Learn mandarin - US clears way for return of NKorean money

WORLD / Asia-Pacific

US clears way for return of NKorean money

(Agencies)
Updated: 2007-03-15 09:31

WASHINGTON - The United States Wednesday cleared the way for the release
of millions of dollars of North Korean money frozen in a Macau bank, a
pivotal demand of North Korea under a deal aimed at dismantling its
nuclear arms program.

The move by the US Treasury came within a 30-day deadline stemming from a
February 13 agreement, under which Pyongyang pledged to scrap its atomic
drive in exchange for aid and a normalization of relations with
Washington.

In September 2005, the Treasury accused Banco Delta Asia (BDA) of helping
North Korea to circulate fake 100-dollar bills, and of laundering funds
from narcotics and weapons trafficking.

Under a new ruling announced Wednesday, US banks are formally barred from
any dealings with BDA, which effectively cuts the family-owned bank off
from the global financial system.

But the formal ruling also ends the limbo that left BDA in receivership
and the money beyond North Korea's reach, as it permits the authorities
in the Chinese territory of Macau to resolve the bank's legal status.

"Our investigation of BDA confirmed the bank's willingness to turn a
blind eye to illicit activity, notably by its North Korean-related
clients," Stuart Levey, Treasury under secretary for terrorism and
financial intelligence, said.

However, the bank had already collapsed under the weight of the US
accusations, and North Korea can now gain access to some of its BDA
accounts. Washington has conceded that not all the money was illicit.

More than 25 million dollars in North Korean accounts were frozen by
authorities in Macau, near Hong Kong. It remains unclear how much of the
funds the autonomous territory's administration will unblock.

A US willingness to resolve the banking dispute played a key role in
enticing North Korea back to nuclear negotiations late last year,
resulting in last month's landmark deal with leading diplomatic players.

A first round of bilateral normalization talks took place in New York
last week and the full six-nation negotiations involving China, Japan,
Russia, North and South Korea, and the United States are due to resume on
March 19.

"Everyone's got obligations," State Department deputy spokesman Tom Casey
said. "Everyone intends to meet their obligations. At least we do."

The head of the UN's atomic watchdog said Wednesday his agency's first
direct talks with North Korea in more than four years had been useful and
the nation remained committed to disarming.

However, International Atomic Energy Agency chief Mohamed ElBaradei also
cautioned in Beijing that North Korea's nuclear weapons program would not
end "overnight."

And he warned that Pyongyang remained insistent that the US banking
sanctions must be lifted if the disarmament deal is to hold.

"Once that takes place they said they would be ready to fully cooperate
and implement the (February) agreement," ElBaradei said.

North Korea kicked out IAEA inspectors in December 2002, then went on to
conduct its first atomic test in October last year, but now appears to
favor talks over confrontation.

US Treasury officials have met with the North Koreans three times over
the past year to thrash out their accusations that North Korea routinely
abuses the banking system.

The US government is prepared to continue bilateral talks with North
Korea to discuss "the steps it could take if it truly wishes to alleviate
its isolation from the international financial community," Levey said.

He also congratulated Macau for having instituted, with the backing of
China's central government in Beijing, tough new laws against
money-laundering and counterfeit currency.

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