Treasury: North Korea Still Counterfeiting, Still a Financial Pariah
The State Department and Bill Richardson may harbor illusions to the contrary, but Stuart Levey, Treasury’s Under Secretary for Terrorism and Financial Intelligence may be only man in Washington with real influence over Pyongyang. Yesterday, Levey appeared before the Senate Finance Committee to testify. A reader (thank you) forwarded me a copy of his testimony, and I excerpt the North Korea portion for you here. The key points here are that (a) North Korea continues to be an international financial pariah because of Banco Delta Asia, (b) the Secret Service continues to find more North Korean-made Supernotes, and (c) Treasury continues to investigate and pursue North Korea’s criminal activities.
(No word on whether the Secret Service is providing regular briefings to professional conspiracy theorist Kevin G. Hall.)
The key fact I take from this is that the pressure is not off. Despite State’s return of the $25 million in tainted BDA funds — something that, but for prosecutorial discretion, would have invited an indictment for money laundering — North Korea’s illicit income stream appears to remain at least partially dammed. That explains a few things, including why the regime is unable to feed its elite for the first time in recent history, and why the woes of the palace economy will probably continue as long as certain people keep whispering about more sanctions. Maybe 2007 wasn’t a lost year after all.
Confronted with North Korean conduct ranging from WMD and missile proliferation-related activities to the counterfeiting of U.S currency and other illicit financial behavior, the Treasury Department took two important public actions. First, we targeted a number of North Korean proliferation firms under E.O. 13382. Second, we acted under Section 311 of the USA PATRIOT Act to protect our financial system from abuse by Banco Delta Asia, a Macau-based bank that, among other things, knowingly allowed its North Korean clients to use the bank to facilitate illicit conduct and engage in deceptive financial practices.
Much of the real impact of these actions came from the information we made public in conjunction with the actions and the information we shared with governments and banks around the world. The private sector’s reaction was dramatic. Since the information pointed to the North Korean regime’s involvement in the illicit conduct, many of the world’s private financial institutions terminated their business relationships not only with designated entities, but with North Korean clients altogether. Banks in China, Japan, Vietnam, Mongolia, Singapore and across Europe decided that the risks associated with this business far outweighed any benefit. The result has been North Korea’s virtual isolation from the global financial system. That, in turn, put enormous pressure on the regime ““ even the most reclusive government depends on access to the international financial system. This effort was valuable both in securing the integrity of the international financial system and in providing the State Department with leverage in its diplomacy with North Korea.
In addition to these public actions, we have continued to work with the U.S. Secret Service to counteract North Korea’s counterfeiting of U.S. currency. The Secret Service is continuing to investigate North Korea’s counterfeiting activities and the high-quality counterfeit bills produced by North Korea, known as the “Supernote,” continue to surface. [Stuart Levey, Treasury Under Secretary for Terrorism and Financial Intelligence, Testimony Before the Senate Finance Committee]
Levey’s language shouldn’t give the North Koreans and their enablers in Washington any comfort, but Iranian bankers have the most reason to worry. Levey’s language elsewhere in his testimony and this recent update from Treasury’s Financial Crimes Enforcement Network (FINCEN) make it as loud as the horn of an oncoming train — Treasury is preparing to do something severe to the mullahs’ terror-tainted finances.
Although I’ve repeatedly advocated designating North Korea as a primary money laundering concern under Section 311 of the PATRIOT Act, Treasury’s talk makes Iran seem like the likelier candidate. But with North Korea’s brazen behavior of late, I wouldn’t rule out either one.