[USFK Forums] North Korea Might Be Exporting Fake $100 Bills [WSJ]

[C. Y. Lee]

Uploaded by C. Y. Lee on Saturday, March 25, 2006

North Korea Might Be Exporting Fake $100 Bills

By Gordon Fairclough
The Wall Street Journal
Friday, March 24, 2006; D05

SHANGHAI -- China's central bank warned its lenders about an influx of high-quality counterfeit American $100 bills -- which the United States alleges are made by North Korea -- as the spread of the forgeries moves toward the center of a standoff between Washington and Pyongyang.

Governments around Asia are stepping up surveillance for the bogus currency, which law-enforcement officials have dubbed supernotes because they are so difficult to distinguish from genuine money.

The fake $100 bills have turned up in the United States, Philippines, Taiwan and elsewhere over the past two years. In January, supernotes were seized from a Chinese American in Hong Kong, according to U.S. officials.

The People's Bank of China said the supernotes "have flowed into our country from overseas" and urged lenders to be on the lookout for efforts to place counterfeit bills into circulation. The letter was sent this month to all commercial banks as well as its own branches.

North Korea, which shares a long border with China, may earn as much as $15 million to $25 million a year from counterfeiting, according to an advance copy of a report to be released Friday by the U.S. Congressional Research Service, which also says at least $45 million in supernotes has have been detected in circulation. That figure would represent a small proportion of the total amount of U.S. currency circulating in the world. But, U.S. officials say, any amount of counterfeiting can undermine confidence in the dollar.

Frustrated by the lack of progress in negotiations aimed at persuading North Korea to abandon its nuclear weapons and faced with a lack of international support for economic sanctions against the country, Washington increasingly is turning to law-enforcement actions to deal with Pyongyang.

The focus now is stanching the flow of fake currency and cracking down on other alleged illegal North Korean activities, often by going after the Chinese and Taiwanese organized-crime groups that, U.S. officials say, have become the conduits for Pyongyang's illicit products.

"This is state-sponsored criminal activity, and Washington's policy response is morphing," said Raphael Perl, one of the authors of the Congressional Research Service report. "The administration is moving towards taking on North Korea with laws and prosecutors."

The report, prepared for members of Congress and their staffs, raises the possibility of U.S. legal action against North Korean leader Kim Jong Il. But going after Kim remains unlikely, as the United States continues to pursue diplomatic efforts to curb North Korea's nuclear ambitions. Such a move would face opposition from U.S. ally South Korea, as well as China, both of which fear destabilizing North Korea.

But the United States is going after others linked to North Korea's alleged illegal activities. Seizures of supernotes have grown as the result of better cooperation between U.S. law-enforcement officials and their counterparts in other countries, U.S. officials say.

In September, the U.S. Treasury Department designated a bank in the Chinese enclave of Macau as an institution of "primary money laundering concern," saying that it had helped North Korea launder money from illicit activities and place counterfeit money in circulation.

The United States has proposed cutting off the bank, Banco Delta Asia, from contacts with the U.S. financial system, which has encouraged other lenders to sever ties with North Korea to avoid unwanted scrutiny from U.S. regulators. Banco Delta Asia has denied involvement in any illicit activities.

U.S. prosecutors also are moving to seize money in a Hong Kong bank account they say is linked to the sale of supernotes, as well as counterfeit cigarettes made in North Korea. The account is linked to the case of three men of Chinese descent who pleaded guilty in 2004 to conspiring to smuggle fake currency and cigarettes into the United States.

This week, the U.S. Secret Service said that about $15,000 in supernotes had passed through the Philippines last year, brought into the country by Chinese and Taiwanese nationals. A Secret Service official declined to identify the source of the notes, other than to say that they were from a country "the United States cannot go into."



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