North Korean entities under international and U.S. sanctions, including Room 39, a branch of the North Korean regime that handles the country's illicit financial activities, may be struggling with a foreign exchange shortage, South Korean news service Daily NK reported.
Money managed by Room 39 is spent under Kim Jong Un's direct supervision and the cash is routed to the top of the North Korean leadership. The foreign currency originates from North Korean earnings at overseas missions but reserves are falling, according to the report.
There are also signs the domestic economy is in bad condition.
Shortly after the conclusion of the "70-day battle," a mass mobilization movement that requires ordinary North Koreans to volunteer free labor to the state's construction projects, Pyongyang called for a "200-day battle" to realize more goals.
That might mean the state did not reach its economic target by making people work harder. More people, however, are defying the mandatory work orders, according to Daily NK.
The continued call for workers also means the state is short on options for the economy, which is not headed for innovative reform, according to Seoul's unification ministry.
Under United Nations Security Council sanctions resolution 2270, all assets related to North Korean individuals and entities connected to nuclear weapons and missile development have been frozen, and labor may be compensating for the shortage in technology or capital.
But North Korea's proximity to China means illicit trade in dual-use products may be ongoing across a shared border.
Radio Free Asia reported Chinese authorities arrested smugglers in the northeastern city of Dalian in early March.
The suspects were trading in banned electronic goods and precious metals that could go toward weapons production, according to Yonhap.