South Korean Yonhap News Agency called Kim a "hard-liner" whose inclusion in the Olympic delegation "is likely to stir up a controversy as he is blacklisted under Washington and Seoul's unilateral sanctions".
Ms Nauert added: "We will not allow North Korea's attendance at the Winter Olympics to hide the true nature of the regime and the need for the world to remain united in the face of its illicit weapons programs".
North Korea's attendance at the Winter Olympics was seen as a major thaw in consistently tense relations on the Korean peninsula.
Pence missed a group photo organized by South Korea for world leaders before the Games.
Like her brother, she received her primary educated in Berne, Switzerland in the 90s, and later returned to North Korea to study computer science in Pyongyang.
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In this image made from video by North Korean broadcaster KRT, North Korean leader Kim Jong Un, right, waves as people parade to celebrate the first congress of the ruling Workers' Party of Korea in 36 years, in Pyongyang, North Korea.
Pence said he planned to use his trip to the Olympics to prevent North Korea from using the games as a ploy for favorable propaganda on the communist regime.
Pyongyang has used the Games to try to soften its image and push for talks with Seoul that could cut the odds of a USA military strike.
"For all the media fawning over the sister of the North Korean dictator, I think it's important that every American knows who this person is and what she's done", Pence said Thursday.
Mr Kim also heads the United Front Department, the North Korean office responsible for handling inter-Korean affairs. "Perhaps that's why they walked away from a meeting or perhaps they were never honest about sitting down".
"And we will keep standing strong until North Korea stops threatening our country and our allies, or until they abandon their nuclear and ballistic missiles once and for all", he added. A meeting is possible between Kim and Suh Hoon, the director of South Korea's National Intelligence Service.
In addition to Pence, President Donald Trump is scheduled to address CPAC on Friday, as well as administration officials like Secretary of Education Betsy DeVos and Secretary of Energy Rick Perry.