On Wednesday, Japan issued arrest warrants for two executives allegedly involved in establishing a business that outsourced work to North Korean IT engineers.
One of the individuals, Pak Hyon-il, a 53-year-old South Korean national, served as president of the Fuchu-based IT firm ITZ. The other, Toshiron Minomo, a 42-year-old Japanese national, was the head of Fukuyama-based Robast and had previously worked for Pak, as reported by local media.
Reportedly, Robast secured application development work from Japanese clients through a business brokering website and then outsourced it to North Koreans, whom the executives believed were in China.
This alleged action was carried out without the customers' knowledge or consent.
Authorities suspect Pak may have connections to an individual involved in North Korea's foreign currency acquisition activities.
They are investigating whether the money earned through this outsourcing was sent to North Korea.
During an investigation into a case involving the development of a smartphone app that violated Japan's banking act, authorities reportedly discovered suspicious remittances to North Korean IT engineers from Robast.
Warrants issued by the Kanagawa and Hiroshima Prefectural Police accuse the duo of filing and using false electronic notarized records to inflate Robast's registered capital to 3 million yen (nearly $20,000).
The actual amount of capital is unknown. Pak and Minomo are also accused of unemployment benefit fraud.
While hiring North Korean workers for development work may appear cost-effective, it carries numerous potential risks, including malware and other cybersecurity threats.
Additionally, it may contribute to funding a despot's activities, legal and illegal, while violating domestic sanctions.
In October, US and South Korean authorities issued updated guidance on avoiding hiring North Korean agents.
Warning signs include threats to release proprietary source code if additional payments are not made, using a freight forwarder's address for company equipment, and being unavailable for drug tests or in-person meetings.
On Tuesday, the Japanese government issued a warning about North Korean IT contractors posing as Japanese nationals.
The notice highlighted that North Korean workers, whether abroad or remote, were being used to finance North Korea's nuclear and missile development and might be involved in the nation's malicious cyber activities.
Warning signs include unnatural or non-proficient use of the Japanese language, suspicious use of IP addresses, and discrepancies between names used and payment records.