Regulatory Actions Impacting Cryptocurrency Landscape

The U.S. Treasury Department has imposed significant sanctions on two North Korean financial institutions and eight individuals, all linked to laundering cryptocurrency derived from cybercrime and fraudulent IT worker schemes.

According to Bleeping Computer, the Treasury's Office of Foreign Assets Control, or OFAC, designated Ryujong Credit Bank, a North Korean financial institution, for its connections to sanctions-evasion activities with China and money laundering.

Additionally, Korea Mangyongdae Computer Technology Company, along with its president, U Yong Su, has been sanctioned for operating North Korean IT workers in China. Two North Korean bankers, Jang Kuk Chol and Ho Chong Son, were also sanctioned for managing funds on behalf of First Credit Bank, specifically funds linked to ransomware attacks targeting victims in the U.S.

Five more individuals, financial representatives of North Korean institutions operating out of Russia and China, were designated for facilitating financial transactions violating UN sanctions. OFAC reported that in the last three years, North Korea-affiliated cybercriminals have stolen over $3 billion in cryptocurrency using advanced malware and social engineering techniques.

The report highlights that North Korean IT workers have strategically obscured their identities, enabling them to earn hundreds of millions annually by engaging in IT development while disguising their nationality.

These sanctions block all property of the designated companies and individuals under U.S. jurisdiction and pose risks for financial institutions that engage with them, exposing them to secondary sanctions or enforcement actions.

This latest round of sanctions follows a report from the Multilateral Sanctions Monitoring Team that emphasized North Korea's cyber activities as a threat to international security and the global digital economy.

The report describes North Korea's cyber force as a sophisticated national program, comparable to cyber capabilities of countries like China and Russia. It also indicates that these cyber operations are crucial for circumventing UN sanctions and financing North Korea's unlawful pursuits, such as the development of weapons of mass destruction and ballistic missile programs.

Earlier this year, OFAC sanctioned and indicted 20 individuals and eight companies across three separate enforcement actions in connection to similar activities, highlighting the escalating regulatory environment surrounding cryptocurrency operations globally.