Latest / The Infographics Show Podcast / North Korea’s Illicit International Activities

Transcript

North Korea’s Illicit International Activities · The Infographics Show Podcast

• 0:10
  Speaker 1: You know, when I try to picture an international crime syndicate,
• 0:18
  Speaker 1: my mind just immediately defaults to the movies.
• 0:20
  Speaker 2: Oh, sure, like the glassic Hollywood.
• 0:22
  Speaker 1: Tropes, right, it's almost a cinematic reflex. At this point,
• 0:26
  Speaker 1: I picture, you know, a ruthless drug cartel hiding out
• 0:29
  Speaker 1: in some fortified jungle compound, armed to the teeth, constantly
• 0:33
  Speaker 1: looking over their.
• 0:34
  Speaker 2: Shoulders, right, trying to evade the military exactly.
• 0:37
  Speaker 1: Or I imagine a mafia family having a hushed secret
• 0:41
  Speaker 1: meeting in the back room of a dimly lit restaurant
• 0:43
  Speaker 1: in Brooklyn, bribing local cops to just you know, look
• 0:47
  Speaker 1: the other way.
• 0:48
  Speaker 2: Or maybe a group of hackers, yeah.
• 0:50
  Speaker 1: Like a shadowy group of rogue energy drink fueled hackers
• 0:54
  Speaker 1: operating out of a dark basement somewhere in eastern Europe.
• 0:57
  Speaker 1: But the common thread in all of those scenarios, fundamental
• 1:00
  Speaker 1: assumption we all make is that organized crime exists in
• 1:03
  Speaker 1: the shatters.
• 1:04
  Speaker 2: It's defined by the hiding.
• 1:06
  Speaker 1: Yes, it is inherently defined by the fact that it
• 1:08
  Speaker 1: is running, hiding and evating the authorities. But recently I
• 1:12
  Speaker 1: was going through some incredibly dense global security reports and
• 1:16
  Speaker 1: financial intelligence summaries, and I had this staggering personal realization
• 1:21
  Speaker 1: that completely flipped that entire script upside down for me.
• 1:24
  Speaker 2: I mean, it really does change your whole perspective when
• 1:27
  Speaker 2: you dig into this stuff.
• 1:28
  Speaker 1: It really does. I started thinking, what if the most sophisticated,
• 1:33
  Speaker 1: untouchable crime syndicket in the entire world doesn't have to
• 1:37
  Speaker 1: hide from the government.
• 1:38
  Speaker 2: At all, because they are the government exactly?
• 1:41
  Speaker 1: What if the crime syndicate actually is the sovereign nation.
• 1:45
  Speaker 1: What if the world's biggest mob boss isn't hiding in
• 1:48
  Speaker 1: a bunker but actually has a literal recognized seat at
• 1:52
  Speaker 1: the United Nations in New York.
• 1:54
  Speaker 2: It forces a complete rewiring of how you understand global security.
• 1:58
  Speaker 1: It really does.
• 1:58
  Speaker 2: When you are looking at a situation situation where the
• 2:00
  Speaker 2: state itself becomes the cartel, the entire traditional playbook of
• 2:04
  Speaker 2: international law enforcement basically evaporates. I mean, you can't just
• 2:08
  Speaker 2: send the police to arrest the criminals when the criminals
• 2:10
  Speaker 2: are the ones writing the.
• 2:10
  Speaker 1: Laws right or issuing the passports.
• 2:13
  Speaker 2: Or commanding the military. It's a totally different paradigm.
• 2:16
  Speaker 1: And that profound realization is the mission of today's conversation.
• 2:21
  Speaker 1: Here on beyond infographics, we are going to completely dismantle
• 2:25
  Speaker 1: everything you thought you knew about how North Korea operates.
• 2:28
  Speaker 2: That's going to be a wild ride.
• 2:30
  Speaker 1: It really is. My personal insight coming out of all
• 2:33
  Speaker 1: this reading is that we can no longer just look
• 2:35
  Speaker 1: at them as a rogue state throwing, you know, geopolitical
• 2:40
  Speaker 1: tantrums or saber rattling for food aid.
• 2:43
  Speaker 2: That's a very outdated view, right.
• 2:44
  Speaker 1: We're looking at a global, highly diversified criminal enterprise operating
• 2:50
  Speaker 1: on a scale that is honestly almost hard to comprehend.
• 2:53
  Speaker 2: We're talking about a multi billion dollars slush.
• 2:56
  Speaker 1: Fund, yes, a massive slush fund, state man dated drug cartels,
• 3:01
  Speaker 1: managed by literal government bureaucrats, and counterfeit currencies so flawless
• 3:05
  Speaker 1: it literally broke the brains of the world's best central bankers,
• 3:09
  Speaker 1: not to.
• 3:09
  Speaker 2: Mention the billion dollar cryptocurrency heists orchestrated with military precision.
• 3:14
  Speaker 1: It is an evolution unlike anything else in modern history.
• 3:17
  Speaker 2: It really is, because they haven't just ignored international law.
• 3:21
  Speaker 2: They have actively taken the traditional, respected tools of state
• 3:24
  Speaker 2: craft and weaponized them.
• 3:26
  Speaker 1: Tools like embassies and diplomatic community.
• 3:28
  Speaker 2: Exactly, and state owned commercial shipping fleets. They use all
• 3:33
  Speaker 2: of this strictly for illicit off the book's profit.
• 3:37
  Speaker 1: Now, you might be listening to this right now and thinking, well,
• 3:39
  Speaker 1: North Korea's extreme isolation means their actions don't really affect
• 3:44
  Speaker 1: my daily life.
• 3:45
  Speaker 2: It's a common misconception.
• 3:46
  Speaker 1: Yeah, you think it's a hermit kingdom on the other
• 3:48
  Speaker 1: side of the planet, entirely cut off from the global
• 3:51
  Speaker 1: internet and trade. Right, But I promise you, by the
• 3:54
  Speaker 1: time we wrap up, you'll see exactly how their shadowy,
• 3:57
  Speaker 1: invisible economy ribbels outward.
• 4:00
  Speaker 2: It touches everything.
• 4:01
  Speaker 1: It touches the global financial system, your local job markets,
• 4:04
  Speaker 1: the security of your digital assets, and even the physical
• 4:07
  Speaker 1: products you might end up buying at a corner store.
• 4:09
  Speaker 2: It's incredibly pervasive.
• 4:11
  Speaker 1: Also, just a quick housekeeping note, if you are enjoying
• 4:14
  Speaker 1: beyond infographics and finding these personal insights as mind blowing
• 4:17
  Speaker 1: as I am, please take a quick second to rate
• 4:19
  Speaker 1: the show five stars on your podcast app.
• 4:21
  Speaker 2: It makes a huge difference.
• 4:23
  Speaker 1: It genuinely helps us keep uncovering these hidden realities for you,
• 4:27
  Speaker 1: and we really really appreciate it. Okay, let's unpack this.
• 4:29
  Speaker 2: Let's do it.
• 4:30
  Speaker 1: I'll admit, for the longest time I used to view
• 4:33
  Speaker 1: North Korea's bad behavior, you know, the sudden missile tests
• 4:37
  Speaker 1: over the Sea of Japan, the aggressive theatrical rhetoric on
• 4:42
  Speaker 1: state television is just diplomatic tantrums.
• 4:45
  Speaker 2: Like a cry for attention exactly.
• 4:48
  Speaker 1: I thought it was purely a mechanism to get attention
• 4:51
  Speaker 1: or to force the international community back to the negotiating
• 4:54
  Speaker 1: table to ease sanctions.
• 4:55
  Speaker 2: A lot of people viewed it that way for decades.
• 4:57
  Speaker 1: Right, But the more I looked into the actual mechanics
• 5:00
  Speaker 1: their economy, the more I realized it's actually a cold,
• 5:03
  Speaker 1: highly calculated business model. I kept coming across this specific
• 5:07
  Speaker 1: academic term.
• 5:08
  Speaker 2: In the literature, criminal sovereignty.
• 5:10
  Speaker 1: Yes, criminal sovereignty.
• 5:12
  Speaker 2: Criminal sovereignty is really the crux of this entire phenomenon.
• 5:16
  Speaker 2: If we connect this to the bigger picture, this concept
• 5:19
  Speaker 2: is what makes North Korea entirely unique on the modern
• 5:22
  Speaker 2: world stage. How so well to really grasp it, think
• 5:25
  Speaker 2: about the Westphalian model of how a normal country is
• 5:28
  Speaker 2: supposed to operate. A normal functioning state uses its national
• 5:33
  Speaker 2: instruments of power, its localized police force, its military, its
• 5:38
  Speaker 2: judicial system, it's regulatory agencies to fight crime within its
• 5:43
  Speaker 2: borders and protect its citizens.
• 5:45
  Speaker 1: Right that is a fundamental social contract. The state has
• 5:48
  Speaker 1: the monopoly on violence and uses it to maintain order exactly.
• 5:52
  Speaker 2: That. Then on the other end of the spectrum, you
• 5:54
  Speaker 2: have your violent nonstate actors, your drug cartels, your warlords,
• 5:59
  Speaker 2: your insurgent.
• 6:00
  Speaker 1: Rebel groups, the ones hiding in the jungle.
• 6:02
  Speaker 2: Exactly, they commit massive systemic crimes to fund their survival.
• 6:06
  Speaker 2: But they're defining characteristic is that they constantly have to
• 6:09
  Speaker 2: evade state authority. They are operating in defiance of a
• 6:13
  Speaker 2: recognized government.
• 6:14
  Speaker 1: Okay, see where you're going with this, right.
• 6:16
  Speaker 2: So North Korea represents a third, entirely different category that
• 6:20
  Speaker 2: almost breaks international relations theory. It is the recognized state,
• 6:24
  Speaker 2: but it actively uses those state resources to commit crimes globally.
• 6:28
  Speaker 1: So they aren't hiding from the police, they are the police.
• 6:31
  Speaker 1: Like if a normal cartel needs to move product, they
• 6:34
  Speaker 1: have to bribe customs officials, but if North Korea needs
• 6:38
  Speaker 1: to move product, they just assign the customs official to
• 6:40
  Speaker 1: the smuggling operation.
• 6:42
  Speaker 2: It goes even deeper than that. Actually, they utilize the
• 6:45
  Speaker 2: protections afforded by international treaties to shield their criminality.
• 6:49
  Speaker 1: Wait, like diplomatic community.
• 6:51
  Speaker 2: Yes, they use official diplomatic pouches, which under the Vienna
• 6:55
  Speaker 2: Convention cannot be searched by host countries to smuggle contraband.
• 7:00
  Speaker 1: Oh wow, so you literally can't even open their bags.
• 7:02
  Speaker 2: Legally, No, you can't. And they use state owned military
• 7:06
  Speaker 2: submarines for illicit coastal drops. They use actual government ministries
• 7:11
  Speaker 2: and state run collective agricultural farms to manage illegal enterprises.
• 7:16
  Speaker 1: That is insane.
• 7:17
  Speaker 2: They use their sovereignty not to protect their citizens, but
• 7:20
  Speaker 2: as an impenetrable shield against external law enforcement interference, so
• 7:24
  Speaker 2: they can run a global.
• 7:25
  Speaker 1: Racket, which brings us to the actual nerve center of
• 7:28
  Speaker 1: this entire operation. This is another massive realization.
• 7:30
  Speaker 2: For mere central Hub.
• 7:32
  Speaker 1: Yeah, all of this global criminality isn't just happening haphazardly.
• 7:35
  Speaker 1: It isn't just rogue generals lining their own pockets on
• 7:38
  Speaker 1: the side.
• 7:39
  Speaker 2: No, it's highly organized.
• 7:40
  Speaker 1: It is directed by a highly specific, incredibly shadowy department
• 7:45
  Speaker 1: located right inside the Workers' Party Central Committee in Pyongyang.
• 7:49
  Speaker 1: It's called Office thirty.
• 7:50
  Speaker 2: Nine, though you sometimes see it translated as Bureau thirty
• 7:53
  Speaker 2: nine or Division thirty nine.
• 7:54
  Speaker 1: Right right.
• 7:55
  Speaker 2: Office thirty nine is arguably the most successful criminal organization
• 7:59
  Speaker 2: you've never heard of, was established way back in nineteen
• 8:01
  Speaker 2: seventy four by Kim Jong il.
• 8:03
  Speaker 1: So this was decades before he officially took full power
• 8:07
  Speaker 1: as the Supreme Leader after his father passed away.
• 8:09
  Speaker 2: Correct, But I think a lot of people ask why
• 8:11
  Speaker 2: why create an entire official government department dedicated to international crime?
• 8:16
  Speaker 1: Yeah, that was my question too. What is the actual
• 8:18
  Speaker 1: underlying logic there? A nation state doesn't just wake up
• 8:22
  Speaker 1: one day and decide to become a mafia for fun.
• 8:24
  Speaker 2: There has to be a structural existential reason, and it
• 8:28
  Speaker 2: comes down to regime survival and the mechanics of something
• 8:31
  Speaker 2: called a court economy, the court com Yeah, to understand
• 8:35
  Speaker 2: the why, you have to look at the history. For
• 8:37
  Speaker 2: decades following the Korean War, North Korea survived and in
• 8:41
  Speaker 2: some ways thrived on massive economic subsidies from the Soviet Union.
• 8:45
  Speaker 1: Right.
• 8:46
  Speaker 2: The Soviets provided cheap oil, fertilizer, and industrial machinery, often
• 8:50
  Speaker 2: at highly subsidized friendship prices or basically on a barter system.
• 8:54
  Speaker 1: So they were effectively a geopolitical welfare state funded by Moscow.
• 8:59
  Speaker 2: That's a very fair way to look at it. But
• 9:01
  Speaker 2: as the Cold War wound down in the late nineteen eighties,
• 9:05
  Speaker 2: and the Soviet Union eventually collapsed, those subsidies completely dried
• 9:09
  Speaker 2: up almost overnight, right basically in nineteen ninety the Soviet
• 9:13
  Speaker 2: Union transitioning into the Russian Federation essentially told North Korea
• 9:17
  Speaker 2: the free ride is over. From now on, you have
• 9:19
  Speaker 2: to pay for your imports and hard currency at global
• 9:22
  Speaker 2: world market prices.
• 9:23
  Speaker 1: And North Korea didn't exactly have a booming, globally competitive
• 9:28
  Speaker 1: export economy of legal goods to fall back on, not
• 9:31
  Speaker 1: at all, Like they couldn't just suddenly start exporting consumer
• 9:34
  Speaker 1: electronics or automobiles to make up the difference.
• 9:37
  Speaker 2: No, their's centrally planned economy was already stagnating pretty badly.
• 9:41
  Speaker 2: So suddenly the Kim regime found itself desperately needing hard
• 9:45
  Speaker 2: currency US dollars, US dollars, euros, Japanese yen, Swiss francs.
• 9:51
  Speaker 2: And they needed this cash not to feed the general
• 9:53
  Speaker 2: populace who would soon suffer through a devastating famine, but
• 9:57
  Speaker 2: to sustain that court economy we mentioned.
• 9:59
  Speaker 1: Okay, so break down the court economy for me.
• 10:01
  Speaker 2: The court economy is the localized system of wealth distribution
• 10:05
  Speaker 2: used to buy the loyalty of the elite, got it.
• 10:08
  Speaker 2: You have to keep the top military generals, the party officials,
• 10:11
  Speaker 2: and the political elite absolutely loyal to the Kim family.
• 10:14
  Speaker 2: You can't shower them with luxury goods, you know, fleets
• 10:17
  Speaker 2: of Mercedes, ben Sedan's, high end Swiss watches, fine French Konyaks,
• 10:22
  Speaker 2: flat screen televisions, your grip.
• 10:24
  Speaker 1: On power weekends, and the risk of a military coup
• 10:26
  Speaker 1: skyrockets exactly.
• 10:27
  Speaker 2: Furthermore, they needed billions in untraceable cash to fund their
• 10:31
  Speaker 2: clandestine nuclear weapons and ballistic missile programs, which are essential
• 10:35
  Speaker 2: for their deterrent strategy.
• 10:36
  Speaker 1: So my personal insight here was comparing it to organized
• 10:40
  Speaker 1: crime dynamics. It's basically like a mafi don keeping his
• 10:44
  Speaker 1: capos and lieutenants happy with thick envelopes of cash. That's
• 10:47
  Speaker 1: a great analogy, and luxury gifts just to ensure they
• 10:50
  Speaker 1: don't turn on him and take his territory. Except in
• 10:53
  Speaker 1: this case, the envelopes are being bought using illicit funds
• 10:57
  Speaker 1: generated by an entire state apparatus in.
• 10:59
  Speaker 2: The territory is an entire country exactly. That captures the
• 11:03
  Speaker 2: dynamic perfectly, but with the added complexity of state level
• 11:06
  Speaker 2: bureaucracy office thirty nine essentially functions as the keeper of
• 11:11
  Speaker 2: the Supreme leader's personal off the books cash box.
• 11:14
  Speaker 1: So it's totally separate from the normal government budget.
• 11:16
  Speaker 2: It is entirely separate from the official state budget that
• 11:19
  Speaker 2: funds normal government functions like schools or infrastructure.
• 11:22
  Speaker 1: Wow.
• 11:23
  Speaker 2: To execute this massive wealth generation strategy, Office thirty nine
• 11:26
  Speaker 2: controls an absolute maze of state run front companies around
• 11:30
  Speaker 2: the world.
• 11:31
  Speaker 1: Got right about some of these.
• 11:32
  Speaker 2: Yeah, you have entities like the day Song General Trading Corporation,
• 11:36
  Speaker 2: which handles international procurement and heavy finance.
• 11:39
  Speaker 1: Right.
• 11:39
  Speaker 2: Then you have groups like Zawquang Trading, which acted as
• 11:43
  Speaker 2: a major front for decades in places like Macaw.
• 11:46
  Speaker 1: And on paper, these just look like normal businesses.
• 11:48
  Speaker 2: Right, totally normal. They look like slightly boring import export businesses.
• 11:52
  Speaker 2: They have offices, they have corporate letterheads, they have regular
• 11:55
  Speaker 2: bank accounts, but.
• 11:57
  Speaker 1: Their true singular function is to funnel billions of dollars
• 12:02
  Speaker 1: in illicit profits directly back to the regime's leadership in Pyongyang.
• 12:06
  Speaker 2: That is their only real purpose.
• 12:08
  Speaker 1: Okay, here's where it gets really interesting and frankly a
• 12:12
  Speaker 1: little bit terrifying.
• 12:13
  Speaker 2: Oh I know where you're going with this.
• 12:14
  Speaker 1: If your primary existential problem as a regime is that
• 12:18
  Speaker 1: you desperately need hard cash, specifically physical United States dollars,
• 12:24
  Speaker 1: to pay off your elites and buy weapons parts. The
• 12:26
  Speaker 1: most direct, audacious route is to just print it yourself.
• 12:30
  Speaker 2: Just cut out the middle man entirely exactly.
• 12:32
  Speaker 1: I was looking into the history of physical counterfeiting, and
• 12:34
  Speaker 1: I was an absolute shock when I learned about the
• 12:36
  Speaker 1: existence of the supernote.
• 12:38
  Speaker 2: Ah, the supernote, it is a legendary piece of forensic
• 12:41
  Speaker 2: history in the world of financial security. It refers to
• 12:45
  Speaker 2: a specific counterfeit, one hundred dollars bill of such breath
• 12:49
  Speaker 2: taking unprecedented perfection that it completely baffled global law enforcement
• 12:55
  Speaker 2: and the US Secret Service for literally decades.
• 12:59
  Speaker 1: And when I say counter fit, I really want you,
• 13:01
  Speaker 1: the listener, to completely erase the mental image of some
• 13:05
  Speaker 1: small time criminal in a damp basement with a high
• 13:08
  Speaker 1: end laser.
• 13:09
  Speaker 2: Printer right washing one dollar bill.
• 13:11
  Speaker 1: Yeah, bleaching ones in printing hundreds. This was something entirely different.
• 13:15
  Speaker 1: This was beyond the capability of any traditional criminal organization
• 13:18
  Speaker 1: on Earth.
• 13:19
  Speaker 2: This was industrial scale, state sponsored forgery. The United States
• 13:23
  Speaker 2: government naturally takes immense pride and invests billions in the
• 13:27
  Speaker 2: security of its currency.
• 13:28
  Speaker 1: It's the reserve currency of the world.
• 13:30
  Speaker 2: Its integrity is a matter of profound national security. But
• 13:34
  Speaker 2: North Korea took that as a challenge. They threw the
• 13:36
  Speaker 2: entire weight of their state, scientific and industrial resources at
• 13:40
  Speaker 2: defeating those security measures.
• 13:42
  Speaker 1: And they built a whole facility for this.
• 13:43
  Speaker 2: They did. Intelligence agencies eventually tracked the production to a
• 13:47
  Speaker 2: facility known as Plant sixty two in the city of Pyongsong,
• 13:51
  Speaker 2: just north of yom Yang.
• 13:52
  Speaker 1: Plant sixty two.
• 13:53
  Speaker 2: This wasn't a back alley print shop. This was a
• 13:55
  Speaker 2: highly secure, militarized industrial printing facility, nor reserved for printing
• 14:01
  Speaker 2: their own domestic currency.
• 14:03
  Speaker 1: The mechanical details of how they pulled this off are
• 14:06
  Speaker 1: just mine numbing. I went down the total rabbit hole
• 14:08
  Speaker 1: on this. Let's start with the paper itself.
• 14:11
  Speaker 2: The paper is incredibly difficult to fake, right because US
• 14:15
  Speaker 2: currency isn't actually made of normal paper.
• 14:17
  Speaker 1: You can't just buy it at an office supply store.
• 14:19
  Speaker 2: No, it's a very specific, highly proprietary blend of seventy
• 14:23
  Speaker 2: five percent cotton and twenty five percent linen.
• 14:26
  Speaker 1: And normally that blend is exclusively manufactured by one specific
• 14:30
  Speaker 1: company in Massachusetts, craning company.
• 14:32
  Speaker 2: And their supply chain is locked down tighter than a
• 14:35
  Speaker 2: military base. You can't just call them up and order
• 14:37
  Speaker 2: a few tons of currency paper.
• 14:39
  Speaker 1: So what did North Korea do well?
• 14:41
  Speaker 2: Because they couldn't just illicitly purchase the paper on the
• 14:43
  Speaker 2: open market, they had to entirely reverse engineer it from scratch.
• 14:47
  Speaker 2: They utilized top state temists, paper manufacturers, and agricultural experts
• 14:52
  Speaker 2: to recreate the exact chemical composition, the precise weight, and
• 14:56
  Speaker 2: most importantly, the tactile properties.
• 14:59
  Speaker 1: That specifics, nap and feel of a genuine US bill exactly.
• 15:03
  Speaker 2: But achieving the correct paper is only the foundational step.
• 15:07
  Speaker 2: To print a genuine, high quality US hundred dollars bill,
• 15:11
  Speaker 2: you need something called an intalio printing press.
• 15:14
  Speaker 1: And from what I read, an intalio press isn't just
• 15:17
  Speaker 1: a big copy machine, not at all. These are massive,
• 15:20
  Speaker 1: multimillion dollar, highly restricted pieces of heavy machinery. They work
• 15:25
  Speaker 1: by engraving the ink directly into the paper under immense
• 15:28
  Speaker 1: crushing pressure.
• 15:29
  Speaker 2: That's what gives genuine bills that slightly raised, textured feel.
• 15:34
  Speaker 2: When you run your fingernail over the portrait of Benjamin.
• 15:37
  Speaker 1: Franklin right, you can literally feel the ink.
• 15:39
  Speaker 2: It requires tons of physical pressure per square inch. Standard
• 15:43
  Speaker 2: commercial lithographic or offset printing simply cannot replicate the three
• 15:48
  Speaker 2: dimensional depth of intalio printing, So how do they get one? Somehow,
• 15:51
  Speaker 2: North Korea managed to acquire these highly restricted inalio presses,
• 15:55
  Speaker 2: likely through complex networks of shell companies in Europe.
• 15:58
  Speaker 1: That is wild.
• 15:59
  Speaker 2: But they didn't stop there. They perfectly replicated the highly
• 16:02
  Speaker 2: guarded color shifting magnetic inks like the ink on.
• 16:05
  Speaker 1: The bottom right corner of the one hundred dollar bill.
• 16:07
  Speaker 2: Yes, the ink that changes from green to black or
• 16:11
  Speaker 2: copper to green when you tilt the bill in the light.
• 16:13
  Speaker 1: Mailed that too, flawlessly.
• 16:15
  Speaker 2: They flawlessly integrated the micro printed polymer security threads that
• 16:19
  Speaker 2: run vertically through the paper, which glow under UV light.
• 16:23
  Speaker 2: They even perfectly recreated the tiny red and blue synthetic
• 16:27
  Speaker 2: security fibers that are randomly embedded deep within the pulp
• 16:30
  Speaker 2: of the bill itself.
• 16:31
  Speaker 1: It is terrifyingly impressive. They essentially built a perfect mirror
• 16:36
  Speaker 1: image of the US Bureau of Engraving and Printing. They
• 16:39
  Speaker 1: really did, and this leads to a brilliant, almost philosophical
• 16:43
  Speaker 1: concept that completely shielded North Korea from consequence for years.
• 16:48
  Speaker 1: It's what intelligence analysts call the quality trap.
• 16:51
  Speaker 2: The quality trap is a fascinating psychological phenomenon in law
• 16:54
  Speaker 2: enforcement and intelligence analysis.
• 16:56
  Speaker 1: Tell me about it.
• 16:57
  Speaker 2: For a very long time. In the late night teen
• 17:00
  Speaker 2: eighties and nineteen nineties, when these flawless supernotes started showing
• 17:03
  Speaker 2: up in bank vaults in Asia and Europe, authorities simply
• 17:06
  Speaker 2: refused to believe that an isolated, impoverished nation like North
• 17:09
  Speaker 2: Korea could possibly possess the technological sophistication to produce them.
• 17:14
  Speaker 1: They just assumed it had to be someone else exactly.
• 17:16
  Speaker 2: The counterfeits were so flawless, so technologically advanced, that Western
• 17:21
  Speaker 2: experts assumed they had to be coming from a much
• 17:23
  Speaker 2: more advanced adversary like who. There are wild theories that
• 17:28
  Speaker 2: it was the Iranian government, or the Syrian government, or
• 17:30
  Speaker 2: perhaps a rogue, highly funded faction within a developed intelligence
• 17:34
  Speaker 2: agency like the CIA itself running and off the books operation.
• 17:38
  Speaker 1: So the quality of the crime actually provided North Korea
• 17:41
  Speaker 1: with plausible deniability precisely because the fake bills were too good,
• 17:47
  Speaker 1: nobody believed the North Koreans made them. It's like a
• 17:50
  Speaker 1: bank robber getting away because the vault was blown open
• 17:53
  Speaker 1: with such precision that the police assume it must have
• 17:55
  Speaker 1: been an inside job by the vault manufacturer.
• 17:57
  Speaker 2: That psychological blind spot gave the Kimri decades of operational cover.
• 18:02
  Speaker 2: It allowed them to quietly flood the global market with
• 18:05
  Speaker 2: these bills, generating hundreds of millions, if not billions, of
• 18:09
  Speaker 2: dollars in pure profit for Office thirty nine.
• 18:11
  Speaker 1: But printing the money is only half the battle. You
• 18:14
  Speaker 1: can't just spend a million faked dollars at a grocery
• 18:16
  Speaker 1: store in Piogne.
• 18:17
  Speaker 2: No, you have to get it into the global financial
• 18:19
  Speaker 2: system right.
• 18:20
  Speaker 1: And the ways they actually laundered and distributed these supernotes
• 18:23
  Speaker 1: were just as bizarre and elaborate as how they printed them.
• 18:26
  Speaker 1: I came across this incredibly surreal true story of a
• 18:30
  Speaker 1: man named Sean Garland.
• 18:32
  Speaker 2: Oh the Sean Garland cases wild, it really is.
• 18:35
  Speaker 1: Garland was a prominent leader in the official Irish Republican Army,
• 18:39
  Speaker 1: the IRA, over in Ireland, and somehow this Irish paramilitary
• 18:43
  Speaker 1: leader ends up running a massive distribution ring moving North
• 18:46
  Speaker 1: Korean supernotes across Eastern Europe, Russia and the UK. I
• 18:51
  Speaker 1: had to pause and ask myself, how on earth does
• 18:53
  Speaker 1: a Marxist Leninist regime in East Asia team up with
• 18:57
  Speaker 1: an Irish paramilitary group.
• 18:58
  Speaker 2: It sounds like a geopolitical but it makes perfect cynical
• 19:02
  Speaker 2: sense when you understand how transnational criminal networks operate. North
• 19:06
  Speaker 2: Korea needed people with existing battle tested smuggling networks to
• 19:10
  Speaker 2: move the physical bolt cash into the legitimate banking system.
• 19:14
  Speaker 1: And the ira certainly had those networks exactly.
• 19:17
  Speaker 2: During the Cold War, North Korea had established diplomatic and
• 19:21
  Speaker 2: ideological ties with various anti Western and Marxist leaning groups
• 19:25
  Speaker 2: around the world, including factions of the ira AH. When
• 19:29
  Speaker 2: the Cold War ended, those ideological ties morphed into purely
• 19:34
  Speaker 2: transactional criminal partnerships. Garland allegedly visited the North Korean embassy
• 19:39
  Speaker 2: in Moscow, which was a major hub for their illicit activities. Naturally,
• 19:43
  Speaker 2: he secured the supernotes there and utilized his existing underground
• 19:47
  Speaker 2: networks in Ireland and the UK to quietly exchange the
• 19:50
  Speaker 2: fake dollars for legitimate pounds or euros at exchange houses.
• 19:54
  Speaker 1: It's the ultimate underworld crossover, it really is. And then
• 19:58
  Speaker 1: for even larger scale laundering, there was Macare. Macaw was
• 20:01
  Speaker 1: this tiny vibrant territory near Hong Kong, famous for its
• 20:05
  Speaker 1: massive casinos and at the time it's incredibly loose financial regulation.
• 20:09
  Speaker 2: A launderer's paradise exactly.
• 20:11
  Speaker 1: For a long time, it served as North Korea's primary
• 20:13
  Speaker 1: golden goose money laundering hub. Specifically, there was a bank
• 20:17
  Speaker 1: called Bonco Delta Asia.
• 20:19
  Speaker 2: Right the BDA.
• 20:20
  Speaker 1: The setup was incredibly brazen. I read accounts of how
• 20:23
  Speaker 1: North Korean operatives carrying official government diplomatic passports would literally
• 20:28
  Speaker 1: just walk into the bank carrying briefcases and heavy suitcases
• 20:32
  Speaker 1: completely stuffed with millions of dollars in fake one hundred
• 20:36
  Speaker 1: dollars bills.
• 20:37
  Speaker 2: He just walked right up to the teller.
• 20:39
  Speaker 1: Yeah, they would deposit them into accounts controlled by their
• 20:42
  Speaker 1: front companies like Zawkwine Trading.
• 20:45
  Speaker 2: And this is where the weaponization of sovereignty comes back
• 20:48
  Speaker 2: into play again. Because they had diplomatic status, customs officials
• 20:51
  Speaker 2: at the airport in Macau couldn't legally search their luggage.
• 20:55
  Speaker 1: They had a literal free pass to move contraband across borders.
• 20:59
  Speaker 2: Once those supers were deposited into Banco Delta Asia, the
• 21:02
  Speaker 2: physical fake cash was essentially clean. The bank accepted the deposit,
• 21:08
  Speaker 2: credited the account, and Suddenly that fake paper was transformed
• 21:12
  Speaker 2: into clean, legitimate digital funds.
• 21:14
  Speaker 1: Funds that could be electronically transferred anywhere in the global
• 21:17
  Speaker 1: financial system to buy luxury goods or weapons components.
• 21:21
  Speaker 2: It was a perfectly closed loop of illicit finance sanctioned
• 21:24
  Speaker 2: by a bank that turned a blind eye.
• 21:26
  Speaker 1: I really want you, the listener, to pause and think
• 21:29
  Speaker 1: about the implications of this for a second. Have you
• 21:32
  Speaker 1: ever held a one hundred dollars bill up to the
• 21:35
  Speaker 1: light to check for that little watermark of Benjamin Franklin's face.
• 21:39
  Speaker 2: Most people have?
• 21:40
  Speaker 1: Or have you ever run your thumb over the collar
• 21:43
  Speaker 1: of his jacket to feel the ridges of the ink
• 21:46
  Speaker 1: to make sure you weren't getting scammed?
• 21:47
  Speaker 2: Right? It was a common habit.
• 21:49
  Speaker 1: Imagine knowing that every single security feature you rely on,
• 21:53
  Speaker 1: features designed by the most powerful government on earth, was
• 21:57
  Speaker 1: perfectly slawlessly replicated by a government run factory on the
• 22:01
  Speaker 1: other side of the world, printed by state workers doing
• 22:04
  Speaker 1: their nine to five jobs.
• 22:05
  Speaker 2: It completely shatters your implicit trust in the physical concept
• 22:09
  Speaker 2: of money.
• 22:10
  Speaker 1: It really does.
• 22:11
  Speaker 2: And that profound loss of trust, that systemic threat to
• 22:14
  Speaker 2: the integrity of the US dollar, is precisely why the
• 22:17
  Speaker 2: US government eventually had to bring the hammer down. They
• 22:20
  Speaker 2: couldn't allow a rogue state to indefinitely counterfeit the world's
• 22:23
  Speaker 2: reserve currency.
• 22:24
  Speaker 1: Right. Eventually, the sheer volume of supernotes and the undeniable
• 22:28
  Speaker 1: intelligence pointing back to Pyongyang triggered a massive, coordinated crackdown.
• 22:32
  Speaker 2: In two thousand.
• 22:33
  Speaker 1: Yeah, in two thousand and five, the US Treasury Department
• 22:36
  Speaker 1: utilized a specific tool, section three to eleven of the
• 22:39
  Speaker 1: Patriot Act, to designate Banco Delta Asia as a primary
• 22:43
  Speaker 1: money laundering concern.
• 22:45
  Speaker 2: That was a huge move.
• 22:46
  Speaker 1: It was a financial death sentence for the bank. It
• 22:49
  Speaker 1: effectively froze millions of dollars of North Korean assets overnight
• 22:53
  Speaker 1: and sent a chilling message to every other global bank. Yeah,
• 22:56
  Speaker 1: if you touch North Korean money, you will be entirely
• 22:59
  Speaker 1: cut off from the US financial system, which.
• 23:01
  Speaker 2: Is something no international bank can afford exactly.
• 23:04
  Speaker 1: But this raises a critical question. If you are a
• 23:07
  Speaker 1: criminal state and your absolute primary cash pipeline, printing fake dollars,
• 23:12
  Speaker 1: gets choked off by international sanctions, what do you do?
• 23:15
  Speaker 2: Do you give up and reform your economy right now?
• 23:18
  Speaker 1: You pivot. You transition from forging physical cash to moving
• 23:22
  Speaker 1: high margin physical contraband that doesn't need to touch a
• 23:25
  Speaker 1: bank account until it's already sold on the black market.
• 23:27
  Speaker 2: Yes, when the formal banking routes became too toxic and risky,
• 23:31
  Speaker 2: North Korea had to rely on physical products that generated
• 23:34
  Speaker 2: massive profit margins but could be sold entirely outside the
• 23:38
  Speaker 2: formal financial system.
• 23:39
  Speaker 1: And the most obvious and lucrative answer to that problem
• 23:43
  Speaker 1: was narcotics.
• 23:44
  Speaker 2: Unfortunately.
• 23:44
  Speaker 1: Yeah, this was another deeply unsettling personal insight for me.
• 23:53
  Speaker 1: As I dug into the history, I was reading first
• 23:55
  Speaker 1: hand accounts from international aid workers and NGEO representatives who
• 24:00
  Speaker 1: went into North Korea during the devastating famines of the
• 24:03
  Speaker 1: mid to late nineteen nineties.
• 24:04
  Speaker 2: A horrific period.
• 24:06
  Speaker 1: The country was starving, millions were dying of malnutrition, but
• 24:10
  Speaker 1: these aid workers kept noticing these large tracts of incredibly fertile, unfarmed.
• 24:15
  Speaker 2: Land in the middle of a famine.
• 24:17
  Speaker 1: Yeah, and when they asked the local government officials about it,
• 24:20
  Speaker 1: the officials used the term pomeo.
• 24:22
  Speaker 2: Right.
• 24:22
  Speaker 1: The aid workers, relying on translators, initially thought this was
• 24:25
  Speaker 1: just a standard Korean agricultural term for fallow land, you know,
• 24:29
  Speaker 1: land that is resting between crop rotations to regain its nutrients.
• 24:33
  Speaker 1: What it wasn't It wasn't at all. As intelligence eventually revealed,
• 24:37
  Speaker 1: Pomong actually designated state mandated plots specifically reserved by the
• 24:41
  Speaker 1: government for growing opium poppies.
• 24:44
  Speaker 2: It highlights the utter ruthlessness of the regime's priorities. I mean,
• 24:48
  Speaker 2: while the country was experiencing a catastrophic, biblical scale famine,
• 24:52
  Speaker 2: and while they were desperately begging for international food aid
• 24:55
  Speaker 2: to feed their citizens, the state apparatus was deliberately dedicatedaing
• 25:00
  Speaker 2: prime agricultural land to cultivating narcotics for export.
• 25:04
  Speaker 1: And it wasn't just the allocation of land they were
• 25:06
  Speaker 1: utilizing their captive population. Oh absolutely, they were pulling school
• 25:10
  Speaker 1: children and forced youth the labor brigades out of their
• 25:13
  Speaker 1: classes to work the fields, harvest the poppy step and
• 25:16
  Speaker 1: meet the state's strict opium production quotas.
• 25:20
  Speaker 2: It wasn't a cartel paying desperate farmers, it was state
• 25:22
  Speaker 2: sponsored drug farming on a massive, mandatory industrial scale.
• 25:27
  Speaker 1: What's fascinating here is the sheer, logistical and conceptual nightmare
• 25:31
  Speaker 1: this presents for international law enforcement agencies like the DEA
• 25:35
  Speaker 1: or Interpol.
• 25:36
  Speaker 2: Oh, it's unprecedented, Like when you.
• 25:38
  Speaker 1: Were fighting a traditional drug cartel in Columbia or Mexico,
• 25:42
  Speaker 1: you are trying to intercept shipments that are being actively
• 25:44
  Speaker 1: hidden from the local government. The local government, however corrupt,
• 25:48
  Speaker 1: is ostensibly on your side.
• 25:51
  Speaker 2: Right, they are at least pretending to fight them.
• 25:53
  Speaker 1: But how do you fight a cartel when the cartel
• 25:55
  Speaker 1: is the sovereign government.
• 25:56
  Speaker 2: You really can't using traditional methods. North Korea doesn't have
• 26:00
  Speaker 2: to hide its drug labs in the jungle. They processed
• 26:03
  Speaker 2: the raw opium into high grade heroin and eventually synthesize
• 26:06
  Speaker 2: industrial quantities of crystal methamphetamine right inside state run official
• 26:11
  Speaker 2: pharmaceutical factories.
• 26:13
  Speaker 1: And then for the distribution phase, they once again leveraged
• 26:16
  Speaker 1: their ultimate untouchable weapon, snate sovereignty. Yes, they actually used
• 26:23
  Speaker 1: their official diplomatic core to traffic the drugs. I was
• 26:26
  Speaker 1: reading through these historical incident reports, and the anecdotes are wild.
• 26:30
  Speaker 1: They read like rejected scripts for a spy comedy, except
• 26:33
  Speaker 1: they're entirely real.
• 26:34
  Speaker 2: Some of the stories are just unbelievable, like as.
• 26:36
  Speaker 1: Far back as nineteen seventy seven, the entire country of
• 26:39
  Speaker 1: Venezuela actually expelled the entire North Korean diplomatic mission from
• 26:43
  Speaker 1: Caracas because they caught them red handed trafficking illicit drugs
• 26:47
  Speaker 1: to fund their embassy operations.
• 26:49
  Speaker 2: And that was hardly an isolated incident. What's fascinating here
• 26:53
  Speaker 2: is the pattern. There was a notorious case in nineteen
• 26:56
  Speaker 2: ninety eight where Egyptian police arrested a North Korean dipl
• 27:00
  Speaker 2: and Cairo who was trying to smuggle five hundred thousand
• 27:03
  Speaker 2: tablets of a powerful date raped drug.
• 27:06
  Speaker 1: Into Egypt half a million tablets.
• 27:08
  Speaker 2: Russian authorities in the border regions have repeatedly arrested North
• 27:12
  Speaker 2: Korean diplomats caught holding kilos of cocaine and heroin. The
• 27:16
  Speaker 2: diplomats were essentially acting as heavily armed immune drug mules.
• 27:20
  Speaker 1: But eventually, even for a rogue state, getting your own
• 27:23
  Speaker 1: official diplomats repeatedly arrested on the global stage becomes a
• 27:27
  Speaker 1: bad look.
• 27:27
  Speaker 2: It draws way too much attention.
• 27:29
  Speaker 1: So displaying that adaptability we talked about, they adapted. They
• 27:32
  Speaker 1: realized they didn't need to do the street level distribution themselves.
• 27:35
  Speaker 2: They outsourced.
• 27:35
  Speaker 1: They started outsourcing the heavy lifting to actual established organized
• 27:39
  Speaker 1: crime syndicates. They partnered with the Yakuza in Japan, the
• 27:43
  Speaker 1: Russian mafia in Vladivostok, and the Chinese triads across the border.
• 27:47
  Speaker 2: And again the delivery mechanisms are straight out of a
• 27:50
  Speaker 2: Tom Clancy novel.
• 27:51
  Speaker 1: Oh yeah, they would use state owned commercial cargo ships
• 27:55
  Speaker 1: or even military submarines to execute massive drug drops at sea.
• 27:59
  Speaker 1: To these indicate, there was this incredibly famous, highly documented
• 28:03
  Speaker 1: incident involving a North Korean state owned commercial freighter called
• 28:07
  Speaker 1: the pong Su.
• 28:08
  Speaker 2: The pong Su incident is a classic case study.
• 28:11
  Speaker 1: In two thousand and three, this massive cargo ship was
• 28:14
  Speaker 1: spotted loitering off the southern coast of Australia under the
• 28:17
  Speaker 1: cover of darkness in heavy seas. The ship literally launched
• 28:21
  Speaker 1: a small dinghy to deliver one hundred and seventy four
• 28:24
  Speaker 1: pounds of street ready pure heroin directly onto an Australian
• 28:28
  Speaker 1: beach where local syndicate members were waiting to receive it.
• 28:31
  Speaker 2: The pong Su incident perfectly highlights the unique value proposition
• 28:34
  Speaker 2: that North Korea offers to international crime synecas if you
• 28:38
  Speaker 2: are the Yakuza or an Australian biker gang, partnering with
• 28:41
  Speaker 2: North Korea is a dream scenario where is that well,
• 28:44
  Speaker 2: it gives you access to a massive, highly reliable supply
• 28:47
  Speaker 2: of exceptionally high purity and narcotics produced in an entirely
• 28:50
  Speaker 2: enforcement free environment.
• 28:52
  Speaker 1: Oh, because the military is guarding the lab exactly.
• 28:54
  Speaker 2: You don't have to worry about the police raiding the
• 28:56
  Speaker 2: lab because the lab is guarded by the North Korean military.
• 29:00
  Speaker 2: For North Korea, outsourcing the last mile of distribution to
• 29:04
  Speaker 2: the Yakuza gives them plausible deniability.
• 29:07
  Speaker 1: I can just claim the ship was hijacked or that.
• 29:09
  Speaker 2: The crew went rogue. It gives them instant access to
• 29:11
  Speaker 2: wholesale distribution networks without having to risk their own government
• 29:14
  Speaker 2: personnel in foreign jurisdictions.
• 29:17
  Speaker 1: Okay, so they are moving metric tons of heroin and
• 29:19
  Speaker 1: high grade crystal meth. That makes perfect ruthless sense from
• 29:24
  Speaker 1: a criminal profits standpoint. Drugs are highly addictive and extremely lucrative.
• 29:29
  Speaker 2: Absolutely.
• 29:30
  Speaker 1: But then as I kept reading into Office thirty nine portfolio,
• 29:33
  Speaker 1: I came across another major pillar of their smuggling empire,
• 29:37
  Speaker 1: and initially it seemed surprisingly mundane.
• 29:41
  Speaker 2: Counterfeit cigarettes.
• 29:42
  Speaker 1: Counterfeit cigarettes, And let me throw a bit of my
• 29:44
  Speaker 1: own skepticism in here. When I first read this, my
• 29:47
  Speaker 1: immediate thought was why cigarettes?
• 29:49
  Speaker 2: It seems small time?
• 29:50
  Speaker 1: Yeah, why would a rogue nuclear armed nation bother running
• 29:54
  Speaker 1: a global scam printing fake packs of marlboroughs? It just
• 29:59
  Speaker 1: seems so low rent, so petty, compared to printing perfect
• 30:03
  Speaker 1: hundred dollars bills or running military submarines full of heroin.
• 30:06
  Speaker 2: It does sound significantly less glamorous than a submarine drop
• 30:09
  Speaker 2: will grant you that, But when you break down the
• 30:11
  Speaker 2: actual economics of counterfeit cigarettes, you realize it's actually a
• 30:15
  Speaker 2: stroke of absolute criminal genius. Really, you have to look
• 30:19
  Speaker 2: at the risk to reward ratio. According to intelligence estimates
• 30:23
  Speaker 2: and custom seizures, it costs North Korea roughly seventy thousand
• 30:26
  Speaker 2: dollars to produce and pack a standard forty foot maritime
• 30:30
  Speaker 2: shipping container full of counterfeit.
• 30:32
  Speaker 1: Marlborough cigarettes oka seventy k.
• 30:34
  Speaker 2: That includes the fake tobacco, the cardboard that printing everything.
• 30:37
  Speaker 2: But once that shipping container is successfully smuggled into a
• 30:40
  Speaker 2: Western country, say the United States or a European port,
• 30:44
  Speaker 2: and those fake packs are sold on the street or
• 30:46
  Speaker 2: in shady bodegas, they completely bypass all the heavy local
• 30:49
  Speaker 2: and federal taxes and duties that normally make cigarettes so expensive.
• 30:53
  Speaker 1: Right, taxes are a huge part of the cost of cigarettes. Yeah.
• 30:55
  Speaker 2: Huge. So that single seventy thousand dollars container yields anywhere
• 31:01
  Speaker 2: from three to four million dollars in pure street profit.
• 31:04
  Speaker 1: Wow, seventy thousand dollars to produce yielding four million dollars
• 31:10
  Speaker 1: in return. That is a staggering markup.
• 31:12
  Speaker 2: It's an astronomical return on investment. The overhead is incredibly low. Remember,
• 31:17
  Speaker 2: they already possessed the highly advanced industrial printing capability from
• 31:21
  Speaker 2: their currency operations. If you can print a perfect supernote,
• 31:25
  Speaker 2: printing a fake cardboard Marlborough box with the right red
• 31:28
  Speaker 2: chevron is absolute child's play. That makes total sense, and crucially,
• 31:31
  Speaker 2: from a strategic standpoint, the legal penalties for getting caught
• 31:35
  Speaker 2: smuggling cigarettes are incredibly light compared to the penalties for
• 31:38
  Speaker 2: smuggling heroin or weapons.
• 31:40
  Speaker 1: If port customs officials find a container of fake marlboroughs,
• 31:44
  Speaker 1: what do they do?
• 31:45
  Speaker 2: They usually just confiscate it and burn it. It rarely
• 31:47
  Speaker 2: triggers an international diplomatic crisis, and it certainly doesn't trigger
• 31:51
  Speaker 2: military retaliation.
• 31:52
  Speaker 1: From a logistics standpoint, it has to be so much
• 31:54
  Speaker 1: easier to move. You don't need a stealthy submarine or
• 31:58
  Speaker 1: a midnight dinghy drop.
• 31:59
  Speaker 2: No, just put the container on a standard commercial cargo ship,
• 32:03
  Speaker 2: mix it in with millions of other legal shipping containers
• 32:06
  Speaker 2: moving across the Pacific.
• 32:08
  Speaker 1: And you just rely on the fact that customs agents
• 32:10
  Speaker 1: can only physically inspect a tiny fraction of global shipping.
• 32:15
  Speaker 1: It's hiding in plain.
• 32:15
  Speaker 2: Sight precisely to be clear, it is the perfect crime
• 32:19
  Speaker 2: of scale. It is an incredibly high margin, exceptionally low
• 32:23
  Speaker 2: risk revenue stream that quietly pumps millions upon millions of
• 32:27
  Speaker 2: dollars directly back into Office thirty nine s coffers to
• 32:30
  Speaker 2: keep the regime afloat.
• 32:32
  Speaker 1: So what does this all mean? We need to take
• 32:34
  Speaker 1: a step back here, good idea. We've talked about the
• 32:36
  Speaker 1: mechanics of fake hundred dollars bills, the audacity of heroin
• 32:39
  Speaker 1: dropped on Australian beaches, and the surprising economics of containers
• 32:43
  Speaker 1: full of fake Marlboroughs. It's very easy to listen to
• 32:46
  Speaker 1: all this and view it as just a list of fascinating,
• 32:48
  Speaker 1: isolated true crime stories.
• 32:50
  Speaker 2: But it's much bigger than that.
• 32:51
  Speaker 1: Yes, my big takeaway is that we have to link
• 32:54
  Speaker 1: these localized ciscal crimes back to the broader picture of
• 32:58
  Speaker 1: global security and stability. It's not just about the fake
• 33:01
  Speaker 1: money sitting in a vault or the cheap cigarette sold
• 33:04
  Speaker 1: at a corner store. It's about what that money ultimately
• 33:07
  Speaker 1: buys and how the network itself is utilized.
• 33:10
  Speaker 2: That is exactly the dark intersection where international crime meets
• 33:14
  Speaker 2: geopolitical terror. The primary threat isn't simply that North Korea
• 33:18
  Speaker 2: is making illicit money. The true existential danger is the robust,
• 33:24
  Speaker 2: resilient infrastructure they have built to move that money and
• 33:27
  Speaker 2: those goods.
• 33:28
  Speaker 1: The pipelines themselves exactly.
• 33:30
  Speaker 2: Think about the physical pathways. The exact same covert maritime
• 33:34
  Speaker 2: smuggling routes, the same network of shell companies in Southeast Asia,
• 33:38
  Speaker 2: The same corrupt customs officials and foreign ports that are
• 33:41
  Speaker 2: used to successfully move a shipment of counterfeit cigarettes can be.
• 33:44
  Speaker 1: Used to move anything anything at all.
• 33:46
  Speaker 2: If a route is secure enough for a million dollars
• 33:48
  Speaker 2: worth of crystal meth, it is mathematically secure enough to
• 33:51
  Speaker 2: move precision ballistic missile components or even fissile nuclear material.
• 33:55
  Speaker 1: That is a chilling thought. The infrastructure is entirely dual use.
• 34:00
  Speaker 1: The same pipeline that delivers the device delivers.
• 34:02
  Speaker 2: The weapons exactly. The criminal infrastructure and the WMD proliferation
• 34:06
  Speaker 2: infrastructure are deeply intertwined. They are often managed by the
• 34:10
  Speaker 2: exact same operatives within Office thirty nine.
• 34:13
  Speaker 1: Wow.
• 34:13
  Speaker 2: Furthermore, North Korea actively uses these criminal networks to directly
• 34:17
  Speaker 2: fuel violence and instability in other sovereign regions.
• 34:20
  Speaker 1: Howso well.
• 34:22
  Speaker 2: For example, intelligence has documented North Korea treating small arms
• 34:26
  Speaker 2: and light weapons for massive quantities of drugs with various
• 34:30
  Speaker 2: insurgent and rebel groups in places like.
• 34:31
  Speaker 1: Mean Mar Oh Wow. So they're directly arming rebels.
• 34:35
  Speaker 2: By supplying these arms to rebel factions. North Korea is
• 34:38
  Speaker 2: actively intentionally perpetuating civil wars and human rights abuses halfway
• 34:43
  Speaker 2: across the continent simply to balance their own books.
• 34:45
  Speaker 1: And we can't ignore the direct human toll of the
• 34:48
  Speaker 1: drugs themselves. The exceptionally high purity crystal meth that is
• 34:52
  Speaker 1: exported by these North Korean state factories has directly fueled
• 34:56
  Speaker 1: devastating generational addiction crises in places as white It's spread
• 35:00
  Speaker 1: as Japan, South Korea, and even the US state of Hawaite.
• 35:03
  Speaker 2: It's terrible.
• 35:04
  Speaker 1: It's a shadow economy, sure, but the damage it does
• 35:07
  Speaker 1: to real families and real communities is devastatingly visible on
• 35:12
  Speaker 1: the streets.
• 35:13
  Speaker 2: It acts as a highly destabilizing force on multiple compounding levels.
• 35:18
  Speaker 2: It financially undermines markets, it socially devastates communities with narcotics,
• 35:23
  Speaker 2: and it militarily proliferates dangerous weapons technology.
• 35:27
  Speaker 1: This is a tremendous amount of process. It really forces
• 35:30
  Speaker 1: you to look at a standard geopolitical news headline entirely differently.
• 35:34
  Speaker 1: By the way, if you're finding this exploration as eye
• 35:36
  Speaker 1: opening as I am, please remember to hit that five
• 35:38
  Speaker 1: star rating on your podcast app. It really helps the show.
• 35:41
  Speaker 2: It definitely does.
• 35:42
  Speaker 1: Okay, let's pivot the conversation to the modern era, because
• 35:45
  Speaker 1: the world certainly doesn't stand still and needed as North Korea,
• 35:49
  Speaker 1: there are nothing if not adaptable.
• 35:51
  Speaker 2: Very true.
• 35:51
  Speaker 1: I started wondering what does a state sponsored criminal enterprise
• 35:55
  Speaker 1: do when the physical world becomes.
• 35:57
  Speaker 2: Harder to navigate, especially recently.
• 35:59
  Speaker 1: Right what happens when physical borders start closing like during
• 36:02
  Speaker 1: the COVID nineteen pandemic, when maritime shipping containers face much
• 36:06
  Speaker 1: stricter scanning and X ray technologies, and when the entire
• 36:10
  Speaker 1: global financial system increasingly moves away from physical cash and
• 36:14
  Speaker 1: goes completely digital.
• 36:15
  Speaker 2: The answer is both predictable and terrifying. They evolve, they do,
• 36:20
  Speaker 2: they transition into a highly sophisticated cyberpunk threat. We are
• 36:25
  Speaker 2: currently witnessing a massive historic transition in their operational model.
• 36:29
  Speaker 1: So no more massive printing presses.
• 36:31
  Speaker 2: Right, the physical dollar factory of the nineteen nineties, the
• 36:35
  Speaker 2: heavy inalio presses, the chemical reverse engineering of cotton linen
• 36:39
  Speaker 2: paper has evolved into the digital kleptocracy of twenty twenty
• 36:43
  Speaker 2: five and twenty twenty six.
• 36:44
  Speaker 1: It's all digital now.
• 36:45
  Speaker 2: State sponsored cyber hacking and massive cryptocurrency theft are quite
• 36:49
  Speaker 2: literally the new supernot.
• 36:51
  Speaker 1: The sheer scale of this digital theft is almost impossible
• 36:54
  Speaker 1: to wrap your head around. They aren't just sending phishing
• 36:56
  Speaker 1: emails to hack individual bank accounts for a few thousand dollars.
• 36:59
  Speaker 2: No, Oh, they're going after much bigger targets.
• 37:02
  Speaker 1: They are compromising entire multi billion dollar financial exchanges. Just
• 37:07
  Speaker 1: look at the staggering scale of what happened recently. In
• 37:10
  Speaker 1: twenty twenty five, North Korean state sponsored cyber actors pulled
• 37:15
  Speaker 1: off a mind boggling one point four to six billion
• 37:18
  Speaker 1: dollar heist from the cryptocurrency exchange by bit. It's staggering,
• 37:22
  Speaker 1: one point four six billion dollars stolen in the digital
• 37:26
  Speaker 1: flash without a single shot fired or a single submarine deployed.
• 37:30
  Speaker 2: The regime has astutely recognized that decentralized cryptocurrency offers the
• 37:35
  Speaker 2: absolute perfect vehicle for their unique needs. It allows for massive,
• 37:40
  Speaker 2: instantaneous cross border value transfers that operate entirely outside the
• 37:44
  Speaker 2: control of the traditional US dominated banking.
• 37:47
  Speaker 1: System because there's no central bank to stop them exactly.
• 37:49
  Speaker 2: They don't need to worry about the Patriot Act or
• 37:51
  Speaker 2: Swift Network sanctions if they are moving bitcoin or ethereum
• 37:54
  Speaker 2: on the blockchain. By twenty twenty six, we see that
• 37:57
  Speaker 2: North Korea isn't just using crypto as a tool of
• 38:00
  Speaker 2: last resort or a side hustle.
• 38:01
  Speaker 1: It's their main thing.
• 38:02
  Speaker 2: They have fully integrated it as their core financial infrastructure.
• 38:05
  Speaker 2: It is the lifeblood of Office thirty nine today.
• 38:07
  Speaker 1: But stealing the crypto is one thing. The blockchain is
• 38:11
  Speaker 1: a public ledger, right, everyone can see where the stolen
• 38:14
  Speaker 1: funds go. So how do they actually launder a billion
• 38:17
  Speaker 1: dollars of stolen pitcoin?
• 38:19
  Speaker 2: It's a complicated process.
• 38:21
  Speaker 1: Just like they partnered with the yakuza in the physical
• 38:23
  Speaker 1: world to move Heroin, I read they were partnering with
• 38:26
  Speaker 1: highly professional laundering networks in the digital world.
• 38:29
  Speaker 2: Yes, and the mechanics of this are fascinating. To move
• 38:33
  Speaker 2: those stolen billions without being pracked by the FBI or
• 38:36
  Speaker 2: blockchain analytics firms, they heavily utilize sophisticated underground networks often
• 38:42
  Speaker 2: referred to as the Chinese laundromat okay or they use
• 38:46
  Speaker 2: complex decentralized protocols known as mixers or tumblers.
• 38:50
  Speaker 1: Tumblers I've heard of those. How do they work?
• 38:52
  Speaker 2: Essentially, these specialized services take the stolen cryptocurrency, pull it
• 38:56
  Speaker 2: together with funds from thousands of other legitimate and illegitimate users,
• 39:00
  Speaker 2: and mix it through thousands of complex rapid fire.
• 39:03
  Speaker 1: Transactions, sort of scrambling the signal exactly.
• 39:06
  Speaker 2: It mathematically obfuscates the trail, breaking the link between the
• 39:09
  Speaker 2: original theft and the final destination and then what Eventually,
• 39:13
  Speaker 2: the clean crypto is converted into Fiat currency, usually through
• 39:17
  Speaker 2: over the counter brokers and jurisdictions with loose regulations, or
• 39:21
  Speaker 2: it's used directly to purchase physical goods and military components
• 39:25
  Speaker 2: for the regime.
• 39:25
  Speaker 1: But the cyber threat isn't just about massive abstract heists
• 39:30
  Speaker 1: from faceless crypto exchanges. This is where it actively infiltrates
• 39:34
  Speaker 1: main street.
• 39:35
  Speaker 2: This is the part that hits close to home.
• 39:37
  Speaker 1: This was an insight that genuinely terrified me because of
• 39:40
  Speaker 1: how incredibly relatable it is to anyone working today. I
• 39:44
  Speaker 1: was reading about a highly organized scheme they deployed called
• 39:47
  Speaker 1: the contigious interview.
• 39:48
  Speaker 2: The contagious interview is a brilliantly insidious piece of social engineering.
• 39:53
  Speaker 2: It targets the weakest link in any cybersecurity of the.
• 39:56
  Speaker 1: Human ambition and trust.
• 39:58
  Speaker 2: Exactly.
• 39:59
  Speaker 1: The way it works is why North Korean thread actors
• 40:02
  Speaker 1: are literally posing as legitimate high end tech recruiters on
• 40:05
  Speaker 1: professional networking platforms like LinkedIn.
• 40:08
  Speaker 2: Right, they just blend in.
• 40:09
  Speaker 1: They approach software developers and IT professionals at major Western companies,
• 40:13
  Speaker 1: offering incredibly lucrative remote job opportunities.
• 40:16
  Speaker 2: Who wouldn't want a better job, right exactly.
• 40:20
  Speaker 1: But they don't just use fake text profiles. They use
• 40:23
  Speaker 1: highly sophisticated AI generated personas and real time deep fakes
• 40:27
  Speaker 1: to conduct live video interviews.
• 40:30
  Speaker 2: They establish this massive professional credibility they look the part,
• 40:34
  Speaker 2: they sound the.
• 40:34
  Speaker 1: Part, and then as part of the standard technical interview process,
• 40:38
  Speaker 1: they ask the developer to download a coding test or
• 40:41
  Speaker 1: an assessment package from a provided link.
• 40:44
  Speaker 2: And of course, that seemingly innocuous assessment package contains highly sophisticated,
• 40:49
  Speaker 2: malicious code.
• 40:50
  Speaker 1: It's a trap.
• 40:51
  Speaker 2: The moment the developer runs it on their machine, often
• 40:53
  Speaker 2: a company issued laptop, the North Korean hackers instantly establish
• 40:57
  Speaker 2: a persistent backdoor directly into the developers.
• 41:00
  Speaker 1: Machine and by extension, their company.
• 41:02
  Speaker 2: Yes, they gain access to their employer's entire internal corporate network.
• 41:07
  Speaker 1: It's weaponizing the everyday mundane remote job hunt. You think
• 41:13
  Speaker 1: you are interviewing for a great new gig and you
• 41:15
  Speaker 1: just handed the keys to your company servers to Pyongong.
• 41:17
  Speaker 1: It's and it gets even deeper and even stranger. They
• 41:21
  Speaker 1: aren't just hacking companies, they're actually getting hired by them.
• 41:24
  Speaker 1: We absolutely have to talk about the Casina Chapman case.
• 41:27
  Speaker 2: Oh, this raises an important question about the profound vulnerabilities
• 41:31
  Speaker 2: of the modern gig economy.
• 41:33
  Speaker 1: Yeah, and the massive shift toward remote work. So there's
• 41:36
  Speaker 1: this woman, Christina Chapman, Right.
• 41:38
  Speaker 2: She was an American woman living a seemingly normal life
• 41:41
  Speaker 2: in Arizona, but.
• 41:42
  Speaker 1: She was recently caught by the Department of Justice and
• 41:45
  Speaker 1: sentenced for running a massive, multi year scheme. She essentially
• 41:50
  Speaker 1: acted as a physical domestic front for a small army
• 41:53
  Speaker 1: of North Korean IT workers.
• 41:55
  Speaker 2: The mechanics of this scheme are fascinating. These North Korean
• 41:58
  Speaker 2: IT workers, who are highighly trained state sponsored coders living
• 42:02
  Speaker 2: in places like China or Russia, needed to get lucrative
• 42:06
  Speaker 2: freelance coding jobs at major US tech companies to earn
• 42:09
  Speaker 2: hard currency for the regime.
• 42:11
  Speaker 1: But obviously, a fortune five hundred companies HR department isn't
• 42:14
  Speaker 1: going to hire a remote worker whose IP address resolves
• 42:17
  Speaker 1: to Pyongyang, No, or.
• 42:19
  Speaker 2: Someone who submits a North Korean passport for background.
• 42:21
  Speaker 1: Checks, right, So Chapman solved that problem for them. She
• 42:25
  Speaker 1: allowed these North Korean workers to use her real Arizona address,
• 42:30
  Speaker 1: her domestic Internet connection, and the stolen identities of actual
• 42:34
  Speaker 1: US citizens to apply for these jobs.
• 42:36
  Speaker 2: She operated what is essentially a laptop.
• 42:39
  Speaker 1: Farm, like literal shelves of.
• 42:42
  Speaker 2: Laptop Yes, she would buy dozens of laptops, set them
• 42:46
  Speaker 2: up on shelves in her house, and connect them to
• 42:48
  Speaker 2: her local Arizona Internet. The North Korean workers overseas would
• 42:52
  Speaker 2: remotely log into those specific laptops, so.
• 42:55
  Speaker 1: When the US company's IT department checked the log in.
• 42:58
  Speaker 2: Logs, it appeared as though the worker was legitimately sitting
• 43:02
  Speaker 2: in Arizona diligently writing code that is wild.
• 43:05
  Speaker 1: Using this method, she helped them fraudulenty to secure highly
• 43:08
  Speaker 1: paid remote IT and software development positions at over three
• 43:12
  Speaker 1: hundred different US companies.
• 43:13
  Speaker 2: Including major television networks and.
• 43:15
  Speaker 1: Airspace firms, and the North Koreans were actually doing the
• 43:17
  Speaker 1: technical work. They were getting paid legitimate salaries in US dollars,
• 43:20
  Speaker 1: and then Chapman would take her cut and funnel the
• 43:23
  Speaker 1: rest of the money, totally millions of dollars back to
• 43:25
  Speaker 1: the North Korean regime via cryptocurrency.
• 43:27
  Speaker 2: Is absolutely mind blowing.
• 43:29
  Speaker 1: I keep asking myself how safe is the global remote
• 43:32
  Speaker 1: work economy? When a rogue nation can literally deep fake
• 43:36
  Speaker 1: and IP spoof its way onto your company's.
• 43:38
  Speaker 2: Payroll, it really makes you wonder.
• 43:40
  Speaker 1: Think about it. You could be in a corporate slack
• 43:43
  Speaker 1: channel right now, casually collaborating on a piece of back
• 43:46
  Speaker 1: end code with someone you think is a friendly guy
• 43:48
  Speaker 1: named Dave living in Arizona, But in reality, Dave is
• 43:52
  Speaker 1: a state sponsored IT worker operating out of a compound
• 43:55
  Speaker 1: in flat of Ostock, generating direct revenue for Office thirty
• 43:59
  Speaker 1: nine's clear ambitions.
• 44:01
  Speaker 2: It is the ultimate frictionless infiltration. They have entirely bypassed
• 44:05
  Speaker 2: physical borders. They have completely bypassed the traditional, heavily sanctioned
• 44:10
  Speaker 2: banking system.
• 44:11
  Speaker 1: And they bypassed corporate firewalls exactly.
• 44:13
  Speaker 2: They didn't even have to hack them. They just logged
• 44:15
  Speaker 2: in through the front door using a stolen identity and
• 44:17
  Speaker 2: a fake resume.
• 44:18
  Speaker 1: Okay, let's try to synthesize this incredible journey we've just
• 44:21
  Speaker 1: been on. We have traced North Korea's evolution from a
• 44:24
  Speaker 1: struggling Cold War relic desperately seeking hard currency to survive
• 44:29
  Speaker 1: the fall of the.
• 44:29
  Speaker 2: Soviet Union into a dynamic, highly adaptable, fiercely transnational criminal enterprise.
• 44:35
  Speaker 1: We've seen them go from printing flawless, fake one hundred
• 44:38
  Speaker 1: dollars bills on multimillion dollar in tallio presses in secret
• 44:42
  Speaker 1: militarized factories, to running state sponsored opium farms using the
• 44:47
  Speaker 1: agricultural term pom yong as cover.
• 44:49
  Speaker 2: And we've seen them moving pure math using diplomatic passports
• 44:52
  Speaker 2: and military submarines.
• 44:53
  Speaker 1: And finally adapting to the modern age by using AIDEP
• 44:56
  Speaker 1: fakes and laptop farms to steal billions in cryptocrency and
• 45:00
  Speaker 1: infiltrate American tech companies.
• 45:02
  Speaker 2: It truly is a masterclass in criminal adaptation. Whenever the
• 45:06
  Speaker 2: international community successfully closes one avenue, whether it's through the
• 45:10
  Speaker 2: Patriot Act isolating their banks or naval task forces stopping
• 45:14
  Speaker 2: their smuggling ships, North Korea expertly leverages its sovereign capabilities
• 45:19
  Speaker 2: to seamlessly.
• 45:19
  Speaker 1: Pivot always to a new, more advanced, and often more
• 45:22
  Speaker 1: lucrative method of generating illicit revenue. Absolutely, and this is
• 45:26
  Speaker 1: the ultimate why for you listening right now. You might
• 45:29
  Speaker 1: have initially thought this shadow economy exists purely in the
• 45:31
  Speaker 1: realm of spy novels and classified intelligence.
• 45:34
  Speaker 2: Briefings, but the reality is much closer to home.
• 45:37
  Speaker 1: It is you might interact with the ripple effects of
• 45:40
  Speaker 1: this shadow economy without even knowing it. It's the very
• 45:43
  Speaker 1: reason why the physical cash in your wallet has so
• 45:46
  Speaker 1: many complex color shifting security features and microprinting.
• 45:50
  Speaker 2: It's the reason your company's IT department forces you to
• 45:54
  Speaker 2: implement such aggressive, sometimes annoying cyber defenses and strict identity
• 45:59
  Speaker 2: verification protocols for remote work.
• 46:01
  Speaker 1: Exactly the geopolitical news you read, the tragic conflicts in
• 46:05
  Speaker 1: places like me and more, the underlying security the digital economy,
• 46:09
  Speaker 1: it is all invisibly tied back to this incredible hidden
• 46:13
  Speaker 1: engine of criminal sovereignty, and.
• 46:15
  Speaker 2: That leads to a deeply chilling concept to ponder as
• 46:18
  Speaker 2: we look to the future. North Korea pioneered this model
• 46:21
  Speaker 2: of criminal sovereignty because they were uniquely isolated, totally desperate,
• 46:26
  Speaker 2: and perfectly positioned to ruthlessly exploit the gaps in international law.
• 46:31
  Speaker 2: But as artificial intelligence, deep fakes, and decentralized cryptocurrency make
• 46:35
  Speaker 2: it easier, cheaper, and faster than ever to commit massive
• 46:38
  Speaker 2: crimes anonymously across international borders, we have to ask ourselves
• 46:42
  Speaker 2: a very hard question, fa are we looking at a
• 46:44
  Speaker 2: historical anomaly born purely out of the unique, bizarre circumstances
• 46:49
  Speaker 2: of the Kim regime, or has North Korea just provided
• 46:52
  Speaker 2: the ultimate battle tested survival blueprint for the next rogue
• 46:56
  Speaker 2: state man.
• 46:58
  Speaker 1: That is a terrifying thought to Levi on if they
• 47:00
  Speaker 1: wrote the ultimate playbook for state sponsored crime, Who's going
• 47:03
  Speaker 1: to pick it up and read it next Well, thank
• 47:05
  Speaker 1: you so much for joining us on this edition of
• 47:07
  Speaker 1: Beyond Infographics. We hope you walk away looking at the world,
• 47:09
  Speaker 1: the global news, and maybe even that hundred dollars bill
• 47:12
  Speaker 1: in your pocket just a little bit differently. Until next time,