hankyoreh

The U.S. Treasury holds the key to resolving a North Korean banking dispute, an unexpected stumbling block to implementing a denuclearization deal that would remove nuclear weapons and programs from the communist nation, officials here said Tuesday.

The Associated Press reported from Hong Kong that Pyongyang last week specifically asked an American bank to transfer US$25 million out of Macau to another country. The Treasury was expected to make a decision by as early as Thursday, it said.

At the State Department, spokesman Sean McCormack said the North Koreans were still working with their bankers on finding a solution.

"We have not been informed that they have found the solution.

We will stay tuned," he told reporters.

The spokesman added the final decision rests with the Treasury.

"Any decisions with respect to how the solution intersects or does not intersect with the rules of the financial system are going to be made by the Department of Treasury," he said.

But Molly Millerwise, Treasury's spokesperson, denied the report.

"The U.S. Treasury Department is not aware of any such request from North Korea to use a U.S. bank to transfer funds," she said in an e-mail to Yonhap.

Banco Delta Asia (BDA), a small bank in Macau, froze the $25 million after the U.S. accused it of laundering money North Korea pockets through illicit financial activities ranging from counterfeiting of American currency to smuggling of narcotics and contraband.

In March, the Treasury issued a ruling to prohibit U.S. banks from doing business with BDA. The Macanese bank then unblocked the funds, allowing account holders to make withdrawals. The unfreezing of the accounts was intended to bring North Korea back to a six-nation forum and commit it to a denuclearization agreement that would eventually dismantle Pyongyang's atomic weapons and program.

But North Korea now insists that it wants to transfer the money to other countries, possibly Russia and Italy, to verify that they still can do regular business in the international financial system without being blacklisted.

Pyongyang's request is for an American bank to become in "intermediary," a delivery vehicle between BDA and a bank in another country. But Section 311 of the U.S. Patriot Act, the legal basis for prohibiting U.S. business with BDA, does not allow such a transaction.

A source close to the negotiations, however, speaking only on condition of anonymity, would not rule out the possibility.

"I think we need to wait and see," the source told Yonhap when asked if there were ways to work around Section 311.


WASHINGTON, May 8 (Yonhap News)