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The U.S. Treasury Department on Wednesday made public a plan to resolve the financial dispute with North Korea by formally banning U.S. financial institutions from dealing with the Macau-based Banco Delta Asia (BDA), suspected of handling illicit North Korean assets.

"When it takes effect in 30 days, this action will prohibit all U.S. financial institutions from maintaining correspondent accounts for BDA and prevents BDA from accessing the U.S.

financial system, either directly or indirectly," the Treasury Department said in a statement, wrapping up its lengthy investigation into the bank.

This move will clear the way for North Korea to recover at least some of the $25 million in frozen North Korean assets held by the BDA. As part of a deal reached during the six-nation nuclear talks in Beijing on Feb. 13, the United States agreed to settle the financial dispute with the communist state within 30 days.

The Treasury Department said it is severing ties between the BDA and the U.S. financial system because of the bank's alleged money laundering for North Korea. At the same time, however, the department is expected to provide guidance to help overseas regulators identify high-risk and low-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.

In this regard, some media raised speculation that the Macau authority may choose to release about $8 million to $12 million of the frozen North Korean funds, though the unfreezing of the whole amount cannot be ruled out.

Some $25 million was frozen in September 2005 when the BDA was designated a "primary money laundering concern" abetting North Korea. BDA was accused of laundering money North Korea earned through illicit financial activities, including the production and circulation of counterfeit American currency and the trafficking of drugs and contraband.

In New York, Kim Myong-kil, deputy chief of the North Korean mission to the United Nations, said the settlement of the North Korea-U.S. dispute over North Korean funds frozen in the BDA would lead to rapid progress in their bilateral relations, paving the way for visits by U.S. Secretary of State Condoleezza Rice and top U.S. nuclear negotiator Christopher Hill to North Korea in the first half of this year.

In a telephone conversation with a representative of the Korean Global Foundation, Kim expressed North Korea's wish to open a liaison office in the U.S. prior to normalizing bilateral diplomatic relations. Kim also said that North Korea will be satisfied if all of its BDA funds are unfrozen at one time or gradually.

In Beijing, International Atomic Energy Agency (IAEA) chief Mohamed ElBaradei said that North Korea is committed to the six-party disarmament pact reached on Feb. 13 but wants sanctions lifted first.

After returning from a short trip to Pyongyang, the IAEA chief said North Korea wanted U.S. financial restrictions resolved before it shuts down its Yongbyon nuclear reactor and readmits inspectors as agreed in the six-party agreement.

"The DPRK mentioned that they are waiting for the lifting of sanctions with regard to the Macau bank before they implement the part of the agreement allowing the agency to monitor and verify the shutdown of the Yongbyon facility," ElBaradei told a news conference, referring to North Korea by its official name, the Democratic People's Republic of Korea.

Responding positively to North Korea's demand, the U.S. has allegedly decided not to take issue with the Macau authority's possible decision to unfreeze all of the North's money held in the BDA, according to diplomatic sources accompanying Hill on his trip to Beijing.

The U.S. will leave the responsibility for unfreezing North Korea's BDA accounts in the hands of the Chinese and Macau authorities, said the sources.

Hill also told reporters on Wednesday that the BDA issue should now be dealt with by Macau and the Chinese government.
Washington/Beijing, March 15 (Yonhap News)