Bank transfer said snagging N.Korea deal

By Carol Giacomo, Diplomatic Correspondent
Reuters
Thursday, April 19, 2007; 6:23 PM

WASHINGTON (Reuters) - North Korea has not taken possession of money snagging a six-country nuclear agreement apparently because it wants the funds transferred to a reputable bank to guarantee access to the international financial system, current and former U.S. officials say.

But banks that receive the funds could be subject to U.S. sanctions so that has complicated Pyongyang's search for a solution, they said.

North Korea has said it would not start shutting down its Soviet-era Yongbyon reactor or invite U.N. nuclear inspectors back into the secretive state, until about $25 million in funds frozen at a Macau bank for suspected use in Pyongyang's illicit activities have been freed.

The United States insists it has done all it could do to make the funds, held by Banco Delta Asia, or BDA, available, but so far there is no indication Pyongyang has claimed them.

The North Koreans "want access to their money, and would rather not withdraw it (as cash) in wheelbarrows in front of a gaggle of South Korean and Japanese press now staking out BDA," one senior U.S. official told Reuters.

"Because BDA has been designated a money launderer (by the U.S. Treasury Department), the North Koreans would like to move the money to another bank that could do the full range of banking transactions that clearly the sanctioned BDA cannot do," he said.

One idea was to put the money in a Bank of China account and designate it for humanitarian purposes.

But Michael Green, former top Asia specialist at the White House's National Security Council, said the Bank of China, which is listed on the international stock exchange, would not accept the money because of concerns it might be sanctioned.

The United States has designated BDA a "prime money laundering concern" and said the North Korean accounts contained funds associated with Pyongyang's counterfeiting, drug-smuggling and other illicit activities.

TAINTED FUNDS?

U.S. officials this week said they still believe Pyongyang is engaged in these activities and that North Korea's BDA accounts contain tainted funds. The bank has challenged the U.S. ruling as politically motivated and lacking evidence.

"The Chinese wanted the Treasury Department to pledge that they would not sanction any bank that took this money ($25 million) but Treasury wasn't willing to do that. Our law won't allow us to do that, to give that kind of 'get out of jail free card,"' Green told a briefing at the Center for Strategic and International Studies where he is a senior adviser.

Since then, Pyongyang has sought to transfer the funds to other banks "because they want to reopen their international financial transactions, their ability to move money," he added.

The impact of the Treasury Department's action against BDA goes far beyond the $25 million because by raising concerns about North Korean accounts, U.S. officials have forced all banks to question whether, by dealing with Pyongyang, they could compromise their integrity and become liable to sanctions.

As a result, U.S. officials say they have severely limited Pyongyang's ability to do business as part of a strategy designed to pressure Pyongyang into abandoning its nuclear weapons program.

Washington has gone to great lengths to explain to the North Koreans the process for releasing the funds and that the only way it can clear its reputation is by halting illicit activities and establishing a financial system that complies with international standards, U.S. officials say.

This was the main focus of six meetings that the White House's top Asia expert, Victor Cha, had with North Korean negotiator Kim Gae Gwan when Cha was in Pyongyang for three and a half days recently.

Bank transfer said snagging N.Korea deal - washingtonpost.com