North Korea Reshuffles Kim Family's Financial Gatekeepers

North Korea is a peculiar country that divides its national economy into three separate streams. The people's economy under the Cabinet handles the civilian sector, the military economy serves as the armed forces' financial base, and the party economy funds the Workers' Party—each operating independently.

The core function of the party economic system is procuring and managing ruling funds for Chairman Kim Jong-un's family. To this end, the Party Secretariat's "Office 89" and the Party Central Committee's "Office 38" and "Office 39" have served as financial gatekeepers across generations. An even more secretive private vault function is reportedly performed by "Bureau 36" under the State Affairs Commission.

Office 39, the foreign currency-earning organization, was established in 1974 under instructions from Kim's father, Kim Jong-il. The director position has been held successively by Choi Bong-man, Kim Dong-un, Jeon Il-chun, and Shin Ryong-man. Office 39 controls over 120 enterprises including Daesong General Bureau and Kumsung Bank, disguising itself as legitimate business operations. Its actual revenue sources are illegal activities: drug and weapons smuggling, counterfeit dollar production and distribution, insurance fraud, and financial institution hacking. It earns at least several trillion won worth of dollars annually. Since Office 39 also operates gold and silver mines within North Korea, total assets under management may exceed tens of trillions of won.

Office 38, which procures the Kim family's private funds, was established in the 1980s within the Party Light Industry Department under Kim Il-sung's instructions. After taking power in 1994, Kim Jong-il appointed his close associate Rim Sang-jong, a former deputy director of Office 39, as Office 38 director in 1996. Following Rim's death in 2007, Office 38 was merged into Office 39 during 2008-2009. It was later revived in May 2010 in response to international sanctions against North Korea, then reintegrated into Office 39 around 2014.

Shin Ryong-man, who has headed Office 39 since 2018, was recently replaced. Han Sang-man, a newly appointed candidate member of the Party Central Committee, is mentioned as a potential successor. The reasons behind the dismissal remain unclear. Kim may have replaced his financial gatekeeper with a new generation to secure slush funds needed to establish a succession structure for his daughter Ju-ae.

The money earned by Office 39 and similar organizations is a major funding source for nuclear and missile development. Even if South Korea pursues conciliatory policies toward the North, blocking the Kim family's slush fund pipeline through strengthened international cooperation is essential to deterring North Korea's nuclear buildup that threatens both South Korea and the United States.