equipment failures. Political prestige projects competed with everyday necessities.
By the 1970s, Pyongyang had borrowed heavily to obtain Western industrial technology. It hoped new equipment would increase exports enough to repay its creditors. When export performance disappointed and international prices moved against it, the government struggled to service its debts, and defaults damaged its standing with foreign lenders. The need for imported materials remained, even as legitimate ways of financing them narrowed.
The currency problem was particularly unforgiving. North Korean won might pay domestic wages, but a foreign manufacturer selling medical equipment or precision machinery wanted dollars or another accepted currency. A government with its own printing presses could make more won; it could not manufacture legitimately spendable foreign exchange. Selling commodities abroad, receiving aid, and borrowing were therefore essential to buying things that the domestic economy could not produce.
Then came the loss of the Soviet Union. The trade arrangements and subsidized supplies underpinning North Korean industry unraveled, and the crisis spread through farms, electricity generation, transport, and food distribution. Floods and agricultural failures compounded the damage. The famine of the mid-1990s, known officially as the Arduous March, caused immense suffering; estimates of excess deaths vary, with frequently cited scholarly ranges in the hundreds of thousands rather than a securely established figure of several million. The wider collapse is examined in the history of North Korea.
Yet the ruling party’s financial requirements were different from those of the public. The regime needed not only imports but also loyalty. A senior official offered an apartment, imported car, valuable gifts, or opportunities for his children had something tangible to lose if the leadership fell. Those rewards helped sustain a hierarchy in which the supreme leader controlled both punishment and privilege.
Analysts sometimes call the arrangements that funded these benefits a court economy: a set of privileged financial channels serving the leader and his inner circle. The distinction was not necessarily between legal money and illegal money. It was between resources available for ordinary state needs and resources controlled for political purposes. Office 39 emerged as one of the mechanisms through which the court economy could obtain funds independently of the country’s visibly failing public institutions.
How Office 39 Was Created and Who Controls the Money
Office 39’s origins lie in the 1970s, when North Korea’s growing debt problems made the search for foreign exchange urgent. A commonly repeated account dates its founding to 1974 and links it to Kim Jong Il, then rising through the Workers’ Party as the intended successor to his father. Other descriptions credit Kim Il Sung with establishing the underlying financial organization. The precise founding arrangements are difficult to verify, and the famous story that its name came from an office room number is better treated as an account than a documented administrative fact.
Its function is less mysterious than its beginnings. Office 39 collected foreign-currency earnings for senior party leadership, operating through businesses and financial entities that could transact beyond North Korea’s borders. Unlike a normal finance ministry, its work centered on funds available to the ruling circle. Its power came from access to the party hierarchy and from the discretion that accompanied money outside transparent public accounting.
The clearest public evidence of this role came from foreign sanctions investigations. On 30 August 2010, the United States listed Office 39 under Executive Order 13551. The Treasury Department’s description of the designation said the organization supported North Korea’s leadership through illicit economic activity and management of leadership-controlled funds. It identified activities including narcotics production and trafficking, as well as an attempted purchase of luxury yachts destined for Kim Jong Il.
That yacht episode captures the political character of the problem. In 2009, Italian authorities stopped an attempted purchase of two luxury yachts worth more than $15 million, which US officials said were intended for the North Korean leader. Such goods were restricted under international sanctions, but the planned purchase also illustrated why a leadership fund required foreign suppliers, intermediaries, and financial arrangements capable of reaching markets inaccessible to most North Koreans.
Information about the internal chain of command remains incomplete. Outsiders cannot inspect Office 39’s accounts or establish how individual transactions were authorized, and defectors see only the parts of the organization in which they worked. Nevertheless, the broader pattern is consistent: the institution’s position within the Workers’ Party gave it a direct relationship to the political center rather than to an ordinary commercial market.
This made its money more consequential than its accounting value alone. Kim Jong Il inherited a system that rewarded reliable officials and protected a small circle during the famine. Under Kim Jong Un, the regime retained both the need for hard currency and the ability to allocate valuable resources selectively. Office 39’s continuing relevance came from helping supply a leadership whose political obligations did not disappear when the national economy deteriorated.
The Legitimate Businesses Behind the Shadow Network
To picture Office 39 only as a criminal organization would miss much of its operation. A trading company can sell lawful goods, earn legitimate export revenue, and still form part of an opaque structure designed to deliver money to a political leader. North Korea had commodities that buyers wanted: gold from mines and river deposits, minerals, agricultural produce, ginseng, seafood, textiles, and other products. Each provided potential access to currencies with purchasing power abroad.
A rare glimpse came in 2018, when an ABC News investigation interviewed a former Office 39 trader living in South Korea. He described five years working through the Daesong Group, a commercial organization associated with the leadership’s trade network. His assignments included selling ginseng, gems, and gold in Asian markets. He described the money as a fund intended for the leader, rather than income that would be returned to ordinary workers or citizens.
One story concerned North Korean gold. The trader said gold extracted from rivers and mines could be brought across the Chinese border and sold onward as Chinese-origin gold. That detail mattered because the commodity itself was not exotic: the profit came from access to a valuable resource, while obscuring its origin could make international sale easier. A buyer further along the chain might see a transaction involving a Chinese business without clearly identifying the North Korean source or beneficiary.
The trader also described changing company names and establishing overseas branches to work around restrictions. The precise practices varied, and his testimony cannot illuminate every part of the organization. But it reveals why a corporate network was more versatile than a single smuggling route. Firms could be renamed, transactions routed through intermediaries, and one revenue source substituted for another as sanctions or market conditions changed.
American sanctions supplied another piece of evidence. On 18 November 2010, the Treasury Department designated Korea Daesong Bank and Korea Daesong General Trading Corporation as entities owned or controlled by Office 39. Officials said the bank facilitated financing activities while the trading corporation conducted foreign transactions on Office 39’s behalf. Those are different functions, but they complement each other: one business earns revenue and another helps move or manage it.
International trade depends on such supporting infrastructure. A shipment must have a buyer, an invoice, a means of payment, and usually access to banking or credit. When the true ownership of a company is obscured, when a sanctioned beneficiary is hidden behind intermediaries, or when the source of goods is disguised, apparently routine commercial machinery can serve a clandestine political purpose.
This is why estimating Office 39’s earnings is so difficult. The former trader told ABC he believed the organization controlled a huge share of economically valuable activity, and public estimates of its revenue have sometimes reached billions of dollars annually. But the claim that Office 39 accounts for a particular percentage of North Korea’s economy is not independently established. Researchers must distinguish gross sales from profit, income earned by the state from funds actually controlled by Office 39, and testimony about individual businesses from a comprehensive national picture.
Nor were all trading activities equally illicit. Exporting agricultural goods is fundamentally different from laundering criminal proceeds, even if both may benefit the same political leadership. Treating them as one undifferentiated criminal enterprise obscures how the network worked. Its advantage was precisely that ordinary commerce and clandestine finance could occupy neighboring parts of the same system, providing flexibility when one avenue became difficult or politically dangerous.
Diplomatic Bags, Drug Trafficking, and the Methamphetamine Economy
North Korean diplomats began appearing in international narcotics cases in the 1970s. The cases were striking because diplomatic privileges were supposed to make international relations possible, not create opportunities for commercial smuggling. Officials carrying state credentials could cross borders and maintain contacts unavailable to most North Korean citizens, while protected diplomatic communications created particular difficulties for customs authorities.
The rule at the center of many stories was the diplomatic bag. Under Article 27 of the 1961 Vienna Convention on Diplomatic Relations, a diplomatic bag must not be opened or detained by the receiving state. But it must also contain only diplomatic documents or articles intended for official use. Transporting narcotics would violate that requirement; the convention grants protection for legitimate diplomatic functions, not permission to carry contraband.
Arrests and seizures involving North Korean diplomats or officials occurred in countries including Turkey, Egypt, Taiwan, and Japan. Reports described hashish, opium, heroin, and other substances, sometimes transported through networks that took advantage of official status. Pyongyang denied that such incidents reflected government policy and attributed wrongdoing to individuals. The question for investigators was whether particular cases represented opportunistic corruption, organized government activity, or something in between.
The cumulative evidence made the issue hard to dismiss. A Congressional Research Service study of North Korean crime-for-profit activities examined decades of drug-related incidents and the wider pattern of counterfeiting and illicit trade. It recorded strong indications of state involvement while warning that the scale, profitability, and precise direction of secret operations remained uncertain. The important distinction is between demonstrable criminal episodes and the additional claim that Office 39 personally managed every episode.
By the 1990s, allegations had moved beyond diplomats carrying finished drugs. North Korea was accused of cultivating opium poppies and manufacturing illicit substances at home. Synthetic methamphetamine was especially attractive to producers because it did not require growing a narcotic crop, although it still demanded chemicals, expertise, equipment, and a means of distribution. Manufacturing brought greater control over supply, while criminal intermediaries could provide access to markets beyond the reach of normal North Korean trade.
The US Treasury made unusually specific accusations in 2010. It alleged that Office 39 produced methamphetamine in Sangwon, South Pyongan Province, and distributed it to smugglers moving drugs toward China and South Korea. It also accused the organization of operating poppy farms and manufacturing opium or heroin in other locations. These allegations provide a clearer connection between Office 39 and drugs than vague claims that anything illegal in North Korea must have been its business.
Distribution required outside partners. Accounts of North Korean trafficking described contacts with criminal groups in China and Japan, including networks associated with triads and the Yakuza. Such links would have allowed a producer to sell larger quantities without relying entirely on diplomats as couriers. Still, connections to a criminal market do not establish a single permanent chain of command, and estimates that narcotics alone routinely generated billions should be treated skeptically.
In 2003, the Pong Su, a North Korean-crewed freighter, became involved in an attempted heroin delivery off Australia. Authorities recovered about 125 kilograms of heroin after an operation near the Victorian coast; the ship was seized, and the case led to a prolonged investigation and court proceedings. It became an enduring symbol of North Korea’s suspected role in large-scale maritime trafficking, even though the legal responsibility of the vessel’s crew could not simply be inferred from the ship’s nationality.
The trade then underwent a revealing transformation. Methamphetamine production and consumption reportedly spread within North Korea, creating a domestic market alongside cross-border smuggling. The drug was commonly called bingdu, or ice. In a society where dependable healthcare and medicines could be difficult to obtain, some people reportedly used methamphetamine as a stimulant or even as a substitute for treatment, despite its serious health risks.
The State Department’s 2016 narcotics report described substantial evidence of widespread methamphetamine use but made an important qualification: there was insufficient information to say whether North Korean state entities were still directing production or trafficking. Available reporting increasingly suggested small laboratories operated by independent criminal entrepreneurs, often protected by bribery. Earlier evidence of state-connected manufacturing could not automatically be extrapolated to every subsequent dealer or producer.
Drug use also acquired disturbing social dimensions. In 2019, Radio Free Asia reported accounts of crystal meth being exchanged as Lunar New Year gifts, with sources describing demand among younger people and residents outside major cities. The accounts were limited and could not establish national prevalence. They nevertheless suggested that a drug once associated with export earnings had become embedded in parts of everyday life, despite official prohibitions and harsh penalties.
The evolution is revealing. The government could condemn narcotics publicly while officials, criminal producers, smugglers, and users participated in an economy difficult to regulate. It also shows why there is no credible single story of Office 39 smoothly expanding one methamphetamine empire decade after decade. Different periods involved different forms of state participation, commercial opportunity, corruption, and independent criminal enterprise.
Superdollars, Counterfeit Goods, and Financial Deception
Selling an illegal drug produces foreign income only after buyers pay for it. Counterfeiting offers a more audacious possibility: producing an object that already looks like money. North Korea has long faced US accusations of involvement with exceptionally convincing counterfeit American banknotes known as supernotes or superdollars, especially $100 bills. Their resemblance to genuine notes made them a serious concern for law enforcement and banks.
A high-quality forged note requires more than a convincing photograph. Authentic banknotes combine specialized paper, fine printing, security threads, watermarks, microprinting, and features designed to respond differently to light or movement. Reports about the supposed North Korean production operation described advanced printing presses, distinctive paper, and imported inks. Specific stories linked materials to Japan, Hong Kong, or France, although many such details are difficult to corroborate independently.
The most important uncertainty is not whether counterfeit notes connected to North Korean representatives circulated abroad. They did. It is whether all the sophisticated notes attributed to Pyongyang were actually printed inside North Korea and how directly their distribution was managed. A Congressional Research Service review of supernotes stressed that evidence about distribution was stronger than publicly verifiable evidence about manufacture. North Korea denied responsibility, while American officials pointed to intelligence findings and links involving state representatives.
One concrete case involved North Korean trading-company officials carrying diplomatic passports who were arrested in Macau in 1994 after depositing counterfeit currency. Other incidents connected fake notes to intermediaries in Asia and Europe. Those cases showed that access to legitimate financial institutions mattered as much as the quality of the counterfeit. A forged note becomes profitable only if it can be exchanged or spent without detection.
The United States was strengthening its notes at the same time. In 1995, the Treasury and Federal Reserve announced a redesigned $100 bill, introduced in 1996, featuring a larger portrait, watermark, microprinting, security thread, and ink that shifted from green to black when tilted. The redesign addressed improving copying and printing technologies generally. It should not be attributed solely to North Korea, nor do stories about North Korea purchasing substitute green-to-magenta ink constitute proven evidence of a particular counterfeiting factory.
The banking consequences became dramatic in 2005. The US Treasury identified Banco Delta Asia, based in Macau, as a primary money-laundering concern because of its North Korea-related activities. The action helped isolate North Korean accounts and frightened other financial institutions away from doing business with Pyongyang. About $25 million in North Korean funds became entangled in the dispute, which subsequently complicated diplomacy over the nuclear program. A relatively small sum had become strategically important because ordinary access to international payments was so fragile.
Money forgery formed only one part of the allegations. Congressional investigators also examined fake branded cigarettes, imitation pharmaceuticals including products marketed as Viagra, and other counterfeit goods. These products could be manufactured cheaply and sold at a premium by exploiting the reputation of legitimate brands. Counterfeit cigarettes generated customs and tax problems; fake medicines carried additional risks for people who might mistake them for authentic products.
Again, no reliable public ledger assigns every cigarette shipment or counterfeit pill to Office 39. The broader economic mechanism was nevertheless recognizable: goods could move through deceptive commercial arrangements, proceeds could be obscured through intermediaries, and legitimate financial channels could be used to support transactions that were illegal or sanctions-sensitive. As banks became more cautious and currency security improved, the regime had incentives to seek less conventional forms of revenue.
Weapons, Overseas Workers, and the Limits of Office 39’s Reach
North Korea’s armed forces and defense factories developed skills that were marketable abroad. Its industries produced artillery, ammunition, missiles, military equipment, and technology that attracted buyers seeking Soviet-derived systems or suppliers outside conventional Western markets. Trade relationships with countries including Iran and Syria reflected a mixture of commercial opportunity, military cooperation, and geopolitical alignment. Seizures of prohibited cargo exposed the routes used to move weapons or components despite international restrictions.
It would be a mistake, however, to assign this entire trade to Office 39. US Treasury sanctions distinguished Office 39 from the Reconnaissance General Bureau, or RGB, and from Green Pine Associated Corporation, an arms-related company under RGB control. The Korea Mining Development Trading Corporation was another important military-trading entity. These distinctions are essential to understanding North Korea’s shadow economy: several state institutions could generate revenue or acquire restricted goods, sometimes pursuing related political objectives without sharing one administrative chain of command.
Labor exports offered another way to earn foreign exchange. North Korean citizens worked on construction sites, in logging operations, in factories, and in other demanding jobs overseas. Employers could pay wages in hard currency, but workers were often supervised closely and reportedly surrendered much of their earnings to state-controlled organizations. Investigations described travel restrictions, confiscated documents, threats, and limited ability to leave, raising concerns about forced labor and exploitation.
This arrangement differed from ordinary migrants independently seeking work abroad. In documented North Korean schemes, state agencies played a central role in selecting, supervising, and profiting from workers. Earnings could continue for months or years, providing a less spectacular but potentially steadier income stream than a smuggling operation. As with arms exports, however, not every overseas labor arrangement can be shown to have fallen under Office 39’s direct control.
The United Nations attempted to restrict this revenue source. Security Council Resolution 2397, adopted in December 2017, required member states, subject to specified exceptions, to repatriate North Koreans earning income within their jurisdictions within twenty-four months. The measure reflected international concern that funds obtained abroad could support prohibited nuclear and missile activities. Enforcement was difficult, particularly where employment arrangements were concealed or governments were unwilling to cooperate.
North Korea’s relationships with Russia and other partners have further demonstrated that sanctions do not operate in a political vacuum. Strategic interests can sustain trade and exchange even when particular activities violate international restrictions. The central point is not that Office 39 owns every revenue stream. It is that the Kim regime has assembled an adaptable collection of commercial, military, labor, and intelligence institutions whose financial benefits can reinforce the same ruling system.
Cyber Theft, Fake Remote Workers, and the New Money Machine
For decades, North Korea’s clandestine income depended on moving something physical: gold, drugs, banknotes, cigarettes, weapons, or workers. Digital finance changed the calculation. A skilled operative might cross no border at all while attempting to transfer assets worth more than an entire shipment of contraband. The country that denied ordinary citizens meaningful internet access invested in selected specialists capable of exploiting the networks on which the wider world depends.
North Korean cyber units grew out of military and intelligence priorities. Technically promising students could be trained in mathematics, programming, and computer systems, while some specialists operated from locations abroad. Espionage and political disruption were important purposes, as incidents involving Sony Pictures and WannaCry showed. But financial operations offered an additional attraction: cash or convertible assets obtained from foreign institutions without normal exports.
The 2016 Bangladesh Bank attack illustrated both ambition and vulnerability. Attackers sent fraudulent payment instructions through the international financial system, attempting to move nearly $1 billion from the bank’s account at the Federal Reserve Bank of New York. Most of the intended transfers failed, but $81 million was stolen. A suspicious spelling error became part of the public story, although the failure of most transfers involved multiple controls and interventions rather than a single typo saving the entire sum.
Cryptocurrency created still larger opportunities. Exchanges and digital-asset firms held enormous pools of value, while the movement of funds through wallets, conversion services, and multiple blockchains complicated recovery. In February 2025, attackers stole approximately $1.5 billion from Bybit; the FBI attributed the theft to North Korea’s TraderTraitor operation. Moving stolen coins into other assets did not make them automatically anonymous or spendable, but it gave criminals tools to attempt to obscure the trail.
The stakes escalated again in October 2026. Following a theft of more than $6 billion from Binance on 29 October, the FBI publicly attributed the operation to TraderTraitor on 31 October. Its alert on the Binance attack described efforts to convert stolen assets and urged exchanges and other service providers to block associated transactions. The episode, explored in the account of the Binance cryptocurrency theft, showed the enormous scale of potential digital proceeds—and the continuing challenge of turning stolen assets into usable money.
A parallel operation exploited the globalization of ordinary office work. Rather than hacking an employer from outside, North Korean-linked IT workers applied for remote jobs using stolen or fabricated identities, misleading résumés, false online profiles, and technical methods that concealed their actual locations. A company might believe it had hired a software developer living in the United States when the person logging in was operating abroad under a different identity.
Some schemes relied on American accomplices managing laptop farms. A legitimate employer shipped a computer to an address in the United States, where a facilitator kept it running and enabled remote access from elsewhere. To basic checks, the device appeared domestic; the person doing the job could be overseas. Salaries could then pass through accounts and intermediaries toward North Korean-controlled entities. The worker might genuinely write code or attend meetings, making the deception harder to spot than a conventional one-time intrusion.
The US Department of Justice’s October 2026 actions against remote IT-worker schemes illustrated the model’s scale. Authorities described schemes affecting more than seventy American companies, alleged fraud generating about $3 million in one case, and operations against suspected laptop farms that involved approximately 187 computer devices. The cases also highlighted risks beyond wages: employees with legitimate network access could obtain proprietary information or attempt extortion.
An important institutional distinction remains. A 2025 statement by the Multilateral Sanctions Monitoring Team’s participating governments identified sanctioned bodies including the Reconnaissance General Bureau as central to much of North Korea’s cyber and fraudulent employment activity. Evidence that the operations enriched the regime is not evidence that Office 39 commanded every hacker or hired every fraudulent developer. The connection is systemic: different agencies discovered increasingly inventive ways of drawing value from the global economy for the same political state.
Cyber operations also expose a paradox in North Korea’s isolation. The leadership restricts ordinary citizens’ communications but depends on specialists who understand foreign businesses, financial technology, and international workplaces in intimate detail. To extract money from a world it publicly condemns, the regime must train people to navigate that world exceptionally well.
What Office 39 Really Explains About the Kim Regime’s Survival
Office 39 helps explain how financial privilege and national deprivation could exist side by side. Its associated businesses and alleged criminal activities gave the leadership additional channels for obtaining foreign currency, while preferential control over that money helped reward loyal officials and purchase goods unavailable through ordinary domestic production. This was more than personal extravagance. In a tightly controlled political system, access to scarce rewards could bind influential people to the survival of the ruling family.
But it would be wrong to claim that Office 39 single-handedly prevented North Korea’s collapse. The regime also survived through coercion, institutional continuity, adaptation by ordinary people through informal markets, relationships with China and Russia, and military capabilities that made foreign intervention exceptionally dangerous. Nuclear weapons altered the strategic calculations of other states, while internal security structures made organized resistance difficult. Those factors operated alongside financial patronage, not in place of it.
Nor is the value of the clandestine economy precisely known. Estimates have varied widely, sometimes mixing legitimate export earnings, illegal profits, overseas labor revenue, military sales, and digital theft. Some figures describe money attempted to be stolen rather than funds actually retained. An alleged billion-dollar operation cannot be entered automatically into Office 39’s accounts, much less assumed to have paid for a particular luxury purchase or weapons program.
The better lesson lies in the organization’s design. North Korea’s leadership built institutions capable of pursuing money wherever ordinary economic relationships broke down: selling legitimate goods through privileged firms, hiding beneficiaries behind intermediaries, exploiting illegal markets, and drawing upon other state agencies as new opportunities emerged. The methods changed from the era of diplomats and counterfeit notes to cryptocurrency and remote employment fraud, but the political incentive remained consistent.
When a country’s population becomes poorer, its ruling elite does not necessarily become powerless at the same rate. If the government can concentrate scarce resources among the people whose loyalty matters most, it may continue functioning despite severe economic failure. Office 39 reveals that distinction more clearly than almost any other North Korean institution: the survival of a regime and the prosperity of its citizens are not the same achievement.
Last Updated on November 5, 2026 by Aseem Gupta