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The United States said Friday it found a way to resolve the banking issue that threatened to delay a North Korean denuclearization agreement.

After 10 days of negotiations in Beijing, the parties were able to "identify the technical pathway," State Department spokesman Sean McCormack said.

Assistant Secretary of State Christopher Hill, top U.S. delegate to the six-party denuclearization talks, will fly out to Asia on Sunday, stopping in Tokyo, Seoul and Beijing, the spokesman said. There are no plans yet for Hill to meet North Koreans in Beijing, he said.

"The U.S. has done its part," McCormack said, reiterating that the U.S. supports the full release of all the money previously frozen by a Macau bank.

An informed source told Yonhap that Hill had met with a North Korean diplomat earlier this week in New York and gave impetus to the negotiations.

Hill met with Kim Myong-gil, the deputy chief of North Korean mission to the United Nations, according to the source.

"I believe that it was at their meeting that the two sides were able to reach a broad agreement on the banking issue," he said.

Not having formal diplomatic relations, the U.N. missions are the common contact venue between Pyongyang and Washington.

Banco Delta Asia (BDA) in Macau froze some US$25 million of North Korea-related funds after the U.S. Treasury accused it in September 2005 of laundering money Pyongyang allegedly pockets through illicit activities, including counterfeiting of American currency, drug trafficking and smuggling of contraband.

Pyongyang used the BDA as an excuse for over a year to boycott the six-party talks, a denuclearization forum involving South and North Korea, the U.S., China, Russia and Japan, aimed at ridding the North of its nuclear weapons and programs.

The BDA became an obstacle again last month when North Korea walked out of the six-party talks, demanding that the money transfer has to be complete before it comes back.

The U.S. agreed to the full release and transfer of the $25 million out of BDA to North Korean accounts in other countries, but the transaction was delayed when banks refused to accept money linked to Pyongyang's shady activities for fear of being blacklisted.

But questions about North Korea's illicit activities apparently remained.

"I can't tell you whether it's a clean bill of health on that or not," McCormack said.

The U.S. Treasury team, led by Deputy Assistant Secretary Daniel Glaser, was in Beijing from early last week to help find a solution. It was heading back to Washington on Friday.

"We believe the results of those conversations has been to identify the technical pathway by which the funds may be returned," McCormack said.

But he refused to go into the technical elements.

Some reports said the transfer would involve a bank in Hong Kong.

"I am not going to get into that," McCormack said when asked to confirm.

The source who knew of the Hill-Kim meeting in New York denied the reports, saying that from what he knows, Hong Kong is not the transfer route.

The settlement of the BDA dispute comes at a critical time as six-party members are anxious to meet the deadline set in a Feb. 13 agreement.

The agreement commits Pyongyang to shut down its primary nuclear facilities and allow back in international inspectors within 60 days of the accord. Implementation of this phase is symbolic in showing each party's commitment to abide by the deal.

Hill will talk about the next six-party round with his Asian counterparts, McCormack said, suggesting a rush to push the talks forward as quickly as possible.

"He is going to be talking about when the next envoys-level meeting will be," the spokesman said.

The Treasury suggested one of the issues in the case has been ensuring North Korea will use the returned money for promised intentions.

One of the conditions to the release of $25 million was that North Korea will use it for the humanitarian and educational benefits of its own people instead of for the regime.

"We have worked with all parties to ensure this (release of the funds) is consistent with our mutual domestic and international obligations regarding safeguarding the world's financial system," Treasury spokeswoman Molly Millerwise told Yonhap by e-mail.

"We stand ready to assist... with all parties to effectuate the North Korean pledge that any money received by them would be used for humanitarian purposes of benefit to the North Korean people," she said.
Washington, April 6 (Yonhap News)