Counterfeit Currency—North Korea Update

The controversy surrounding allegations that North Korea has been manufacturing high quality counterfeit American currency has expanded to include an alleged Hong Kong link.^[1] “U.S. authorities are set to seize more than US$2.67 million from Hong Kong bank accounts linked to trade in North Korean counterfeit U.S. notes and cigarette smuggling.”^[2] The funds, which are “frozen in three accounts belonging to an unemployed mainland migrant” are believed to be “the first known link between Hong Kong’s open banking system and what U.S. authorities fear is a growing underground trade” in the so-called “supernotes.”^[3]

The Chiyu Banking Corp. declined to comment on the report, but stated that “[t]he bank fully complies with Hong Kong's laws and regulations and has checks in place to prevent money laundering and other illegal activities.”^[4]

The funds were actually frozen a year ago, but the news surfaced this past weekend as The South China Morning Post ran a story on the freezing of the accounts “ahead of an upcoming meeting on March 7, when North Korean diplomats are scheduled to meet with U.S. officials who will brief them on why Washington imposed financial sanctions on Pyongyang.”^[5]

The supernotes have been linked to Sean Garland—who is currently in Ireland facing extradition to the United States—to Banco Delta Asia—which has been designated a “primary money laundering concern” by the US Department of Treasury—to “Operation Smoking Dragon”—which involved joint operations on the East and West coasts of the United States—and to the alleged attempt to smuggle MANPADS into the United States. We discussed these seemingly disparate cases in further detail at the end of December.

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[1] HK Link to Pyongyang Counterfeit US Bills: Report, Reuters, Feb. 26. 2006.
[2] Id.
[3] Id.
[4] HK Bank Declines Comment on Counterfeiting, Associated Press (via MSN Money), Feb. 27, 2006.
[5] N.K. Counterfeit Bill Accounts Surface in Hong Kong, Chosun Ilbo, Feb. 27, 2006.