North Korea has said it will not return to the six-party talks on its nuclear program until U.S. financial sanctions are lifted. But an American official told a Senate hearing Tuesday that the U.S. government plans to continue the sanctions until it is finished investigating charges of counterfeiting and other illegal activities by North Korea.

Six nation talks on North Korea's nuclear program, involving the United States, North Korea, South Korea, China, Japan and Russia, have been stalled since last year.

North Korea has said it will not rejoin the talks until sanctions against it are lifted. The U.S.-ordered sanctions freeze more than $20 million of North Korean funds in a bank in Macau. The bank is believed to be a front for North Korean counterfeiting activities.

The State Department's Peter Prahar told a Senate Homeland Security Committee subcommittee that the ongoing investigations into charges of North Korean counterfeiting are not related to the Six-Party talks, and will continue.

"We say to the North Koreans, that is a law enforcement or regulatory matter," said Peter Prahar. "Investigation of that bank's activities is proceeding. And the chips will fall where they may, when they may."

Besides the charge of counterfeiting U.S. currency, Prahar accuses North Korea of making fake cigarettes and pharmaceuticals. He said any overall assessment of the value of Pyongyang's alleged criminal activities is speculative, but he added that U.S. officials believe most of the money comes from fake cigarettes.

"What I can say is it appears from what we understand about the cigarette counterfeiting, that that may be the single most lucrative item in their portfolio," he said. "Our information with regard to pharmaceutical counterfeiting is very sketchy. We can't even begin to put an estimate on the value of that."

The U.S. official alleged Pyongyang is involved in other illegal activities, including trade in endangered species, as well as narcotics trafficking and production.

In the area of narcotics, Prahar said he could not confirm reports that there is what he described as "significant opium poppy cultivation in North Korea."

He added that it has been several years since U.S. officials linked a drug trafficking incident to North Korea.

North Korean defector Seong Min Kim told the Senate subcommittee hearing that North Korean leader Kim Jong-Il personally benefits from the illegal activities.

"Counterfeit monies, which is laundered by diplomats, is deposited in banks in Macau and Switzerland," said Seong Min Kim. "The money is a slush fund for Kim Jong-Il's personal use, and we have heard of these things from diplomats and other escapees from North Korea."

The North Korean defector added that he does not believe the country's leaders when they say they have no money to buy food for the starving population. He pointed to several expensive projects, including a nuclear program that is costing what he described as an "astronomical amount of money."