Tag: Counterfeiting

The North Korean are continuing to print counterfeit US currency as one of their major criminal enterprises:

A high-quality fake $100 note recently discovered in South Korea has stoked concerns of North Korean counterfeiting, Agence France Presse reported Tuesday.

Forgery experts at KEB Hana Bank said the $100 note, which was found at a Seoul branch in November, was almost identical to real notes.

“It was the first of a new kind of supernote ever found in the world,” Yi Ho-Joong, head of KEB Hana Bank’s anti-counterfeit centre told AFP.

North Korea made near perfect $100 bills — dubbed “supernotes” by US officials — for decades as part of a highly sophisticated counterfeiting program. The US believes that, at times, North Korea had earned up to $25 million per year from counterfeit notes.

“You need facilities worth some $100 million to produce counterfeit bills of this quality and no crime rings would invest that much to make fake dollars,” Yi added.

While no evidence directly links the note to North Korea, AFP reported there are suspicions North Korea has resumed its forgeries.

“There would have always been sufficient disrespect for the US financial system there to create counterfeits, which is the main reason why South Korean banks are suspecting the origin of the notes to be North Korea,” Roald Maliangkay, director of the Korea Institute at Australian National University, told Business Insider.  [Business Insider]

You can read more at the link, but last year a North Korean agent was arrested in China trying to pass off $5 million in counterfeit US currency.  It appears that the North Koreans have expanded their operations of passing off counterfeit currency into South Korea.

This could be taken as a sign that the sanctions are working at strangling the Kim regime if they are resorting to counterfeiting US dollars that are not as of high quality as the ones seen in the past:

Image via the Asia Sentinel.

Following initial reports last week that a North Korean agent was arrested in the border city of Dandong in Liaoning Province, northeastern China, multiple sources confirmed Wednesday that the official had been involved in distributing counterfeit U.S. dollars.

After years of circulating counterfeit $100 banknotes, North Korea’s so-called supernotes seemed to have disappeared in recent years. Pyongyang’s forged $100 bills, considered nearly flawless, were a major source of slush funds for the regime and date back to the 1970s. But a major crackdown by U.S. authorities and new security features on banknotes led to a decline in the trade.

The recent arrest indicates their possible resurgence.

One source familiar with Beijing-Pyongyang relations told the JoongAng Ilbo that the agent captured by Chinese officials earlier this month brought $5 million in cash into China from North Korea in order to make payments for household goods and home appliances.
These goods were supposedly distributed to the North Korean people during the April 15 celebration of the birthday of the country’s late founder, Kim Il Sung, as well as during its ruling Workers’ Party’s seventh congress held in early May, the first of its kind in nearly four decades.

Because of international sanctions on North Korea, including those in UN Security Council Resolution 2270 passed in March, Pyongyang is being blocked from financial transactions giving it access to U.S. cash.

“The $5 million was exchanged at the Industrial and Commercial Bank of China and the Agricultural Bank of China for some 30 million yuan [$4.6 million] and then deposited,” the source said.

“But a number of the notes were found to be counterfeit $100 bills when they were run through the banknote counter by a bank employee, so Chinese authorities ordered the relevant account be frozen and arrested the North Korean agent.”  [Joong Ang Ilbo]

You can read more at the link, but this does make me wonder if North Korea is the only country that traffics in state sponsored counterfeiting?

The frozen Banco Delta Asia money has been returned to North Korea:

Money at the heart of a dispute that caused North Korea to delay its nuclear disarmament was finally making its way Friday to the communist nation after months of delay.

The transfer of funds previously frozen in a Macau bank could lead North Korea to start shutting down its nuclear weapons program. But the North is certain to want to count every last penny of its $25 million before fulfilling a February pledge to stop making atomic bombs.

“The transfer is in progress,” South Korea’s chief nuclear envoy, Chun Yung-woo, told reporters Friday. “Let’s wait and see how long it takes for North Korea to confirm it.”

Just to remind people the BDA money was frozen by the US Treasury Department not because of the NK nuclear issue, but because of the totally separate issue of NK counterfeiting of US currency and then laundering of the money through Banco Delta Asia.

Additionally something else that is important realize and that the the media has consistently missed is that the return of the BDA money was never part of the February denuclearization agreement.  It was a condition added by the North Koreans after signing the agreement because they knew the Bush administration was desperate to keep the deal together in order to show some kind of foreign policy success.  To keep this charade of a foreign policy success together the Bush administration agreed to return the money despite the fact that it compromises US counterfeiting laws.

Once the US agreed to allow NK to receive the BDA money they made further demands that the money had to be electronically transferred.  The North Koreans could have simply drove a truck to Banco Delta Asia in Macau and loaded it with the money and than chartered a plane to fly it back to North Korea.  They instead made the demands for a wire transfer because it would allow NK to rejoin the international banking system thus overriding the US Treasury Department sanctions.

However, the money is so tainted that no international bank wanted anything to do with NK’s money.  Amazingly enough the US State Dept. then tried to enlist the US Wachovia bank to launder Kim Jong-il’s money for him.  Wachovia justifiably declined and the State Dept. was forced to use our own American Federal Reserve bank and a Russian bank to launder Kim Jong-il’s ill gotten money instead:

 Japan’s Kyodo news agency, citing Macau financial authorities, said the funds were expected to be transferred through the New York branch of the Federal Reserve and Russia’s central bank to a Russian bank where North Korea holds accounts.

Russia said Wednesday it would allow one of its banks to transfer the funds if Washington gave written guarantees it would not fall foul of U.S. sanctions against North Korea.

It is incredible the lengths the current US government have gone to appease North Korea.  The current appeasement policy makes former President Clinton’s 1994 Agreed Framework policy of appeasement seem mild in comparison.  At least Clinton never agreed to launder North Korean money.

So now the big question everyone is wondering is if North Korea is going to denuclearize.  I have said this over and over again and the answer is no.  North Korea may shut down their reactor for awhile at some point after it has extracted all the aid and money it can get out everyone, but it will never give up it’s nuclear weapons.

Kim Jong-il developed nuclear weapons in order to appease his military eager to join the prestigious nuclear club and to ensure regime survival.  He is using the current six party talks to buy time to perfect his nuclear weapons program.  Once Kim Jong-il has successfully created a half dozen nuclear weapons he will be able to fully implement what Richardson at DPRK Studies calls Strategic Disengagement.

Before strategically disengaging, Kim will get all that he can from the international community in what I call the North Korean Freeze Tactic.  He has already been successful in getting his $25 million dollars returned to him along with being allowed to rejoin the international banking system.  He will continue to play out this nuclear issue as long as possible in order to extract whatever other goodies the US is willing to throw in for a nuclear freeze and buy more time to develop nuclear weapons program.

When there is no more goodies to be had and his nuclear weapon program has been perfected, his regime will withdraw content with the knowledge that the Kim regime can never be forcibly removed due to their possession of nuclear weapons and if times get tough they know they can always threaten the international community to give them more money and aid.  Why not it has worked every time so far.  In short they have guaranteed regime survival at the expense of the US taxpayer and American creditability.

I also highly recommend you read other views on this matter over at DPRK Studies and One Free Korea.  Also make sure you read this Front Page Magazine piece from notable Korean author and journalist Gordon Cucullu and OFK’s very own Joshua Stanton.  A great read and highly recommended.

This article from the Asia Sentinel is a must read for anyone remotely interested in the North Korean counterfeiting of US currency. The reporters travel to China to see if they find North Korean supernotes. This is what they found:

These days there is also a reasonable facsimile of another famous American crossing the river in the opposite direction  Benjamin Franklin. If you’ve got the connections here, and they aren’t hard to find, you can easily encounter Franklin’s enigmatic face for about US$50 on a reasonable copy of a US $100 bill. These presumably Pyongyang-printed Big-Head Benjamins are known worldwide as “supernotes.

We know. We bought one.

So where did these reporters buy these supernotes, right in the open of course:

Our supernote purchase  $100, US Series 2003, serial number DI03120777A (acquired strictly for purposes of this story) took place literally within the shadow of the China Bank of Communications. The bank is directly across the street from the Dandong office of China Customs, which in turn is next to a People’s Liberation Army facility as is the Dandong Police headquarters. Coincidentally, the transaction also took place on the afternoon of Kim’s 65th birthday, February 16.

So where did the supernotes come from you may ask?:

At first he said he got them accidentally from various foreign tourists who were changing them for yuan. Were the tourists from North Korea? He shrugged and smiled and said perhaps some had relatives or friends over there across the mighty Yalu. But after asking if he could sell one or two more, he quickly left on his bicycle after taking a brief mobile phone call.

Make sure you read the whole article, very interesting read about this illegal activity happening quite openly in China with little effort by Chinese authorities to stop it. Maybe it is time someone starts printing Chinese yuan to start spreading around and see how the Chinese government likes that.

HT: Simon World

It looks like Kim Jong-il may have crossed China one too many times::

The Bank of China has frozen North Korea’s accounts at a branch in Macau due to Pyongyang’s counterfeiting and money laundering activities, it emerged Monday. It is the very BOC branch where South Korea’s National Intelligence Service transferred US$200 million to the North to guarantee the success of the first North-South summit between North Korean leader Kim Jong-Il and then-president Kim Dae-jung in 2000. U.S. pressure on the Macau-based bank Banco Delta Asia last year to freeze North Korean accounts reignited conflict between the U.S and the North.

Grand National Party lawmaker Park Jin said a former high-ranking U.S. official told him about the Chinese bank¿s decision when Park visited Washington last week. A South Korean government official later confirmed the account, saying Beijing could not turn down Washington¿s demand to clean up dubious accounts since it is well aware of the importance of improving financial transparency for the sake of trade. Analysts say that is one reason behind the recent rift between North Korea and its long-term ally over the North¿s missile tests.

US diplomats have been saying that China has been very helpful during the North Korean nuclear crisis and it appears behind the scenes they have if this latest crackdown is any indication.

One Free Korea is reporting about a large bust in Atlantic City of a Chinese gang that was smuggling both drugs and counterfeit money from North Korea into the country:

The guests thought they were headed to an early afternoon wedding on a yacht docked near Atlantic City. They ended up in jail instead, courtesy of an elaborate ruse by federal authorities hoping to bust up an international smuggling ring.

Lengthy undercover investigations on opposite sides of the country resulted in indictments of 87 Asians and U.S. citizens on charges of smuggling counterfeit money, drugs and cigarettes into the United States, law enforcement officials said Monday.

Authorities said they seized $4.4 million in high-quality fake $100 bills, more than 1 billion counterfeit cigarettes worth $42 million, and ecstasy, methamphetamine and Viagra worth hundreds of thousands of dollars. Some of the cigarettes were made in China, said acting assistant Attorney General John Richter.

(…)

Of particular concern, Secret Service officials said, was the group’s apparent ability to generate counterfeit U.S. currency that could fool even the most sophisticated detection devices. A government source said the bills, known as “super notes” because they were virtually identical to real currency, had been made in North Korea. The bills were seized before they entered the U.S. money supply, authorities said.

One Free Korea brings up some good questions that need to be answered concerning this bust:

1. Were any North Korean nationals caught or implicated?
2. Were other branches of the same organization operating in third countries? What countries?
3. Will international cooperation be sufficiently swift to snip those branches?
4. Will it be enough to shut down the entire network?
5. Is there a connection to North Korean diplomats, who routinely finance their official functions through illegal activity?
6. Where were the drugs made?
7. Were any of those caught connected to the Chinese government?
8. In the end, how badly will this hurt the finances of the North Korean regime?