Defectors risk legal trouble, scams to send remittances to families in North Korea

North Korean defectors in South Korea face legal consequences for sending remittances home through illegal channels, as the government cracks down on these practices, viewing them as violations of foreign exchange laws.

North Koreans walk around a marketplace in Hyesan, Yanggang Province, in September 2020. The photo was taken from a region of China that borders North Korea. [YONHAP]

Ms. Jung, a North Korean defector in her mid-50s, awaits a criminal trial in South Korea on charges of sending money back to her homeland.

However, she is determined to do it again.

In South Korea, no official routes exist for sending remittances to North Korea. Thus, North Korean defectors, left with few choices, rely on illegal and proxy channels to deliver their money across the border — not for the Kim Jong-un regime, but for families they left behind.

Since escaping the regime in 1998, Jung has sent around 1 million to 2 million won ($720 to $1,450) every year to her family in the North. Now, she calls her actions “unstoppable,” saying such remittances are the sole means to help her family.

“As long as there is a path connecting me to my family, I will continue helping them,” Jung said. “If it weren’t for the money sent by me, they would not survive.”

Despite being against the South Korean Foreign Exchange Transactions Act, the government used to tolerate these remittances until two years ago. The authorities considered them a form of “humanitarian assistance” and looked the other way.

However, a police crackdown in 2023 — the first of its kind since North Korean defectors began sending money to their families in the late 1990s — pushed the defectors into a corner, cutting nearly all their connections. Indictments and criminal trials followed.

Police investigations exposed delivery routes and intermediaries. As a result, around 60 to 70 percent of connections to the North “were shattered and rendered irreparable,” according to Ju Su-yun, who assisted other defectors in sending remittances to the North. "However, money still flows into the North," Ju said.

Four North Korean defectors, who either sent money to their families or acted as brokers at the request of other defectors, spoke to the Korea JoongAng Daily on how money from the South is making its way into one of the most reclusive countries in the world.

Clandestine cash delivery

The graph shows how money sent from North Korean defectors in South Korea is delivered to their families in the North. [YUN YEONG]

The defectors who spoke with the newspaper said all money sent from the South inevitably goes through China before reaching its final destination — North Korea.

Typically, at least four brokers and delivery personnel are involved in the process.

A defector in South Korea wires the money to a China-based broker, who can freely cross the China-North Korea border and deliver the funds to a North Korean broker. The North Korean broker, who usually has the authority to evade the regime’s crackdowns, relays the funds to the final courier, according to Hwang Ji-sung, a defector and Ju's husband.

Hwang and Ju have helped arrange such remittances for more than a decade.

Hwang said each broker and delivery person earns “around 10 percent of the remitted fund” as their commission. He said that the commission has increased multifold in recent years as China and the North intensified border patrols and began sentencing those caught relaying or receiving cash to three to five years in prison.

In this scheme, when a defector sends 1 million won, their families receive between 500,000 won and 600,000 won. Another defector, who fled the North in 2011 and requested anonymity, called the commission costs “immense” nowadays.

Ms. Jung watches a video clip showing her family in North Korea in an undated photo. The video arrived as proof that her remittance had been received. [JUNG]

Every remittance is predicated on the sender receiving a confirmation of receipt. For defectors, these confirmations are about more than the reliability of the delivery service.

Jung said the assurance serves as an opportunity to check on their relatives' survival and well-being.

If the families reside near the border, where Chinese telecommunication networks are accessible, they can speak directly with their families in real time using Chinese-made mobile devices and confirm the amount that they received.

In interior regions, the final courier or broker records a video of the recipient counting the money. The videos are usually sent through online messaging apps.

Jung said she saw how her family or other defectors’ families had gained weight or worn better clothes after receiving the cash.

“However, the process is not completely trustworthy,” Jung said. “I heard of some instances where brokers snatched the cash after recording the families holding the cash or demanded more money.”

Defectors becoming outlaws

Korean currency and Chinese currency are displayed at the Hana Bank headquarters in downtown Seoul in 2017. [YONHAP]

The absence of a banking system between the two Koreas drives defectors to depend on illicit channels and risk criminal punishments.

South Korea’s police and prosecution service view such remittances as violations of the Foreign Exchange Transactions Act, as the funds do not go through officially acknowledged banking institutions or channels. Unauthorized Chinese brokers change the remitted cash from South Korean won to Chinese renminbi.

Because of the involvement of Chinese intermediaries, the transaction is not subject to the Inter-Korean Exchange and Cooperation Act, which views transactions among the two Koreas as an “internal transaction between the same people and not between nations.”

A search warrant issued against Ju Su-yun in 2023. The warrant specified that she was suspected of violating the Foreign Exchange Transactions Act. [JU SU-YUN]

In February, the Uijeongbu District Court sentenced Jung to pay a fine of 1 million won, suspended for a year, for violating the Foreign Exchange Transactions Act. The court found her guilty of exchanging Korean currency for Chinese currency through unlicensed overseas personnel. However, Jung appealed.

The same reasoning was applied to Ju’s case. The Ulsan District Court issued a search warrant on charges of violating the Foreign Exchange Transactions Act in 2023. Last December, the prosecution levied a fine of 10 million won against Ju through summary proceedings. However, Ju did not pay the fine. She appealed for a formal trial.

The legal proceedings are ongoing, even after the police halted their investigation into defectors who sent their money to their families in the North in 2024.

A National Assembly report published in April this year urged legal protections for defectors, who were left in a blind spot while sending money to their families through illegal channels.

The report suggested that the South Korean authorities review means to alleviate the risks of criminal prosecution as a short-term remedy, while proposing inter-Korean cooperation in the financial system as a long-term solution.

'We are innocent'

A person is seen on a train connecting Pyongyang in North Korea and Dandong in China in an undated photo. [JOONGANG ILBO]

The defectors facing criminal trials in the South claimed that they were “innocent.” They believe their actions did not constitute a violation of the Foreign Exchange Transactions Act because they did not intend to funnel South Korean money overseas to support the North Korean regime. In their view, the North is part of the Republic of Korea —the formal name of what is today South Korea.

“I sent money to the northern territory of the Republic of Korea, not a foreign country,” Jung said. “The South Korean Constitution said the other half of the territory of the Korean Peninsula [referring to North Korea] belongs to the South."

Article 3 of the South Korean Constitution says the "territory of the Republic of Korea shall consist of the Korean Peninsula and its adjacent islands."

“How can this be a crime when I am sending money to my family out of fear that they might die of starvation?” Jung asked.

North Koreans are seen in Hwanghae Province, a region that borders South Korea, on June 12. The photo was taken from an observatory in Incheon. [YONHAP]

Another defector, who requested anonymity, said he cannot stop sending money to his families in the North despite his knowledge that his action might violate the South’s laws.

“Unless something is thrown into North Korean society from outside, people stuck there starve and die,” the anonymous defector said. “I did not run away from the North for my own well-being.”

Ju also noted that most defectors in the South scrimp and save their salaries to send around 1.5 million to 2 million won to their families each year. “It would benefit everyone if defectors were allowed to send money directly through banks without paying high commissions to brokers. However, the reality does not allow it.”

Now, the defectors are seeking a bit of compassion from South Korea’s law enforcement agencies.

Hwang said that the South’s National Intelligence Service (NIS) had likely known about money-delivery routes and channels for years and did nothing. The sudden police crackdowns in 2023 made remittances much more difficult, he added.

According to Hwang, the NIS is the first agency to interrogate North Koreans when they defect to the South, asking questions about who helped them escape. “Do you think the NIS turned a blind eye to the remittances out of ignorance?” Hwang said.

“What we all want is to live in a peaceful world where we could keep in touch with our families,” Hwang said. “But, why are [the South Korean authorities] suppressing it? It is truly frustrating.”

BY LEE SOO-JUNG [lee.soojung1@joongang.co.kr]