How North Korea earns money from arms sales?

Sanctions from the United Nations and others have made it more difficult for the North to sell arms abroad, experts say, but Pyongyang has almost nothing else to export and is likely to search for ways to bust the sanctions.

The key to enforcing sanctions is global cooperation, with the North's neighbor and biggest benefactor China playing a major role. Fearful of moves that could lead to a collapse of the North Korean government and chaos on its border, China has expressed caution in the enforcement of sanctions.

The U.S. Treasury brought North Korea's international finances to a virtual halt in 2005 by cracking down on a Macau bank suspected of aiding the North's illicit financial activities. Other banks, worried about being snared by U.S. financial authorities, steered clear of the North's money.

HOW ELSE IS THE NORTH EARNING FOREIGN CURRENCY?

The U.S. government has accused North Korea of trafficking in narcotics, counterfeiting U.S. currency and producing fake cigarettes. Intelligence sources say the North also earns foreign currency through insurance fraud while its overseas missions have also developed various minor schemes to boost Pyongyang's coffers.

WHERE DOES THE MONEY GO?

The North uses foreign currency to buy goods overseas that reward the ruling elite. The funds enrich leader Kim Jong-il and his family and they are also used to buy materials for its arms and nuclear programmes.

(Additional reporting by Christine Kim; Editing by Valerie Lee)