President Park Geun-hye strongly suggested Tuesday that hundreds of millions of dollars South Korea paid to North Korea through their joint factory park ended up in North Korea's nuclear and missile programs.

South Korea provided around $560 million in cash to North Korea in total since the two sides opened the sprawling zone in the North's western border city of Gaeseong in 2004.

South Korea provided the money directly to the North Korean government, instead of its workers, creating a loophole for the diversion of the cash to North Korea's leadership.

South Korea has shuttered the economic enclave following North Korea's recent nuclear test and long-range rocket launch.

Park said the decision was meant to cut off a major revenue source for North Korea to keep the country from advancing its nuclear and missile programs.

"Most of the dollars we paid are presumed to have been funneled to the Workers' Party responsible for nuclear and missile development, instead of being used to improve the lives of ordinary people," Park said in a nationally televised address at the National Assembly.

Park said South Korea cannot allow a situation to continue in which its money is used for North Korea's nuclear and missile programs.

On Sunday, South Korea's point man on North Korea said that 70 percent of the money that flowed into the factory park was funneled into the ruling Workers' Party to bankroll the country's weapons development.

But Unification Minister Hong Yong-pyo retracted his claim a day later, citing a lack of "clear evidence."

The development underscored challenges in separating the legitimate use of money from money diverted to the weapons programs.

Park said the closure of the factory park is just the "beginning" of sanctions that South Korea and the international community will take against North Korea.

The U.N. Security Council has been working on a resolution that will slap sanctions on North Korea over a recent fourth nuclear test and long-range rocket launch.

Park vowed to take stronger and more effective measures to make North Korea recognize that its nuclear program "will only hasten its collapse," not ensure its survival.

Still, it remains unclear whether U.N. sanctions will make any difference.

North Korea has already been under U.N. sanctions for its three previous nuclear tests in 2006, 2009 and 2013, though sanctions have failed to deter North Korea's nuclear ambitions.

The North has repeatedly pledged to boost its nuclear capability, describing its nuclear program as a "treasured sword" against what it claims is Washington's hostile policy towards it. (Yonhap)