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Frozen North Korean funds moved from bank

More than $20 million in disputed North Korean funds was transferred from a blacklisted Macau bank Thursday, an official said, possibly clearing the way for the North to start shutting down its nuclear reactor.
/ Source: The Associated Press

More than $20 million in disputed North Korean funds was transferred from a blacklisted Macau bank Thursday, an official said, possibly clearing the way for the North to start shutting down its nuclear reactor.

The dispute over the funds has dragged on for nearly two years between Pyongyang and Washington, which accused the bank of helping the North launder money. The funds were frozen in the troubled lender, Banco Delta Asia, prompting the North to storm out of talks to dismantle its nuclear weapons program.

Washington agreed to give its blessing for the funds' release to win progress on the nuclear issue. But the North has refused to move forward on a February pledge to start dismantling its nuclear program until it receives the money.

Although Pyongyang was allowed several months ago to begin withdrawing the cash, the funds remained in the bank in this Chinese territory for reasons that were never made clear.

It was widely believed that other banks didn't want to receive the tainted money. Pyongyang was also reportedly demanding the money be transferred via a U.S. bank to prove the funds were clean.

The long-awaited transfer finally happened Thursday, said Francis Tam, Macau's secretary of economy and finance.

"Banco Delta Asia transferred more than US$20 million out of the bank this afternoon in accordance with the client's instruction," Tam told reporters on the sidelines of a business gathering.

Where was money sent?
But Tam would not say where the money was sent. "We have heard reports in foreign media that the money can be wired via the U.S. or Russia, for example. I think these routings are possible," Tam added.

North Korea had $25 million in the bank, but Tam would not provide a specific figure for how much was transferred.

But he said, "Most of the money in this account has already transferred out. There will probably not be another transfer."

If some of the money remains in the bank, it could become a new reason for the recalcitrant and unpredictable North to delay progress with the pledge to shut down its nuclear weapons program.

David Zweig, a political scientist at Hong Kong University of Science and Technology, said that it would be inconsistent of the U.S. to recirculate funds it described as tainted. Zweig said that the U.S. Treasury Department wanted the money to remain frozen, while the U.S. State Department wanted it released to make progress on the nuclear issue.

"Clearly this is a ridiculous situation because on the one hand, the U.S. government wants the money to go to North Korea, and the other arm has made it almost impossible to do that. To me that's all very strange."