For the first time in history, a North Korean businessman is set to be extradited to the United States to face several charges of money laundering and supplying prohibited luxury goods to North Korea. This is a major development not only in sanctions enforcement against illicit North Korean activity abroad, but also in Malaysia’s contribution to the integrity of the global financial system and countering its global reputation as a hotspot for sanctions evasions. While this single extradition may not hamper North Korea’s overall illicit financial operations in Southeast Asia, responsible nations can leverage Malaysia’s decision when engaging in diplomatic dialogue with other ASEAN member states on issues pertaining to international law and North Korea.
Prior to his arrest in 2019 and now pending extradition, Mun Chol Myong lived in Malaysia with his family for a decade. From there, the FBI claims he laundered funds through front companies and facilitated shipments of prohibited luxury goods from Singapore on behalf of the North Korean regime, violating both U.N. and U.S. sanctions. In his affidavit, Mun denied all allegations and described himself as a victim of a “politically motivated” extradition, unfairly caught between diplomatic crosshairs aimed at pressuring North Korea to halt its nuclear weapons and ballistic missile program.
However, the Federal Court of Malaysia denied Mun’s final legal appeal challenging the U.S. extradition request and ruled to uphold its extradition treaty with the United States on March 9, 2021. This was a particularly significant decision given that North Korean criminal activity is poorly regulated in Southeast Asia, and potentially signals an additional downgrade in Malaysia-North Korea relations.
North Korea has a well-documented record of cloaking its illicit financial activity abroad through sophisticated money laundering schemes and seemingly legitimate overseas business ventures in Southeast Asia. In particular, North Korea has ordered and conducted a myriad of illicit activity within Malaysia ranging from assassination and illicit trade of prohibited goods and materials, to conducting widespread cyber-enabled financial crime. For example, the 2017 U.N. Panel of Experts report on North Korea identified the Malaysia-based technology company Glocom as a front company for Pan Systems Pyongyang, a North Korean company supporting the regime’s overseas proliferation finance schemes. Additionally, the 2020 U.S. Army Manuel on North Korean Tactics also listed Malaysia as one of the five major hotspots for illicit North Korean cyber activity alongside China, Russia, Belarus, and India. Malaysia’s unprecedented court decision to approve and finalize the extradition of Mun Chol Myong signals a new stance toward addressing foreign actor-led financial crime not only to Washington and Pyongyang, but also to its fellow ASEAN member states.
While this single extradition will not freeze or discourage all North Korea-sponsored illicit activity in Southeast Asia, it will create a new precedent for strengthening legal framework and sanctions compliance in the region. For years, Pyongyang has continued to exploit financial, legal, and institutional weaknesses in Southeast Asia to the benefit of its overseas financial crime operations aimed at procuring funds for its illicit weapons program. In the largest cyber bank heist known today, North Korea-sponsored cyber criminals stole approximately $80 million from the Central Bank of Bangladesh due to poor cybersecurity protocols and lack of institutional knowledge on the growing threat of malicious hacking attacks by state-sponsored entities, such as North Korea’s Lazarus Group. The extradition of Mun Chol Myong will hopefully not only incentivize Southeast Asian financial institutions and legal bodies to adopt a more adamant stance against illicit North Korean activity, but also encourage fellow ASEAN member states to reject the presence of North Korean criminals seeking refuge within their jurisdictions.
North Korea identified Southeast Asia as an ideal region to host, develop, and safeguard its illicit overseas operations according to the same calculus Pyongyang uses to identify new ways to evade economic sanctions: high monetary gains with low operational cost. The Federal Court of Malaysia’s final decision to extradite Mun to the United States was an important step in the right direction to strengthen the legitimacy of its institutions and rebuild its global image as a responsible nation dedicated to fulfilling its legal obligations. Southeast Asia will most likely continue to grapple with North Korean sanctions evasions and financial crime, but now the region has a new precedent to build upon.
Jason Bartlett is a research assistant in the Energy, Economics, and Security Program at the Center for a New American Security. He tweets at @jasonabartlett.