Pyongyang's pachinko connection

As in any economy, there are some uniquely Japanese twists that have an impact on the struggle against money-laundering and questionable financial transfers.

'One of the biggest issues for the Japanese authorities is income from the pachinko industry that is funnelled back to North Korea,' said Stuart Witchell, Japan representative of International Risk, a business intelligence and investigation consultancy.

'In the past couple of years, the authorities here have managed to squeeze the purse strings of [South Korea's] Dear Leader Kim Jong-il,' he said. 'However, the amount that is being sent to North Korea is impossible to estimate. It is probably in the trillions of yen and a pretty sophisticated underground banking system operates here, linked with Bangkok and Macau.'

The US took action against Banco Delta Asia in September, freezing an estimated US$25 million in North Korean assets, and Japan's financial authorities followed suit with a ban on transactions with the institution.

In the past, hard cash destined for Pyongyang was simply carried aboard North Korean ships that called at Japanese ports, while counterfeit cash and drugs allegedly came in the other direction.

But the biggest source of income for the regime was pachinko, a type of pinball played on an upright board. As gambling is prohibited in Japan, winners who collect trays of balls can exchange them for prizes such as cigarettes - or for tokens that are then taken to a different booth where they can be exchanged for cash. The government turns a blind eye to this type of gambling.