The report comes ahead of a meeting between US and North Korean officials to prepare a second denuclearisation summit.
The US special envoy for North Korea, Stephen Biegun, will meet his North Korean counterpart on Wednesday in Pyongyang to prepare for a summit later this month between Donald Trump and North Korean leader Kim Jong-un, the US State Department said on Monday.
Mr Biegun has said he hoped the meeting with newcounterpart Kim Hyok Chol would map out "a set of concrete deliverables" for the summit between Mr Trump and Mr Kim.
Mr Biegun, who held talks with South Korean officials in Seoul on Sunday and Monday, said he would be aiming for "a roadmap of negotiations and declarations going forward, and a shared understanding of the desired outcomes of our joint efforts".
South Korean officials said they and the US could be looking at a compromise that would see the dismantling of the North's main Yongbyon nuclear complex, which could be reciprocated by US measures including formally ending the 1950-53 Korean War and setting up a liaison office.
But United Nations (UN) sanctions monitors said in a confidential report, submitted to a 15-member UN Security Council sanctions committee and seen by Reuters on Monday, that they had "found evidence of a consistent trend on the part of [North Korea] to disperse its assembly, storage and testing locations".
The North Korean mission to the UN did not immediately respond to a request for comment on the report, which was submitted to Security Council members on Friday.
The first summit between Mr Trump and Mr Kim last June in Singapore yielded a vague commitment by Mr Kim to work towards the denuclearisation of the Korean peninsula, where US troops have been stationed since the 1950-53 Korean War.
The Vietnamese resort town of Danang is seen as the most likely location for the next summit.
Last Thursday, Mr Trump hailed "tremendous progress" in his dealings with North Korea, but the view in the US is that it has yet to take concrete steps to give up its nuclear weapons programme.
North Korea has complained the US has done little to reciprocate its freezing of nuclear and missile testing and dismantling of some nuclear facilities.
It has also repeatedly urged a lifting of punishing US-led sanctions, a formal end to the war, and security guarantees.
The UN report said sanctions were proving ineffective.
"The country continues to defy Security Council resolutions through a massive increase in illegal ship-to-ship transfers of petroleum products and coal," the sanctions monitors found.
"These violations render the latest UN sanctions ineffective."
The monitors said they had evidence of one unprecedented prohibited petroleum product transfer of more than 57,600 barrels, worth more than $5.7 million (£4.4 million).
North Korea has said it will never unilaterally give up its nuclear weapons unless the US first removes any threat to it. North Korea has long demanded US troops be withdrawn as a condition for peace.
The Korean War ended with an armistice that left the two Koreas technically still at war.
The US has stressed its troops are not a bargaining chip and South Korea has said US troops in the South were unrelated to any future peace treaty and American forces should stay even if such an agreement is signed.
The US State Department said on Monday Washington and Seoul had reached an agreement "in principle" on sharing the cost of stationing US troops in the Asian country.
CNN quoted a State Department official as saying that under the revised agreement, South Korea would boost its contribution to nearly $1bn (£770m).
A 2014 deal that expired last year required South Korea to pay about 960 billion won (£660 million) a year for keeping some 28,500 US troops in South Korea. The allies had appeared unable to strike an accord to renew the deal despite 10 rounds of talks since March.
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