MPS personnel profiting on exchange rate disparities

Ministry of People’s Security (MPS)
personnel from the railway safety division are raking in massive profits from
the different exchange rates for the Korean People’s Won to the U.S. dollar
found in areas across the country. By buying in currency for cheaper rates,
they are able to make profits by handing it over to money brokers and donju
[new affluent middle class] in areas with much higher exchange rates, Daily NK has

“Pyongyang’s railway security cadres have
been profiting off this illegal exchange for years,” a Pyongyang source
currently situated near the Sino-North Korean border told Daily NK on November 23.

An independent source in the capital corroborated this news.

He added, “Pyongyang railway security management
overseeing the lower-ranking personnel are known to put together special
two-person ‘currency exchange teams’ and have them make money off of currency
brokers in border areas.”

Using their authority over screening
passengers on the train as a guise, MPS railway personnel in on the scheme actively pursue exchange deals in main border towns such as North
Hamgyong Province’s Rason and North Pyongan Province’s Sinuiju. Each day,
Pyongyang-based railway cadres pick out four members who are known to be good
at nabbing these deals and put two as a team on the Pyongyang-Sinuiju (trains
no. 5, 6) and Pyongyang-Duman River (trains no. 7, 8) trains, so they can
exchange money, according to the source.   

“These agents get on trains heading toward
Rason or Sinuiju with big backpacks brimming with local currency,” the source

“Once they get there, they exchange the money into foreign currency
at a much lower rate than Pyongyang and then bring that money back to the
capital and sell the Chinese yuan and U.S. dollars to money brokers and donju
for a higher rate than purchased and split the profits.”

The exchange rate can differ by up to 500
KPW across the country due to the vicissitudes of the markets. For example, one
dollar could trade for 8,000 KPW in Pyongyang but cost 8,500 KPW in provincial
regions, or vice versa. Depending on which area is cheaper, officials make the
exchange there and sell it back for profit.

“These railway security officials can do
this with great ease, because unlike others, they can ride for free and do not
need permits to travel,” he noted. “Especially if they’re on the no. 5
or 7 express trains, they can use individual first-class carriages, which come
with a bed, so they can enjoy the ride while making money.”

The money made from these exchanges do not
typically go into ‘agency coffers’ and are instead pocketed by the cadres
involved. “The agents who are put in charge of these bulk sums of money act as
if they’re special envoys for the higher-ranking cadres running the operation,
so sometimes if the exchanges are delayed, they’ll even push back the time of
departure to Pyongyang,” he explained.

Railway safety officials on the fringe of this activity are supportive of those in on the arrangement because they believe this supplementary activity is
what keeps their salaries coming in regularly. Train passengers and others working on the train in various capacities know the exchange agents as money dealers, “so they call them ‘money comrades,'” the source concluded.