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Defectors struggle to feed families in North

Fraud scheme rampant yet nuke program makes measures to help financial transactions unrealistic

A few months after fleeing her destitute homeland for a more decent life south of the border, Park received a tempting offer from a fellow defector: She could transfer money to her family in the North for a commission fee.

Haunted by memories of her three starved children and old mother living in Hyesan in the country’s far north Ryanggang Province, the 44-year-old defector eagerly handed over 20 million won ($17,900) to a broker -- only to find out a month later not a single penny had reached her family.

“It was all of my savings,” said Park, who arrived here several years ago and agreed to speak to The Korea Herald on condition her full name not be published.

“I had spent months to find this guy, but to no avail. It is just outrageous to think that other defectors like me would easily fall prey to this kind of fraud, getting their savings wiped out.” 

Two North Korean defectors have managed to send money to their elder sister and relatives in the North for the past decade talk about challenges in an exclusive interview with The Korea Herald correspondent Bak Se-hwan (center). (Kim So-yeon/ The Korea Herald)
Two North Korean defectors have managed to send money to their elder sister and relatives in the North for the past decade talk about challenges in an exclusive interview with The Korea Herald correspondent Bak Se-hwan (center). (Kim So-yeon/ The Korea Herald)

In line with an influx of North Koreans here, the tally of their remittances is expected to rise. As of March 2017, a total of 30,490 from North Korea have resettled in the South, according to the Ministry of Unification.

No official data on their remittances is available, however, given a government ban on South Koreans wiring money to the North. The brokers sneak the funds in through acquaintances, which is also illegal in China.

According to a 2016 survey from the Seoul-based Database Center for North Korean Human Rights, around 58.5 percent of 400 surveyed defectors in the South have sent money home. Twenty-six percent said they did so last year, with the average remittance being about 2.35 million won.

In a poll released by local daily Chosun Ilbo in January 2016, 140 of 200 defectors said they regularly transferred money to their families in the North via China-based agents. Almost 63 percent said they send 1-2 million won a year, while a few respondents put the sum at over 10 million won. The annual average stood at about 1.64 million won.

Most defectors are not high-income earners, with their average monthly wages hovering around 1.5 million won.

But like Park, many defectors arrive here with little knowledge of finance and the clandestine transaction process, and so fall victim to fraud.

“I didn’t have much money as it was only three months after I first landed a job as a factory worker, so my boss lent me 3 million won to fund my elder brother’s wedding in the North,” said Cho, another defector.

“I was contacted by a female money broker, and we agreed on a 15 percent commission. But after three months, I learned from my family that the broker took much more without a single word about it, leaving them only with 600,000 won.” 

Cho, 30, had to work several jobs to clear her debt -- at a factory by day and at a karaoke bar at night.

“I was so angry at that time, but had no other option other than to suppress my anger and move on,” she said. 

According to a defector-turned-money broker in Seoul who said he goes by Kim Tae-soo, the transfer process is multilayered, yet not as difficult as it may appear, and so does not justify the amounts brokers often take.

Brokers here would usually wire money to middlemen in China, most of whom are smugglers or tradesmen with ties to the North. Then the middlemen call their contacts in the North to notify them of the amount of money to deliver out of the pockets of their North Korean counterparts while carrying out other trade deals of their own. The commission fee is between 20 percent and 30 percent in general, Kim said.  

“The money doesn’t go directly to the North. It’s channeled through a series of operators, routed through China,” Kim said in an interview.

“It is trimmed by communication fees and commissions of course, but it’s all up to us to decide how much to charge for our share.”

A common technique is to offer the defectors what sounds like a low commission rate initially and extort up to 80 percent of the original amount for “unexpected circumstances while delivering,” or without any explanation at all.

“These defectors are used to doing whatever they are told to do, and they will believe what they are told to believe. They have to learn everything from the start. It’s not like the friendly society they first thought it would be,” he added.  

With a growing number of new arrivals falling prey to such scams, the Unification Ministry, which handles inter-Korean affairs and defector support, has expanded related education and set up a 24-hour hotline manned by officials at the Hanawon resettlement center. Most defectors are mandated to undertake a three-month training period there as soon as they admitted to South Korea. 

“We acknowledge that some North Korean defectors send money back home to support their families’ living costs,” a ministry official said.

“But we have difficulties in estimating the scope and scale (of remittance fraud) because the practices are carried out so secretly.”

For Seoul, the remittances pose a dilemma due chiefly to the transaction ban and sour public sentiment toward Pyongyang amid its nuclear weapons development and missile provocations.

The money could help keep North Koreans afloat and expose them to the capitalist, better-heeled South. But it would be virtually impossible to set up a mechanism with which to monitor all financial transactions and sort out the ones that may fatten leader Kim Jong-un’s coffers or be siphoned off for military purposes.

The UN Security Council has been seeking to tighten sanctions to squeeze the regime’s hard currency earnings. The US State Department assessed in a July 2015 report that South Korean defectors funneled at least $10 million into the North through the illicit Chinese networks in 2014 alone. It designated North Korea a “primary money laundering concern“ in June 2016. 

“The money sent to North Korean people will gradually bring about changes to the isolated regime,” the broker Kim said. “There should be some protective measures for the defectors to ensure their money lands on the other side safe.”

An Chan-il, head of the World Institute for North Korea Studies in Seoul and who crossed the border in 1979, once proposed a Korean-style “freikauf” model, the money-for-prisoner scheme used by the former West Germany. The Democratic Party of Korea, formerly chaired by President Moon Jae-in, introduced a related vision as part of its campaign pledge in the run-up to the parliamentary election in April 2016. But not since then has it brought up the issue for public debate in the face of Pyongyang’s unabated provocations and a protracted freeze in cross-border relations.

Despite political difficulties, Seoul needs to consider institutional support, An said, stressing the remittances may serve as impetus to shift the mindset of people and eventually the reclusive society. For ordinary citizens of the North, $1,000 is sufficient to cover their living expenses for an entire year, he noted.

“The defectors currently have to take all the responsibility for any of their losses that may occur in helping their families in the North. The government should craft measures to encourage the practice and hedge risks such as through an insurance scheme,” An said.

“The remittance sparks admiration among their left-behind families toward the South and helps plant the market economy there. Together with civilian exchanges, it could play a key role in ushering in an era of reconciliation.”

Not all defectors struggle to find trustful middlemen.

Unlike many others, a 42-year-old defector who gave Kim Hye-sook as her name, has managed to send money to her elder sister and relatives who remain in the North for the past decade.

She was lucky enough to find someone in the transfer business who was a friend of a fellow defector. Although the commission fees are relatively high -- around 30 percent of the amount entrusted -- Kim’s money has always landed safely in the hands of her family.

“Looking at kids here, I cannot help but think of my nephews (in the North). I wish they could live a decent life as they do here. I myself live on a tight budget with my husband, as I’m sick and can’t work. Nevertheless, I can’t stop sending money back home because I know exactly how they live in North Korea -- it breaks my heart now just thinking of it,” Kim said during an interview at her home in Gyeonggi Province.

“Sometimes, several faces of my friends come across my mind. I always wonder if the two Koreas will ever be reunited so that I can see them again.”

But would she believe the money transfers for the 10 years and counting help toward realizing a reunification? “Definitely,” she said, with a faint smile.

By Bak Se-hwan and Shin Hyon-hee ( (