The counterfeiting activities of the North Koreans has been an issue that I have long covered here on the ROK Drop. The below article from TIME’s David Wolman offers a pretty good idea on what to do about it:
Forging $100 bills obviously gels with the regime’s febrile anti-Americanism and its aim to undercut U.S. global power, in this case by sowing doubts about our currency. State level counterfeiting is a kind of slow-motion violence committed against an enemy, and it has been tried many times before. During the Revolutionary War, the British printed fake “Continentals” to undermine the fragile colonial currency. Napoleon counterfeited Russian notes during the Napoleonic Wars, and during World War II the Germans forced a handful of artists and printing experts in Block 19 of the Sachsenhausen concentration camp to produce fake U.S. dollars and British pounds sterling. (Their story is the basis for the 2007 film “The Counterfeiters,” winner of the 2007 Oscar for Best Foreign Language Film.)
Superdollars can be viewed as an act of economic warfare, but Pyongyang’s motive is probably more mundane: The regime is broke. The 2009 attempt to raise funds by devaluing its already pathetic currency revealed not only the country’s fiscal desperation, but also the abuse Dear Leader was willing to inflict on his people. The won was devalued by 100 percent, which meant 1,000 won suddenly had the purchasing power of 10 won. (Imagine waking up to a learn that a slice of pizza costs $250.) Officials set a tight limit on how much old money could be exchanged for new, so whatever value existed within people’s paltry savings evaporated overnight. Compared to devaluation, generating quick cash by counterfeiting some other country’s more stable currency looks downright humanitarian.
The superdollar affair has a certain comic-book quality: copying the currency of the evil capitalists so you can buy cognac and missiles. (…………………)
Superdollars, and the untold billions of (electronic) dollars spent combating them could be the wake-up call that finally forces us to think more clearly about the costs of physical money. If killing all cash strikes you as a little too radical, consider for a moment what it would mean to get rid of high-denomination banknotes. Who would be most inconvenienced if Washington were to outlaw $100 and $50 bills tomorrow? Cartel bosses in Juarez, Mexico jump to mind. So do human traffickers in China and Africa, aspiring terrorists in Afghanistan, wildlife poachers, arms dealers, tax evaders, and everyday crooks who hold up mom and pop groceries. And, or course, North Korean government officials. [TIME]
It is believed that North Korea was conterfeiting up to $250 million US dollars a year and then laundering the money through casinos around the world to include Las Vegas. It was there that members of an Asian criminal syndicate were arrested in Operation Smoking Dragon laundering money through Vegas casinos. The Secret Service has undercover tape of members of this syndicate explaining how the counterfeit money was brought into China and distributed through the Russian embassy in Beijing. Prior reporting on North Korean counterfeiting also showed how the North Korean Supernotes were being openly distributed in China. Even the inter-Korean project the Geumgang Resort was being used to launder money. Another place these Asian criminal syndicates were laundering money was in Macau. It was here that the Treasury Department 4 years ago had $25 million in dirty money frozen in a small bank called Banco Delta Asia. It was estimated that just putting BDA off limits cost the Kim regime 40% of its foreign exchange. However, after North Korea’s 2006 nuclear test President George Bush agreed to unfreeze the money and do away with the financial sanctions after vehement North Korean objections to them.
The US government desperate to cut a deal with Kim Jong-il bent over backwards to return the regime’s ill gotten money, but no banks wanted to do business with North Korea; that is how dirty his money is. The US government was so desperate they asked the US Wachovia bank to launder North Korea’s money for him. Unsurprisingly Wachovia declined. So the US government was left to use the US Federal Reserve to launder his money through a Russia based bank. Even with the Federal Reserve laundering the money the Russian bank was still very hesitant about accepting the deal. Incredibly the US government went through all this hassle to launder money for Kim Jong-il and circumvent US counterfeiting laws in order to meet a demand by North Korea that was not even in the original deal. Even more incredible is the fact that the US government agreed to these demands due to a vague promise from North Korea to use the money to buy humanitarian aid. Of course they never did and instead ultimately revalued their currency to wipe out the life savings of North Koreans in order to prop up the financial health of the regime.
With the lack of a US commitment to financial sanctions and the Chinese actively allowing North Korea to distribute and transfer money through China I think Woman’s idea is actually a pretty good work around. Taking $100 and $50 notes out of circulation in the US does seem like a great way to limit the damage done by counterfeiters that would have a limited impact on the average American. Think about it, when was the last time you had $50 and $100 bills in your wallet? I can even think of the last time I had notes that big in my wallet because I use my ATM and credit card so much. Does anyone else have any better ideas on how to respond to North Korean counterfeiting?