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As Minister of State Security, Kim Won Hong oversaw the North Korean agency responsible for running the country's notorious prison camps, rooting out spies in North Korea and conducting counterespionage operations abroad.
Unification Ministry spokesman Jeong Joon-hee said Kim Won Hong was punished for "human rights abuses committed during interrogations at the State Security Department" among other things.
The security chief was one of seven North Korean officials sanctioned by the US Treasury Department on January 11 for human rights abuses.
He was removed from his position in the North Korean government around that time, the South Korean official said.
According to a US Treasury statement, Kim Won Hong directed and managed activities including "beatings, forced starvation, sexual assault, forced abortions, and infanticide" that took place in the system of prison camps.
The US Treasury order froze any assets of Kim Won Hong under US jurisdiction.
Last November, a United Nations report said up to 120,000 men, women and children are imprisoned in the camps, known as "kwanliso" in Korean.
An analysis by Amnesty International in November concluded that Pyongyang "is continuing to maintain, and even invest, in these repressive facilities."
"These camps constitute the cornerstone of the country's large infrastructure dedicated to political repression and social control that enables widespread and systematic human rights abuses," Amnesty said in a statement.
CNN's James Griffiths and journalist Taehoon Lee contributed to this report.