Counterfeit foreign currency is flooding North Korean markets as the country’s exchange rates skyrocket and the local currency collapses, prompting authorities to launch an urgent crackdown.
Banks, police departments, neighborhood offices and markets throughout the country received orders early this month on how to handle fake money, according to a Daily NK source in Pyongyang recently.
The order, titled “How to Dispose of Counterfeit Cash When Discovered,” directed banks to immediately confiscate counterfeit money, record the time and location of its discovery, identify the individual holding it, provide a confiscation receipt, and notify local security authorities.
While authorities didn’t specify whether the order covered foreign currency or North Korean won, Daily NK believes that the fake money currently circulating in markets is counterfeit U.S. dollars and Chinese yuan.
The directive reminded banks, official money changers and other agencies handling foreign currency transactions about rules for dealing with counterfeit money when discovered.
Citizens must surrender fake money without question
Under the new rules, anyone caught with counterfeit cash must immediately hand it over to banking officials once it’s confirmed as fake, regardless of how they obtained it, and must accept a confiscation receipt.
When banks discover counterfeit currency, they enter details about the money and the person carrying it into an electronic system. This information is shared through North Korea’s internal network with local people’s committees and police, who use it to investigate counterfeiters and distribution networks.
The confiscation receipts are rectangular, similar in size to banknotes, and printed in light pink. A perforated line divides the paper in half—the bank keeps one portion and the person who had the fake money keeps the other. Each receipt has a serial number showing which bank issued it and in what sequence.
Notably, the order didn’t specify punishments for people caught with counterfeit money, suggesting authorities want to encourage voluntary reporting rather than prosecute holders.
The crackdown comes as counterfeit dollars and yuan have spread widely through North Korean markets following dramatic currency fluctuations. According to Daily NK’s regular market surveys, exchange rates spiked dramatically between June and mid-August.
The dollar exchange rate jumped from 27,500 North Korean won in June to 43,000 won by mid-August—a 56% increase. The Chinese yuan rate similarly surged from 3,800 won to 5,600 won over the same period, representing a 47% spike.
These dramatic currency swings have created conditions ripe for counterfeiters to exploit, as people desperately seek stable foreign currency while the local won loses value rapidly.
