Nearly `Perfect' Fake Dollars Complicate Korean Weapons Talks
By Hideko Takayama and Bradley K. Martin
March 28 (Bloomberg) -- Kim Il Nam's first encounter with counterfeit U.S. currency was embarrassing. On an overseas trip several years ago, the North Korean diplomat took a $100 bill from a wad of more than $7,000 he'd received from the Trade Bank in Pyongyang to the front desk of his hotel.
``I had to buy some toiletries, so I asked the cashier at the hotel front desk to change one of the new bills,'' said Kim, who uses a pseudonym to protect his identity since defecting. ``She took my note away and returned, saying, `Sir, this is fake.' I felt like a criminal and protested to the Trade Bank when I got back to Pyongyang.''
Things are different now. A new generation of fake ``supernotes,'' far harder to detect, has appeared on the scene in the last year, counterfeiting experts say.
Fingering the latest $100 bill from North Korea, Yoshihide Matsumura, whose Matsumura Technology Co. supplies counterfeit- detection machinery to Japan's post offices, banks and law- enforcement agencies, said: ``This is the closest to perfect counterfeit U.S. money ever made.''
Counterfeit dollars are one of the issues that have complicated the six-party talks over North Korea's nuclear- weapons program. Before Kim Jong Il's government admits United Nations inspectors, it is demanding release of $25 million in frozen accounts at a Macau bank the U.S. accuses of laundering counterfeit dollars. North Korea denies making or trafficking in counterfeits and calls evidence to the contrary ``fabricated.''
Pinpointing the Presses
In separate interviews, Kim and Matsumura, 57, identify a printing factory in Pyongsong, on the outskirts of Pyongyang, as the location of presses that print counterfeit currency. The fake money is then stored in several locations in Pyongyang, they say.
Matsumura, whose Tokyo-based company started in the counterfeit-detection business around the time of the 1988 Seoul Olympics, said North Korea's early efforts were often seized in quantity from diplomats and trade officials. Japanese authorities continued to confiscate counterfeits in shipments from Wonsan, North Korea, until they banned the entrance of North Korean ships late last year.
Now that the United States, Japan and other countries have intensified their checks, ``the North Koreans are more careful,'' he said. The greater scrutiny has restricted the spread of the fake bills in developed countries. The U.S. Treasury Department has only seized about $50 million of the fake notes since they were detected in the Philippines in 1989, Michael Merritt, an official in the Treasury's Secret Service, told a Senate committee last year.
Still Circulating
The fakes still circulate in quantity in less developed countries, Matsumura said. The U.S. Treasury Department has warned banks in Vietnam, Malaysia, Mongolia and elsewhere that they are holding accounts traceable to North Korea that may be used for money-laundering.
Treasury Undersecretary Stuart Levey said on March 14 an 18- month investigation had found the Macau bank, Banco Delta Asia SARL, had allowed North Korea to launder money. U.S. banks have been barred from doing business with the institution.
``Many account holders at BDA had connections to entities involved in North Korea's trade in counterfeit U.S. currency,'' Levey said.
Working With Macau
While Banco Delta rejected the U.S. finding, the designation remains in place and the Treasury will work with Macau authorities on money-laundering issues, Daniel Glaser, deputy assistant secretary for terrorist financing and financial crimes, said in a March 19 briefing.
Merritt, in his testimony last year, said there are ``definitive connections'' between North Korea and top-quality counterfeits. Matsumura says the printing techniques and ink used on the most recent fake $100 bills are identical to those used in producing North Korea's own 100-won bill.
``North Korea has used front companies to purchase ink for currencies,'' Matsumura said. ``Any country that makes automobile paint can make the ink.'' The volume needed for a major print run could be transported in a single large paint can, he said, estimating the cost of producing each fake note at around four U.S. cents.
`Completely Antiquated'
Some say the North Koreans aren't capable of producing such high-quality fakes. German author Klaus W. Bender wrote in the Frankfurter Algemeine Zeitung newspaper in January that North Korea's machinery from Switzerland-based KBA-Giori SA, ``is completely antiquated, unsuitable for printing the `supernote.''' Giori machines are used to print real dollars.
Matsumura disagrees. ``I know the printing process and I have seen Giori machinery,'' he said. ``It doesn't matter that it's old. Maintenance is what counts.''
In Matsumura's analysis, North Korea's own notes -- which he called far superior in printing technique to those produced by neighboring China -- most likely are made using Giori machinery for about 80 percent of the process. Additional machinery is needed to print the won notes because they are more colorful than U.S. bills, he said.
``For security and confidentiality reasons,'' KBA-Giori won't discuss its clients or its equipment, said spokeswoman Jacqueline Fehle. ``We suggest you address your questions to the U.S. authorities or to Interpol.'' U.S. Treasury spokeswoman Brookly McLaughlin declined to comment.
Years of tracking North Korean counterfeiters have given Matsumura a respect for their work. If North Korea ever melts down the printing plates and allows its counterfeiters to retire, he said, he'd like to meet them.
``I want to buy them drinks and congratulate them on their work,'' he said.
To contact the reporters on this story: Hideko Takayama in Tokyo at htakayama10@bloomberg.net ; Bradley K. Martin in Beijing at bmartin18@bloomberg.net
Last Updated: March 27, 2007 12:24 EDT |
