Kim Jong-il, the Supreme Leader of North Korea, has a $4 billion (£2.6 billion) “emergency fund” hidden in secret accounts in European banks that he will use to continue his lavish way of life if he is forced to flee the country.

South Korean intelligence officials told The Daily Telegraph that much of the money was held in Swiss banks until authorities there began to tighten regulations on money laundering.

Mr Kim’s operatives then withdrew the money - in cash, in order not to leave a paper trail - and transferred it to banks in Luxembourg.

The money is the profits from impoverished North Korea selling its nuclear and missile technology, dealing in narcotics, insurance fraud, the use of forced labour in its vast gulag system, and the counterfeiting of foreign currency.

“I believe this is the most extensive money-laundering operation in the history of organised crime, yet the final destination of the funds has not been given the proper attention it deserves,” said Ken Kato, the director of Human Rights in Asia.

“Somewhere in the world, there are bankers who are earning a large sum of money by concealing and managing Kim Jong-il’s secret funds, and at the same time, almost nine million people in North Korea are suffering from food shortages,” he said. “I believe the secret bank accounts are now in Luxembourg, or have recently been transferred from Luxembourg to other tax havens.”

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