From the Super Mario Wiki
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Spy Land resembles a contemporary city, although it is home to to many Secret Agents and Spies. Super Spy Headquarters is an underground complex located beneath Spy Land, where James Blonde and Secret Agent N both work. Koopfinger's hideout is also located in a building in downtown Spy Land.
When Koopfinger arrived in Spy Land, he turned James Blonde to stone, and proceeded to rob Fort Hard Knox, Spy Land's treasury. Although they weren't able to foil the robbery, Mario and Luigi went after Koopfinger, who eventually called in a Birdo to take them to his hideout. After Mario and Luigi banished Koopfinger from Spy Land, James Blonde was able to turn back to normal. Spy Land has been Koopa-free ever since.