US prosecutors have agreed to drop charges against a former CIA analyst accused of working as an agent of the South Korean government in exchange for designer handbags, high-priced dinners and other luxury goods.

Sue Mi Terry speaks on a "Crisis on the Peninsula: Implications for the US - Korea Alliance" panel at the Asia Society in New York, U.S., in this file photo dated June 19, 2017.  (Reuters-Yonhap)
Sue Mi Terry speaks on a "Crisis on the Peninsula: Implications for the US - Korea Alliance" panel at the Asia Society in New York, U.S., in this file photo dated June 19, 2017. (Reuters-Yonhap)

Sue Mi Terry, who had also served on the White House National Security Council, was charged in 2024 for failing to register as a foreign agent and disclosing US government information to South Korean intelligence.

A court filing Tuesday showed the Justice Department has struck a deferred prosecution agreement with Terry, who denied the accusations and was due to go on trial later this year.

It means Terry, previously a senior fellow for Korea studies at the Council on Foreign Relations, will not face jail time provided she complies with several rules for the next 12 months.

They include restrictions on leaving the United States, and a ban on communicating with the South Korean intelligence service.

Terry is a naturalized US citizen who was born in South Korea's capital, Seoul, and raised in Virginia and Hawaii.

She was employed by the US government from 2001 to around 2011, and was allegedly to have begun her work for South Korea in 2013.

In return for her services, Terry's South Korean handlers gifted her a $3,450 Louis Vuitton handbag, a $2,950 Bottega Veneta handbag, and a $2,845 Dolce & Gabbana coat, according to an indictment.

She was also taken to "multiple" Michelin-starred restaurants and provided with $37,000 in covert payments to a think tank where she worked.

Her lawyer, Lee Wolosky, said in a statement carried by US media Tuesday that Terry had served her country "loyally for many years." "We have consistently maintained that her interactions with South Korean officials were conducted in furtherance of US interests and her work as a leading American specialist on North Korea and East Asia," Wolosky said. (AFP)