A North Korean general who is a confidant of the country’s leader, Kim Jong-il, has been identified by U.S. and foreign intelligence agencies as a key figure in the covert production and distribution of high-quality counterfeit $100 bills called supernotes, according to documents and interviews with intelligence officials.
North Korean Gen. O Kuk-ryol, who was recently promoted to the country’s powerful National Defense Commission, and several of his family members are said to be in charge of producing the fake $100 bills, which are so carefully crafted that they are difficult to tell apart from real U.S. banknotes.
…The report narrowed the source of supernote printing to a plant called the Pyongsong Trademark Printing Factory. The plant is said to be under the control of the operations department of the Korean Workers Party, which is headed by Gen. O.
…Gen. O’s son, O Se-won, works with his father as one of two key overseas officials involved in North Korean counterfeiting, the report said. In addition to O Se-won, another relative of Gen. O, identified as Lee Il-nam, was a councilor at the North Korean Embassy in Ethiopia and operated as a supernotes courier, making visits from Pyongyang, to Beijing to Ethiopia and back from May 2003 to September 2004, according to the report.
The report says North Korea uses front companies and shell companies overseas to facilitate the illicit trafficking in supernotes. The use of fake companies increased after the Treasury Department barred U.S. companies from working with Banco Delta Asia. To further hide the transactions from international financial authorities, the North Korean party office used a financial front company, set up in China in 2006, to make payments as part of the purchases, the report says. North Korea also set up a front company in the British Virgin Islands in the mid-2000s to take advantage of lax banking regulations and tax laws there, it says, and other branches of the front company were established for financial support activities in China, Russia and Southeast Asia. One front company bought luxury yachts, Mercedes-Benz cars and personal helicopters for Mr. Kim and his family, the report said.
…The first North Korean counterfeit supernote was found by a cashier in Manila in 1989, said U.S. Secret Service officials who spoke on the condition of anonymity because of the sensitivity of the subject. In 1994, North Korean trading company officials carrying diplomatic passports of North Korea were arrested after depositing $250,000 in supernotes in Banco Delta Asia in Macao, the officials added.
In the United States, North Korean supernotes have been traced to Las Vegas. In the case of Chen Chiang Liu, a Los Angeles resident who was convicted in federal court in September of conspiracy to sell and pass counterfeit currency, the supernotes he used looked authentic enough to trick bill validators in casino slot machines.
The most recent evidence of North Korean trafficking in supernotes surfaced in Pusan, South Korea, in November when police seized about $1 million in supernotes. According to the report, the case “shows that Pyongyang is using South Korea to circulate or launder supernotes.” Supernote circulation has increased in recent months, the report said, in part to offset revenue shortfalls created by international sanctions against North Korea.