Secret calls and code names: The risky business of sending money to N Korea

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Image caption,

Broker Hwang Ji-sung defected to the South in 2009

Every year, hundreds of North Korean defectors, who have since settled in the South, send much-needed money back home. But this is getting riskier as both countries are increasingly cracking down on illegal transfers of money.

“It is like a spy movie and people are putting their lives on the line,” says Hwang Ji-sung, who has been a broker in South Korea for more than a decade.

As a defector himself, he knows how complex and difficult the task is – requiring a covert network of brokers and couriers spread across South Korea, China and North Korea.

Secret calls using smuggled Chinese phones are made at remote locations. Code names are used.

The stakes are incredibly high – if caught, North Koreans risk being sent to the country’s dreaded political prison camps, known as kwan-li-so, where hundreds of thousands are believed to have died over the years.

A 2023 survey by the Database Center for North Korean Human Rights which polled about 400 North Korean defectors, found that around 63% had transferred money to their families in the North.

But since 2020, North Korean leader Kim Jong Un has intensified a crackdown on brokers to stop the flow of money and “reactionary ideology and culture” from South Korea.

Hwang Ji-sung and his wife Joo Soo-yeonIMAGE SOURCE,JUNGMIN CHOI / BBC
Image caption,

The couple has been in the money transfer business for over a decade

“The number of brokers in North Korea has gone down by more than 70% compared to a few years ago,” says Joo Soo-yeon, Mr Hwang’s wife. She is also a broker.

South Korea bans such transfers too, but in the past authorities have mostly looked the other way. Now that is changing.

Last April, Mr Hwang and Ms Joo’s home in Gyeonggi province – which is close to Seoul – was raided by four police officers, who accused her of violating the Foreign Exchange Transactions Act. Because the bank account that was used to send money to North Korea was in her name, she’s the one facing charges.

At least seven other brokers are also under investigation.

On-camera interviews with brokers are rare, but Ms Joo has chosen to speak to the BBC partly because she wants to publicise her case. The police have not responded to a BBC inquiry over her case.

South Korean authorities told Mr Hwang that any money transfer to North Korea should be carried out through a “legitimate bank”.

“If there is one, let me know!” he said, adding that there is no institution that can legally receive money in North Korea since the two Koreas are technically still at war.

Inter-Korean relations have been worsening since the North blew up a joint liaison office with the South in 2020. Earlier this month, North Korean leader Kim Jong Un even said it was no longer possible to achieve reunification with the South – a goal enshrined in the constitution.

Secret calls

These illicit cross-border cash transfers begin with a phone call between defectors in the South and their families in the North – made possible by an influx of smuggled Chinese phones in border provinces which can tap into Chinese telecom networks.

The calls are facilitated by brokers in North Korea who have to travel long distances and sometimes even climb mountains to arrange such calls.

After hours of waiting, the call is connected, and the defector will agree on a sum with families. But the conversation has to be brisk to avoid surveillance from the Ministry of State Security.

The defector then makes a deposit into a Chinese account through brokers in South Korea. This is also fraught with risk as China also closely monitors the flow of foreign currency.

It is up to the Chinese brokers to bring the money into North Korea.

The borders are relatively porous as China is North Korea’s most important ally. Remittances from defectors are sometimes disguised as transactions between Chinese and North Korean trading companies.

Image caption,

Kim Jin-seok was a courier in North Korea before he fled the country in 2013

They employ several couriers in North Korea to deliver the money to the families.

“The people delivering the money don’t know each other, and they shouldn’t because their lives are at stake,” says Kim Jin Seok, who used to work as a courier in North Korea before he fled the country in 2013. We’ve given him a pseudonym for his safety.

Brokers have to use aliases and develop codes to signal when it will be safe for families to receive funds.

Mr Hwang, who has about 800 clients, says he has even encountered families who rejected the money.

“They were scared that it could be a trap set up by the security police and would say things like, ‘We won’t accept money from traitors.'”

Once the money is delivered, brokers will take about a 50% cut.

“North Korean brokers risk their lives to make 500,000 to 600,000 won per transfer,” Mr Hwang says. At today’s exchange rates, that’s about $375-$450 (£295-£355).

“Nowadays, if you are arrested by a security officer and convicted, you would face 15 years in jail. If convicted of espionage, you would be sent to a kwan-li-so.”

Mr Hwang shows us testimony from North Koreans who have received money through his brokers.

A North Korean counts the money after receiving the delivery from the brokersIMAGE SOURCE,HANDOUT
Image caption,

A North Korean counts the money after receiving the delivery from the brokers

“I was starving every day and ate grass,” cries an old woman in one of them, her hands swollen from scavenging for food in the woods.

In the same video, another woman says: “It’s so difficult here that I want to thank you 100 times.”

Ms Joo says her heart breaks every time when she sees these videos.

“Some defectors have left their parents and children behind. They simply want to ensure that their families in North Korea will survive so that they can be reunited one day.”

She says a million won is enough to feed a family of three for a year in the North.

Years ago, North Koreans coined the term “Hallasan stem” for people who receive assistance from defectors in the South, says Mr Hwang.

Hallasan refers to Mount Halla, a famous volcano on South Korea’s scenic Jeju Island.

“A person from a Hallasan stem family is considered the most desirable spouse, even better than Communist Party members,” he says.

A severed lifeline

It is unclear why South Korea has started cracking down on brokers, but lawyer Park Won-yeon, who has been providing legal support for defectors, believes overzealousness could be a factor, as the power to investigate national security cases, such as espionage, was transferred to police from the National Intelligence Service this year.

“If the police fail to prove the espionage charges, they [will] prosecute them under the foreign exchange transaction act,” he says.

Under increasing pressure from both governments, this lifeline for families of North Korean defectors could be severed.

Mr Hwang is ready to take his wife’s case all the way to the Supreme Court if she is convicted. He believes the remittances from defectors are not just about the money.

“It is the only way to bring North Korea down without fighting,” he says. “Along with the money, it also comes with the news that the South is prosperous and wealthy… That’s what Kim Jong Un is afraid of.”

Mr Kim believes that defectors like him will not stop sending money to their loved ones back home, even though authorities from both sides want to stop them. He says he will travel to China himself to deliver the money if necessary.

“I took the risk that I would never see my children again, but at least my children will have a good life,” he says.

“We will send the money in any way we can, and no matter what.”

He now works as a lorry driver in South Korea and sleeps in his vehicle five days a week.

He is saving as much as possible so that he can send four million won to his wife and two sons in the North every year. He has been playing an audio message from his family on repeat.

One of his sons says, “How are you, dad? How much have you suffered? Our hardship is nothing compared to yours.”