POTENTIAL DPRK PURCHASE OF CURRENCY PRODUCTION

S E C R E T STATE 094546

SIPDIS

SIPDIS

E.O. 12958: DECL: 07/06/2017
TAGS: PARM PREL KNNP MNUC KH KS UK
SUBJECT: POTENTIAL DPRK PURCHASE OF CURRENCY PRODUCTION
EQUIPMENT AND RELATED TECHNOLOGY

REF: A. STATE 071148

B. STATE 071889

C. BERLIN 000963

D. STATE 061051

E. BERLIN 000484

F. EDDY/MOON EMAILS FEBRUARY 27 2007

G. BERLIN 000354

H. BERLIN 000318

I. STATE 018308

J. 2006 BERLIN 002224

K. 2006 STATE 118598

L. 2006 BERLIN 1876

M. RUGGIERO/CONWAY EMAIL JUNE 21 2006

Classified By: CLASSIFIED BY ISN PDAS PATRICIA A. MCNERNEY,
REASONS: 1.4 B/D.


1. (S) Action Request: Washington requests Post to draw from
paras 7-12, as appropriate, in stressing to UK officials the
U.S. warning that the DPRK may seek currency production
equipment and technology from British companies for the
production of U.S. counterfeit currency. Request that para
12 information be delivered verbatim. SBU paras 7-11 may be
handed over as a non-paper. Washington requests post to reply
within 10 business days. End action request.


2. (C) Objectives:

-- Inform British officials of the U.S. concern that the DPRK
may seek to purchase currency production equipment,
technology, or related supplies from British companies that
it could use to counterfeit U.S. currency.

-- Explain the DPRK's current and past production and
dissemination of counterfeit U.S. currency.

-- Obtain assurance from British officials that they will
remain vigilant and use their influence and legal
authorities, if applicable, to prevent the sale or supply of
currency production equipment, technology, or related
supplies to North Korea.

End objectives.

--------------
US-German Meetings on the Drent Goebel Issue
--------------


3. (S) Background: The United States is concerned that North
Korea is seeking to procure equipment and technology suitable
for the production of counterfeit U.S. currency. North Korea
has approached Drent Goebel of Germany to purchase an
intaglio press - capable of counterfeiting U.S. currency. The
U.S. has repeatedly warned both Germany and Drent Goebel (in
Germany) that North Korea could use this equipment to produce
counterfeit U.S. currency (see refs).

4.(S) ISN PDAS McNerney led a meeting with Treasury and
Secret Service representatives on April 26 to receive an

SIPDIS
update on DPRK counterfeit U.S. currency activities and
discuss the pending sale the Drent Goebel printing press to
the DPRK. The Secret Service reiterated that the press is
capable of counterfeiting U.S. currency and recent
investigations indicate that the DPRK continues to produce
and distribute counterfeit U.S. currency. They noted that
amounts of higher denomination counterfeit U.S. currency have
become more prevalent in the United States than abroad.

5.(S) On Friday May 4, PDAS McNerney and Secret Service
Deputy Assistant Director Michael Merritt met with the German
DCM Johannes Haindl to reiterate Washington's continued
concerns that Drent Goebel may go ahead with the sale of
currency production equipment including an intaglio web-press
to North Korea. She handed over a non-paper (ref B). Haindl
reiterated previous statements by Senior German officials
that they are well aware of North Korea's long record of
counterfeiting and that the German Government could
ultimately block the export of the printing press on foreign
policy/national security grounds in the event Drent Goebel
tried to go forward with the deal. Haindl pledged that
Germany would deny the shipment if the company moved forward
with the sale, and encouraged the USG to share any specific
information it has in other channels, and promised to pass
USG concerns to appropriate ministries in Berlin.

6.(S) On May 11, Global Affairs Counselor and Global Affairs
Officer delivered a demarche to Michael Findeisen, the German
Finance Ministry's Director of the Money Laundering and
Terrorist Finance Division(ref B). Findeisen stated there is
no/no likelihood of Drent Goebel beginning production at this
point of the offset/intaglio press North Korea has sought.
He noted North Korea has not even paid the initial deposit
that would be necessary before the firm would start
production. Findeisen agreed with the importance of
continued vigilance against the possibility that the DPRK
might try to obtain the printing press through duplicitous
methods. He noted a legal agreement exists between the
German Government and Drent Goebel that the company will
inform the German Ministries of Economy and Foreign Affairs
if North Korea approaches it again to resume the order for
the printing press and also said the German Government has
the legal authority, using a provision of the Foreign Trade
and Payments Act, to prevent D
rent Goebel from exporting the printing press to North Korea.


--------------
THE DPRK COUNTERFEIT US CURRENCY THREAT
--------------


7. (SBU) Over the past several years, the U.S. Secret Service
has implemented an aggressive campaign to stop the
counterfeiting of U.S. currency by the DPRK through
disruptions in the supply of materials and equipment used to
produce counterfeit US currency.


8. (SBU) The June 2006 Interpol "Orange Alert" describes the
involvement of the government of the Democratic People's
Republic of Korea in the production and distribution of
highly deceptive counterfeit US currency. The notice says
that these counterfeit banknotes, described by some as the
"Supernotes" or "Superdollars" are distributed by DPRK
officials. These counterfeit banknotes are produced in the
same manner as U.S. currency, utilizing similar processes and
materials as U.S. currency.


9. (SBU) In addition, the US Department of Justice indicted
Sean Garland, an Irish citizen, for conspiracy and
counterfeit acts committed outside the United States and for
dealing in counterfeit obligations and securities. This
criminal indictment states that, "Quantities of the Supernote
were manufactured in and under the auspices of the government
of the Democratic People's Republic of Korea. Individuals,
including North Korean nationals acting as ostensible
government officials, engaged in the worldwide
transportation, delivery, and sale of quantities of
Supernotes."

--------------
LAW ENFORCEMENT WARNINGS TO INDUSTRY
--------------


10. (SBU) The Secret Service requested Interpol assistance in
disseminating information regarding the illicit activities of
the DPRK. Interpol responded by issuing an "Orange Alert" in
2005 and 2006 cautioning Interpol member countries about
"Supernotes" and recommending the restriction of the sale and
shipment of banknote production equipment and supplies to the
DPRK. Interpol also hosted a meeting in Lyon, France in
January 2005, for the leading companies within the banknote
industry - including Drent Goebel. At this meeting the
Secret Service presented evidence of currency counterfeiting

SIPDIS
activities attributable to the DPRK.

--------------
MEETINGS WITH DRENT GOEBEL
--------------


11. (SBU) Since late 2005, the U.S. Secret Service and U.S.
Embassy in Berlin have met several times with Drent Goebel
executives and German government officials to discuss Drent
Goebel's scheduled sale of an offset/intaglio web-press.
During meetings with Drent Goebel officials, the U.S. Secret
Service presented evidence of the DPRK's involvement in the
production and distribution of "Supernotes" and provided them
with a copy of the latest Interpol "Orange Alert". The US
subsequently requested Drent Goebel cancel the pending sale.
Requests, however, have thus far been met with assurances by
Drent Goebel that the press could be modified to prevent
misuse by the DPRK. The U.S. Secret Service has concluded
the proposed modifications to the press would be insufficient
to prevent the production of counterfeit currency by the
DPRK.


12. (S//Rel UK) Begin points for the UK

-- In light of our commitment to share as much information
with your government as possible on illicit DPRK activities,
we would like to raise concerns about North Korea's continued
efforts to acquire technology from Drent Goebel (a German
firm with headquarters in Netherlands) that is suitable for
the production of counterfeit U.S. currency.

-- We believe that North Korea's Central Bank continued to
seek currency production equipment from the German firm Drent
Goebel in late December 2006. We understand that the North
Korean Central Bank sought currency paper manufacturing
equipment and may also remain interested in purchasing a high
security printing press from Drent Goebel. Both sets of
equipment are suitable for the production of counterfeit U.S.
currency, possibly including Supernotes.

-- We believe this equipment would be a custom made device
and Drent Goebel would need to contact suppliers in at least
the UK and Germany. Thus, we are concerned that this
transaction may involve other German companies and possibly
British companies.

-- We urge the UK to take all necessary actions, according to
your national legal authorities, to prevent the sale or
transfer of any equipment or technology that may be suitable
for the counterfeiting of U.S. currency from being exported
or transshipped from or through your territories to North
Korea by companies or individuals under your legal
jurisdiction.

-- We look forward to working with you on this and other
related security matters and are prepared to provide
additional assistance as appropriate.

End points for UK.


13. Washington point of contact for follow-up information is
Michelle New, ISN/CPI, (202) 647-0186,
NewML@state.sgov.gov.


14. (U) Please slug all responses for ISN, EAP, EUR,INL and
Treasury/TFI. Please include SIPDIS in any response.
Washington appreciates Post's assistance.
RICE