The experts said in a new report to the Security Council that North Korea is using cyberspace "to launch increasingly sophisticated attacks to steal funds from financial institutions and cryptocurrency exchanges to generate income" in violation of sanctions.
Cryptocurrency exchanges deal in virtual money like bitcoin, Ethereum and Ripple which use a technology called blockchain. There have been some high-profile cryptocurrency exchange heists including a hack reported last month by Tokyo-based Remixpoint, which runs the BITPoint exchange, causing the loss of 3.5 billion yen, or $32 million, worth of virtual money.
The experts' report, seen Monday by The Associated Press, said large-scale attacks against cryptocurrency exchanges by North Korea allow the country "to generate income in ways that are harder to trace and subject to less government oversight and regulation than the traditional banking sector."
North Korea also continues to have access to the global financial system, "through bank representatives and networks operating worldwide" as a result of "deficiencies" by U.N. member states in implementing financial sanctions and Pyongyang's "deceptive practices," the experts said.
The panel said North Korean financial institutions, including banks under U.N. sanctions, "maintain more than 30 overseas representatives controlling bank accounts and facilitating transactions, including for illicit transfers of coal and petroleum."
It said the banks and their representatives "make use of complicit foreign nationals to obfuscate their activities." North Korea has also continued to violate sanctions using illicit ship-to-ship transfers of coal and refined petroleum products, the panel said.
The experts said they identified "new evasion techniques" for such transfers including feeder vessels using Class B Automatic Identification Systems and multiple transfers using smaller vessels. North Korea also continued to violate sanctions by procuring items for the production of nuclear weapons and other weapons of mass destruction, the panel said.
During the six-month period between February and August, the panel said, North Korea continued to enhance its nuclear and ballistic missile programs. The experts said representatives from three North Korean entities under U.N. sanctions — KOMID, Saeng Pil and Namchongang — continued to operates overseas, including under diplomatic cover, "attempting to transfer conventional weapons and expertise and to procure equipment and technology for the country's WMD (weapons of mass destruction) programs."
The Munitions Industry Department and other sanctioned entities also continued to raise funds for these programs by sending information technology workers abroad, the panel said. And the Reconnaissance General Bureau and other sanctioned bodies, including the Mansudae Overseas Project Group, "also engaged in the import of luxury goods and attempted sale of frozen assets overseas" in violation of U.N. sanctions.
The experts said they received a report from the United States and 25 other countries with imagery and data accusing North Korea of violating U.N. sanctions by importing far more than the annual limit of 500,000 barrels of refined petroleum products in the first four months of 2019. The U.S. complaint was made public in June.
The panel said Russia responded that "it would be premature" for the sanctions committee to make a conclusive determination and stop such imports, and China said more evidence and information was needed to make a judgment.