Sri Lankan customs officials detained two North Koreans and confiscated about $168,000 from them, according to Yonhap News Agency.
This is the first case of currency confiscation after U.N. Resolution 2270 took effect following North Korea's fourth nuclear test and long-range missile firing.
An anonymous source said the two North Koreans were arrested on March 14 while waiting at a Colombo airport to transfer to a flight to China.
The Sri Lankan government has fined the North Koreans 800,000 won ($700) for violating domestic customs laws.
The North Koreans claimed the money was wages they and their co-workers earned on a construction site in Oman.
Kye Chun Yong, the North Korean ambassador to India, has requested the release of the two and the money.
It is estimated that some 50,000 to 60,000 North Koreans work in 50 countries, including China and Russia and those in the Middle East, to earn foreign currency for Pyongyang.