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N. Korea uses cash couriers, false names to outwit curbs  Join our daily free Newsletter

MENAFN - Arab News - 17/02/2013

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(MENAFN - Arab News) Kim Kwang-jin says that when he worked for North Korea's state insurance company in Singapore in 2003, he stuffed 20 million into two suitcases one day and sent it to Pyongyang as a special gift for then leader Kim Jong-il.

He received a medal for that, Kim Kwang-jin said.

North Korea, sanctioned by the United States since the 1950s and later by the United Nations after its nuclear tests, has been shuffling money for decades from illicit drugs, arms and financial scams and is now more expert at hiding it to fund its weapons programs and its leaders' opulent
lifestyles. "There is tremendous difficulty identifying bank accounts," said a South Korean government source who is directly involved in yet another sanctions push in the UN Security Council after the North conducted a third nuclear test this week.

A source who has access to the top levels of government in both North Korea and China, its only major ally, told Reuters that Pyongyang was not afraid of sanctions and was considering two more nuclear tests and a rocket launch this year. "It is confident agricultural and economic reforms will boost grain harvests this year, reducing its food reliance on China," said the source.

With limited trade and natural resources, Pyongyang's revenues are heavily reliant on moneymaking scams ranging from fake 100 bills to arms sales and drugs money, according to reports by the US government. Some diplomats and officials call it "The Soprano State" after the US television series.

In 2005, 25 million of the regime's cash was frozen at Macau-based Banco Delta Asia, which was designated a "primary money laundering concern" by the US Treasury.

That case stands as practically the only public success in seizing funds from the isolated country that is now led by 30-year-old Kim Jong-un, the third of the Kim dynasty to rule. The 25 million was released after protracted negotiations led by Kim Kye-gwan, the North's long-standing negotiator with the United States, and US envoy Christopher Hill, officials present at the talks said.

Pyongyang has learned from that episode and buried its funds even deeper, said the South Korean official, who spoke on condition of anonymity.
"The bank accounts are split up a lot," the official said, meaning the money is divided into small amounts so that a freeze on one account would not greatly affect the total.

The official has tried to identify North Korean funds for years and was involved in previous sanctions pushes, although he said that identifying accounts and transactions was near impossible because of the use of fake names.

Kim Kwang-jin, now living as a defector in South Korea, said the 20 million sent to Kim Jong-il in 2003 came from insurance scams by Pyongyang's Korea National Insurance Corp (KNIC), which exaggerated claims from re-insurers and underwriters for events such as weather damage, ship and aircraft losses.

When contacted by Reuters by telephone and email, KNIC was not immediately available for comment.

Kim Kwang-jin said the money from the scams he participated in was funneled into what he termed North Korea's "royal court fund" - money for Kim Jong-il and his inner circle.

"Kim Jong-il sent a letter of thanks to the people in my company (KNIC). And some of us received presents like DVD players and blankets. I later got a medal too," said the 46-year-old.

Unlike oil-exporting Iran, which is heavily sanctioned by the United States and United Nations as well as others, North Korea's puny 50 billion economy produces few goods other than minerals and seafood sold to China. Its trade with China was put by Beijing at 5.7 billion in 2011.

The US Treasury Department's Financial Crimes Enforcement Center estimated in 2005 that North Korea may earn as much as 500 million annually from counterfeiting, and another 100 million to 200 million annually from narcotics trafficking.

In just one known example of its role as a "narco-state," a North Korean ship was raided by the Australian navy in 2003 and found to be carrying 50 million worth of heroin, according to the government in Canberra.

 






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