The Bush administration announced steps Wednesday that could enable the release of North Korean assets frozen in a Macau bank, an action sought by Pyongyang as part of a nuclear arms deal.
In a two-step decision, the Treasury Department also said it is severing ties between Banco Delta Asia and the U.S. financial system because of its alleged money laundering for North Korea.
At the same time, however, the department is expected to provide guidance to help overseas regulators identify highest-risk and lower-risk account holders. This risk assessment, in turn, could be used by Macau to release some North Korean money that has been frozen and is being held by the bank.
Banco Delta Asia holds roughly $25 million in frozen North Korean assets, the department said. The frozen accounts have been a major sore spot for the North Korean government and so angered Pyongyang that it had refused to participate in six-nation nuclear arms talks for more than a year.
The North did return to disarmament talks in December. A deal was struck Feb. 13, in part because of an agreement to resolve the dispute over the frozen funds within 30 days.
$8-12 million involved
The United States, which has spent 18 months investigating the bank, said it will share its findings this week with the Macau government, a move that would pave the way for overseas authorities to release any North Korean money that had been frozen.
The Associated Press has reported that $8 million to $12 million could be unfrozen by authorities in Macau, a semiautonomous territory of China, following the department's action. It could take weeks to release any money.
Treasury Department officials declined to provide any details on the amount of frozen North Korean money that could eventually be released. That decision, they said, is up to the Macau government.
"The Macanese authorities moved to freeze upwards of $25 million held in the bank by clients associated with North Korea," said Stuart Levey, Treasury's under secretary for terrorism and financial intelligence. "We have worked closely with the Macanese on our investigation into the BDA, and this week we are transmitting our findings to the Macanese authorities," he said. Details weren't provided.
Levey commended Macanese authorities, which took over management of Banco Delta Asia, for "significant strides in strengthening Macau's anti-money laundering regime" and for managing the bank "responsibly" over the last 18 months.
He said Macau has enacted new laws and regulations to safeguard the country from financial crime and developed a specialized money laundering unit within its police force.
At the State Department, deputy spokesman Tom Casey said U.S. officials had promised North Korea that they would "resolve or produce a final ruling" on the financial sanctions by mid-month. "Everyone's got obligations. Everyone intends to meet their obligations. At least we do," Casey said.
U.N. official optimistic
The chief U.N. nuclear inspector on Wednesday said North Korea was "fully committed" to an agreement that requires it to shutter its main nuclear reactor and let in inspectors as soon as the U.S. drops financial sanctions.
Mohamed ElBaradei, head of the Vienna-based International Atomic Energy Agency, described the talks on how North Korea will close its main atomic reactor at Yongbyon as "quite useful."
"They said they are fully committed to the Feb. 13 agreement, that they are ready to work with the agency to make sure that we monitor and verify the shutdown of the Yongbyon facility," he said. He added that officials in Pyongyang also "reiterated they are committed to the denuclearization of the Korean peninsula."
The U.S. government first took action against Banco Delta Asia in September 2005, calling it a "willing pawn for the North Korean government to engage in corrupt financial activities."
At that time, the Treasury Department put the bank on the U.S. government's money-laundering blacklist for what the department determined were lax money-laundering controls. The department also proposed cutting off the bank from the U.S. financial system, a power provided by the USA Patriot Act. The U.S. alleged the bank help North Korea distribute counterfeit currency and cigarettes, and drugs, proliferate weapons of mass destruction and other crimes.
Banco Delta Asia has said money might have been laundered at the bank but there was no evidence that the institution was aware it was being used for that purpose. Customers, however, still rushed to withdraw money from the bank, prompting the Macau government to take over management.
If the U.S. government's concerns are eventually eased about Banco Delta Asia, the Treasury Department could rescind its order severing the bank from the U.S. financial system, department officials said.