North Korea Cracks Down on Counterfeiting, on the Rise as Economy Worsens

North Korea has labeled counterfeiters of the country’s currency as “traitors who are aligned with external enemies” as starving citizens forge notes worth less than a dollar to buy food and other necessities, sources told RFA.

The coronavirus pandemic added to the economic squeeze of U.S. and UN nuclear sanctions, making an already bad economy even worse. The closure of the Sino-Korean border in January 2020 and the suspension of trade with China has made it harder for North Koreans who rely on the country’s nascent market economy to support themselves.

Now with food prices skyrocketing and no way to make money by trading smuggled goods from China, many citizens are resorting to small-time counterfeiting to make ends meet.

The North Korean won has an official exchange rate of about 900 to the U.S. dollar, but it is actually worth a fraction of that.

The black-market exchange rate for the currency as of Thursday is about 5,800 won per dollar according to the Osaka-based Asia Press outlet that specializes in North Korean news. The price of a kilogram (2.2 pounds) of rice in North Korea was about 6,300 won ($1.08).

Sources told RFA’s Korean Service that the government discovered hundreds of counterfeit 5,000-won ($0.86) notes, the country’s largest denomination.

“Counterfeit bills copied by a computer printer have been discovered among local market merchants since the middle of last month and have been reported to the authorities,” a resident of the capital Pyongyang told RFA’s Korean Service.

“The central government ordered law enforcement agencies to regard making counterfeit bills as an anti-socialist crime against the government system and says strong measures should be taken against such crimes,” said the source, who requested anonymity for security reasons.

According to the source, the Pyongyang counterfeiting cases are among dozens of others nationwide.

“There are many cases of the counterfeit bills being used at marketplaces or at street food vendors during the late-night hours,” said the source.

RFA reported in September that authorities arrested two people for using fake money in local markets. In one of those arrests, the counterfeiter made purchases with the fake bills from elderly merchants at nighttime, when the notes were harder to detect.

The Pyongyang source said thousands of counterfeit bills were discovered in June at national banks after collecting money from factories and businesses, including over 100 counterfeit 5,000 won notes and 70 fake 2,000 won.

“The central government has been saying that when the public sentiment is at an all-time low due to economic difficulties, using the counterfeit bills is an unforgivable act of making public sentiment even worse, thereby helping our enemies,” said the source.

“And they emphasized that those who make or use counterfeit bills are traitors who are aligned with external enemies, so they should be tracked down and rooted out,” the source said.

Authorities in North Hamgyong province in the country’s northeast have also declared an emergency over counterfeiting, a resident told RFA.

“It is difficult to catch counterfeit bill users because they mainly target vendors who sell food on the streets near the market rather than the merchants at market stands,” said the second source, who requested anonymity to speak freely.

“People are using counterfeit money more these days because the economic situation is getting more difficult each day because of the coronavirus and the border closure. As the number of starving houses who cannot even afford food for the day goes up, some are making and using counterfeit bills as a last resort, even though they know it is a felony.”

Though North Korea is now trying to punish citizens for their small-scale counterfeiting during dire economic times, not long ago the government was notorious for forging foreign currency on a massive scale. For decades under a sophisticated counterfeiting program, Pyongyang printed almost perfect $100 bills which U.S. officials classified as “supernotes.”

Experts believe that North Korea at times printed $25 million in supernotes per year since the 1970s, but after a string of arrests in the mid-2000s, counterfeiting of notes sharply decreased.

But in 2017, AFP reported that a new supernote had been found by forgery experts in Seoul, who suspected that the notes were North Korean in origin.

Reported by Myung Chul Lee for RFA’s Korean Service. Translated by Jinha Shin. Written in English by Eugene Whong.