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Hwagyo Targeted in Remittance Crackdown
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Hwagyo Targeted in Remittance Crackdown

Kang Mi Jin  |  2014-09-17 07:06


The North Korean authorities have recently intensified efforts to stem the flow of remittances entering the country from South Korea. Once restricted to surveillance and monitoring of defector families and brokers, who aid in transferring cash from the South up North, this investigation has now extended to the hwagyo [community of overseas Chinese] residing in North Korea.

A source in North Hamgyung Province reported to Daily NK on September 15th, “News comes regularly about hwagyo under interrogation from State Security Department [SSD] agents,” going on, “This is because they were suspected of being involved in transferring money from defectors living in South Korea to their families in the North.”

The ongoing practice of sending money back to families defectors have left behind in the North has seen sums continue to rise over the past few years, when the practice took hold. This additional source of income has played a substantial role in helping family members in the North to get by, and in many cases, contributing to seed money to start a business.

Growing economic disparity levels among households and ensuing social unrest from this flow of cash prompted the North Korean authorities to take extreme measures: cutting off its source by increasing surveillance of families with defector members, or in some cases going so far as to expel the accused to remote areas of the nation.

However, expanding the circle of monitoring to the hwagyo is considered unprecedented, and reflects the determination of the authorities to stamp out any efforts by those who it believes to be acting as middlemen in the stream of money flowing north. Hwagyo are treated as citizens in North Korea, carrying the same identification cards as all other residents; however, they are also able to hold Chinese passports, which allows for greater mobility and autonomy than other North Koreans, a fact likely to have sparked SSD suspicions of their potential involvement in the operation.

Not only that, as the range of families who are able to receive funds from defectors expands further inland, instead of contained only to border areas, the authorities have widened the scope of monitoring to include its own--SSD officials and security forces.

“The intensified crackdown on money sent from the South began last year,” the source explained. “Initially, it was mostly the families of defectors they monitored and penalized, but now they have made it more inclusive, punishing those who aid in transferring the cash.”

She noted that some of the hwagyo who have been interrogated by the SSD have openly complained, “All I did was run an errand,” and, “What’s wrong with the money coming in? What difference does it make if someone passes it on? At the end of the day, it benefits North Koreans not us.”

Some SSD officials are trying to get members of the hwagyo to talk with intense lines of questioning, “Have you have received illicit money? Have you made contact with South Koreans while doing so, and if so, what did you discuss?” she cited as among the probes they have undergone. Other agents take a more passive, manipulative approach, warning them to “go about it with caution, if someone wants to send money through.”

As this operation unfolds, some residents in the North have remarked, “There’s likely no SSD official who has not received a share of remittances from the South,” noting that SSD members, not residents, should be the first targeted and interrogated.

It is common practice for SSD guards working in the border area to receive portions of the money smuggled in from South Korea as bribes in return for turning a blind eye to the operations. This is because, despite the potential to receive larger and regular rations from the food distribution system, this combined with their paltry salaries is still not enough for most personnel to cover expenses for basic daily necessities.

Some speculate that the clampdown on the hwagyo could be a tactic employed by SSD officials in the border region who have lost their channel of bribes once provided through smuggling and border defections. Others surmise that they are trying to shake down hwagyo, who have a more stable financial footing in the country, in order to receive more bribes.

Many readily accept the reality of the situation, the source said, citing a third party, “They may have no choice but to carry out this monitoring because it’s an order down from the central state power organs,” pointing out, “It’s the law here to do as you’re told, and that’s the fate they [SSD agents] face."