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Counterfeiters in Pyongyang play cat-and-mouse with the US Mint

— Supernotes

08. Copycats Dispatches

“You’ve heard about Bureau 39?” asks Dr. Sung-Yoon Lee, a professor at Tufts’ Fletcher School and a leading expert on North Korea. He’s referring to a notorious government office, overseen by leaders at the very top of North Korea’s regime, which engages in illicit activities across the globe. “It’s charged with overseeing the North Korean leaders’ slush funds abroad and all kinds of revenues from drug smuggling and counterfeiting and so forth.”

One of Bureau 39’s most successful projects has been the creation of “superdollars”, ultra-high-quality forgeries of US hundred-dollar bills. Using expensive intaglio printing presses and buying the exact blend of paper used by the US Mint, North Korean counterfeiters are so sophisticated that their forgeries can pass through electronic detection devices and fool experienced bank tellers. These forgeries are used and sold in North Korean markets with a value of about USD 70 each.

If you’ve ever wondered why the Treasury Department changes the design on currency so frequently, the answer largely lies in Pyongyang. According to Dr. Lee, “North Korea is a major factor, the biggest factor” behind the recent redesign.

While the notion of a country running a counterfeiting operation out of government facilities and contracting with criminal gangs globally to disseminate the product seems nearly unbelievable, experts unanimously agree that it is the case in North Korea. Sheena Chestnut Greitens, a doctoral candidate in government at Harvard, wrote in The New York Times that North Korea’s operations are “so extensive and well-coordinated that American officials nicknamed it the ‘Soprano state’, after the hit HBO television series.”

Chinese triads, Japanese yakuza, and the Russian mafia each have a hand in the Supernotes dissemination game. But the operations reach far further than North Korea’s neighbors. To take just one far-flung example, Sean Garland, a leader of the Official Irish Republican Army, was indicted by the US Department of Justice for his involvement in spreading the fake bills. The indictment claimed that “North Korean nationals acting as ostensible government officials, engaged in the worldwide transportation, delivery, and sale of quantities of Supernotes” between 1989 and 2005—in other words, posing as officials in order to spread duplicate currency.

There’s no way of knowing the exact number of Supernotes. US officials say they’ve identified about USD 50 million worth in the past two decades. Any reasonable estimate of the actual amount in circulation would have to be much higher, since counterfeiting (especially at high quality) is designed to go undetected. “You could sort of be dismissive and say that in the overall context of the US economy or the global economy that’s a drop in the bucket,” said Dr. Lee. “But it is not an insignificant amount of money for North Korea.” According to a testimony by Dr. David Asher, a former State Department official, the total revenue from North Korea’s illicit activities “could be as much as 35 to 40 percent of DPRK exports and a much larger percentage of its total net cash earnings”.

For a country that’s almost completely isolated from the global economy and under crippling financial sanctions, counterfeiting and drug smuggling allow North Korea access to desperately needed hard currency. To keep North Korean elites happy and compliant, Kim Jong Un (and his father, Kim Jong Il, before him) needs cash and luxury goods available for him to distribute. Supernotes operate as a valuable, if unorthodox, tool of his statecraft.

Of course, no self-respecting superpower would allow its currency to be duplicated without response. In fact, the act of counterfeiting another nation’s currency is considered an act of economic war under international law. North Korea’s replication of US hundred-dollar bills is an action almost without historical precedent (made worse by the fact that each attempt to engineer an uncopyable Benjamin has inspired quick, creative retaliation). Washington’s response to the Supernotes has been largely muted due to the delicacy of negotiations with Pyongyang over denuclearization. However, the redesigns of the bill, including the most recent release in October, are intended to make Supernotes more expensive and difficult to produce. The older bills are still legal currency though, so the Treasury Department’s efforts won’t likely have much effect in the short term.

While Washington may hesitate to address North Korean counterfeiting at its source, federal officials have launched several high-profile operations against traffickers since the discovery of the first Supernotes. Code-named “Royal Charm” and “Smoking Dragon”, 2005 investigations took place on both US coasts, involving the Secret Service and FBI.

According to David Archer’s testimony, “Royal Charm was centered on a false-front Mafia group in northern New Jersey…The investigations culminated in a much publicized event, a ‘wedding’, in which the supposed daughter of the FBI undercover ‘mob boss’ was to be married on a yacht, the Royal Charm, moored in Atlantic City harbor.” The wedding guests, a band of international criminals, were in for a rude surprise. Rather than a limo ride to the reception, they found themselves being booked in a Newark courthouse. Two of the bigger fish were Jyimin “Jimmy” Horng and Co “Keith” Khan, who the press reported had received USD 1.15 million from undercover agents in exchange for USD 3.35 million in Supernotes.

While there hasn’t been a large-scale bust since, North Korean counterfeiting has undoubtedly continued. This year’s 100-dollar bill redesign, with its color-changing ink, security ribbon, and raised printing, may mean that the US Treasury is a step ahead of Pyongyang. But surely, Bureau 39’s illicit copycats follow somewhere close behind.



A Ghanaian journalist goes way undercover to document criminal activity

— Deep Cover

08. Copycats Dispatches