US takes tough line on Macau bank ties with NKorea
03 Nov 2006 02:14:50 GMT Source: Reuters
(Recasts, adds sources) By Carol Giacomo, Diplomatic Correspondent WASHINGTON, Nov 2 (Reuters) - A U.S. investigation has confirmed evidence of illicit activity by North Korea and the Macau bank it deals with, officials said on Thursday, raising possible complications for new nuclear talks with Pyongyang. The U.S. Treasury Department reaffirmed its tough line on Banco Delta Asia, the Macau bank identified as a "primary money laundering concern" in 2005 because of involvement with Pyongyang's accounts. "We have been engaged in an ongoing investigation of BDA, and everything that has come to light confirms the illicit conduct of the bank, including that the bank took a fee from the North Koreans in exchange for lax due diligence on their accounts," said the statement issued by spokeswoman Molly Millerwise. She declined to answer questions, but another U.S. official told Reuters that Treasury was moving toward a final determination the bank was a "primary money-laundering concern" under the Patriot Act passed after the Sept. 11 attacks. The United States has accused BDA of handling financing for North Korea's counterfeit currency and drug and cigarette smuggling operations. U.S. banks, warned last year about Treasury's concerns, have already cut ties with BDA, but making a final designation would require them to do so, the second official said. That could make it harder to achieve progress in six-country nuclear talks North Korea said on Tuesday it agreed to resume because Washington promised to discuss the U.S.-led crackdown that Pyongyang says drove it from the negotiating table. Millions of dollars, including $24 million at the Macau bank, have been affected, officials say. One solution to the dispute would be to unfreeze accounts involved in legitimate trade, but some U.S. officials insist that is impossible. "It's all one big criminal enterprise," a senior U.S. official said of North Korea's trading system. "You can't separate it out." U.S. officials say the offer to discuss the financial crackdown has long been on the table and what is significant is that Pyongyang stopped demanding it would only return to negotiations if the assets freeze was lifted. "There were no U.S. concessions as far as I can see," said Mike Green, formerly Asia adviser at the Bush White House. A date for resuming negotiations over the North's nuclear weapons program has not been announced. FINANCIAL CRACKDOWN The plan is for a separate working group to discuss the crackdown within the nuclear talks framework, involving China, South Korea, Japan, Russia, the United States and North Korea. The last six-party round broke off in November 2005 after Washington squeezed Pyongyang's access to the world financial system to punish it for illicit activities, including printing fake U.S. bank notes, worth about $550 million annually. Since China, Pyongyang's main benefactor, ordered its banks in mid-October to halt operations with the North, much of the banking world has been off-limits to the North, U.S. officials say. What the working group might try to accomplish -- apart from insisting Pyongyang end illicit activities -- is unclear. One U.S. official insisted that "all we did was agree to take up the (assets freeze) in a working group" and another said there was little "wiggle room" in the U.S. position. North Korea expert Selig Harrison said it was plausible that U.S. negotiator Chris Hill led Pyongyang to believe Washington had ideas for resolving the financial dispute. One idea might be for Treasury to halt its investigation of Banco Delta Asia and to support a move to unfreeze accounts associated with legitimate North Korean activities, while illicit accounts remain frozen, he said. Harrison said $7.5 million of the $24 million in frozen BDA accounts was from the Daedong Credit Bank, a British bank representing foreign companies doing business in North Korea. Hill has explored compromises but met resistance from Treasury and other administration hard-liners.
