The Chosun Ilbo has obtained a copy of a savings certificate purportedly showing that North Korean regime founder Kim Il-sung deposited US$62.87 billion in the Bank of China.
The faded BOC savings certificate obtained from a North Korean source bears the name of the account holder (MR. KIM IL SUNG) and the amount of the deposit in account No. 209788 C.F 729398 on March 11, 1967.
But an international financial expert said it is probably a forgery aimed at some sort of financial scam since the North's entire GDP was $18 billion in 1967. However, the Kim dynasty's slush funds are estimated at some $4 billion. Leader Kim Jong-il spends some of the money on luxury products like Swiss watches to buy the loyalty of officials.
The source claimed to have information that there have been changes to the slush funds since Kim's son Jong-un was established as his heir. He said a new corporation has been set up to earn hard currency under Kim Jong-un's direct supervision, separately from the existing slush fund management agency that his father controls.
The regime reportedly moved most of its secret stash in Switzerland to Liechtenstein after the U.S. froze North Korean bank accounts with a deposit of $25 million in the Banco Delta Asia of Macau in September 2006. Ri Chol (75), the former North Korean ambassador to Geneva who was believed to have handled Kim senior's secret bank accounts, returned to Pyongyang in March, ending a 30-odd-year stay in Switzerland.
According to the source, the regime has recently found ways to launder money and dodge financial sanctions by the international community.
First, it moves money from Switzerland or Liechtenstein to a third country and deposits it in accounts in the name of North Korean agents who have citizenship there. Then the agents open a sham company in collaboration with local people and hide the money in the company's accounts as legal corporate capital. One businessman in Macau reportedly received a villa in Pyongyang in return for his long-term help with money laundering.
As an another way to launder money, North Koreans in China open accounts in banks there and deposit dollars they have brought from the North, disguising themselves as South Koreans. Chinese banks require North or South Korean customers to fill in just "Korea" on application forms when opening a bank account and clerks are apparently untrained to distinguish the passports of the two Koreas as both have green covers.
Alternatively the regime raises money by smuggling out gold bullion and selling them in the name of a local company. One firm in Hong Kong is said to have been especially active in that line until recently.
Kim Jong-il's slush funds are usually raised through agencies code-named Room 38, Room 39 and the 225th Bureau and an agency under the Guard Command, the source said. Room 39 has been raising slush funds since the 1970s and is headed by Jon Il-chun (69), a high-school classmate of Kim Jong-il's. Until the 1990s, the regime mainly earned hard currency through drug dealing and dollar forgery, but since the early 2000s it has apparently moved on to arms dealing.
In February Kim Jong-il reportedly told senior officials their performance would be judged by how much "loyalty money" they can raise.