‘Supernotes’ from Pyongyang make comeback

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‘Supernotes’ from Pyongyang make comeback

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.”

Some banks have note counters that detect counterfeits.

At the time of the agent’s arrest at his home in Dandong earlier this month, Chinese authorities were reported to have confiscated some 30 million yuan and gold bars. This seizure of the cash was actually misrepresented and that was the amount frozen in his bank account.

“There has been talk about the circulation of counterfeit money among businessmen in Dandong who deal with North Korea,” another intelligence source said. “The distribution of counterfeit dollars is a serious crime that damages the financial payment system, so China, taking into account that this may spread internationally, is said to be keeping silent on the case.”

“North Korea’s economy is entering a state of paralysis because of a shortage of dollars, and there is a high likelihood that it is systematically counterfeiting notes and in the process of wide-scale distribution,” the source added.

“Starting from March, a large amount of supernotes were found in border regions between China and North Korea and China’s three northeastern provinces [Liaoning, Jilin and Heilongjiang], and many have pointed to North Korea as the source of production and circulation,” Park Byung-kwang, a senior researcher with the Seoul-based Institute for National Security Strategy, said.

“So long as the United States considers counterfeiting a serious crime, the level of pressure on North Korea can be increased.”

Chinese authorities notified North Korea after the arrest of the agent.

BY KIM HYOUNG-GU, SARAH KIM [kim.sarah@joongang.co.kr]
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