He said one North Korean embassy in Eastern Europe generated US$30 million by exchanging counterfeit notes a year.
North Korea manufactures so-called supernotes or high-quality counterfeit $100 bills and hands them to embassies for laundering. "The supernotes are delivered at a certain time each year by ship or plane," he said. "An agent working at the embassy goes to a safe house and brings a box full of them."
When the bills arrive, embassy staff bundle them up into $10,000 units. They then travel to major cities in their host country to exchange it. Sometimes they are caught, but the North carefully studies the different types of punishment in different countries and gives the information to diplomats, the defector added.
Diplomats are taught not to exchange too much money at once. After the fakes are exchanged into the host country's currency, the money is exchanged again into real U.S. dollars. And diplomats do not stay long in the cities where they exchange the money. "You can get caught if you stay more than a week in one particular area," the defector said. Diplomats also frequently use casinos to launder their money.