Thursday, June 4, 2009

9,900 Supernotes Smuggled Into S. Korea

North Korea has kept producing counterfeit U.S. bills even after Washington lifted financial sanctions in 2007, and some of them have been smuggled into South Korea, sources in Seoul said Thursday.

South Korea and the U.S. have been investigating the matter since last November when they detected a group of people who attempted to circulate the so-called ``supernotes,'' near-perfect counterfeits of U.S. banknotes, here.

Last November, the Busan Metropolitan Police arrested four people for bringing 9,904 forged $100 notes into Korea and attempting to distribute them on the black market. Police secured evidence that a broker residing in China, identified as Park, traded forged dollar bills with an ethnic Korean Chinese person who frequently visits from North Korea. They asked Interpol for cooperation in apprehending Park.

Police said it was almost impossible to distinguish the notes from real ones ㅡ they tested the notes with bank counterfeit identification machines, which failed to detect the fake bills.

Seoul and Washington have kept the detection of the supernotes a secret on concerns that it might strain inter-Korea, and U.S.-North relations.

The U.S. Department of the Treasury, United States Secret Service and Korea's Ministry of Justice have traced international distribution groups, the sources said.

The arrested people, however, claimed they just tried to exchange the notes here because the U.S. dollar was strong against the Korean won, denying any knowledge of an international brokerage network that is suspected of being linked to North Korea.

Following the detection of the currency circulation, Washington is likely to impose further financial sanctions on the North over the Stalinist state's nuclear test on May 25. The U.S. forced Banco Delta Asia to freeze $25 million in North Korean funds in 2005 by denying it access to U.S. banks before lifting the sanction in 2007.

``The U.S. takes the issue very seriously, as the supernotes not only disturb the country's monetary system but also have been used for the North's nuclear test and funds for the North Korean leader Kim Jong-il,'' a Cheong Wa Dae official said.

The Washington Times reported Tuesday that Gen. O Kuk-ryol, a confidant of North Korean leader Kim, is leading the production and circulation of the forgeries, which are made at the Pyongsong Trademark Printing Factory near Pyongyang under the supervision of the Korean Workers' Party, according to the newspaper.

The report added that O's son, Se-won, was also involved in counterfeiting, and another relative, Lee Il-nam, who was a councilor at the North Korean Embassy in Ethiopia, acted as a courier from Pyongyang to Beijing to Ethiopia.

North Korea has set up shell companies in tax havens such as the British Virgin Islands to take advantage of lax banking regulations there, as well as in China, Russia and Southeast Asia for financial support activities, according to the U.S. newspaper.

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