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The dispute over North Korea's frozen funds at a bank in Macau may be resolved in the near future, allowing the communist nation to take steps toward denuclearization, South Korea's top nuclear negotiator said Thursday.

Chun Yung-woo said he expects to see a key step in resolving the dispute over North Korea's US$25 million at Banco Delta Asia (BDA) as early as "next week."

The South Korean diplomat returned to Seoul earlier in the day from Washington where he held talks with U.S. officials, including Assistant Secretary of State Christopher Hill, Washington's chief envoy to six-nation talks on North Korea's nuclear programs, and Jack Crouch, a security advisor to U.S. President George W. Bush.

Chun's remarks came one day after Foreign Minister Song Min-soon said the banking issue was nearing an end.

"There are still some procedural problems, but we believe the issue is reaching a final stage of resolution," Song told a regular press briefing here Wednesday.

Under a six-party agreement signed on Feb. 13, North Korea was supposed to shut down and seal its key nuclear reactor and related facilities at Yongbyon before April 14.

The 60-day deadline passed with the Yongbyon facilities apparently operating as usual.

Pyongyang has threatened not to take denuclearization measures or discuss the nuclear issue until its funds at the bank are transferred to another bank. The North is apparently seeking to confirm its access to the international financial system which had been effectively blocked by Washington's blacklisting of BDA.

"North Korea is also working hard while consultations among all involved parties are fully underway," Chun told reporters at the airport.

The North's funds, which had been frozen since September 2005 following U.S. restrictions on the bank for its links to Pyongyang's illicit activities such as counterfeiting and money laundering, have been available for withdrawal since at least April 10.

North Korea has said it is working with BDA officials to confirm the release of its funds, but has yet to make any known attempt to withdraw the money.

The six-party talks aimed at denuclearizing the communist state are attended by the two Koreas, the U.S., Japan, China and Russia.

Seoul, April 26 (Yonhap News)