hankyoreh

The U.S. Treasury confirmed Monday that the United States was working with Russia to resolve a North Korean banking dispute, a development expected to move forward a denuclearization deal whose implementation is overdue.

South Korean and U.S. officials are scheduled to meet in the coming days to discuss follow-up steps once the issue is solved.

Treasury spokeswoman Molly Millerwise said the U.S. was cooperating with Russian and Macanese officials to "facilitate the transfer" of funds previously frozen by Banco Delta Asia (BDA).

"We appreciate the willingness of the Russian government to facilitate this transaction and the good cooperation of the Macanese authorities," she said.

The State Department declined to give details.

"Until it is done...that will be the sign of progress," department spokesman Sean McCormack said in his daily briefing.

The BDA, a small bank in Macau, seized some US$25 million of North Korea-related funds in late 2005 after the Treasury accused it of laundering money pocketed by Pyongyang through illicit financial activities.

In March, the Treasury issued a ruling prohibiting American banks from doing business with the BDA, but agreed to the money being returned to North Korea. But in what appears to be an attempt to remove the stigma, North Korea has insisted on transferring the money to a third country through a U.S. bank, an arrangement restricted by the Treasury Department's ruling.

Press reports here said the plan is to route the North Korean funds through the Federal Reserve Bank of New York to Russia's central bank, and then to a commercial Russian bank from where withdrawals can be made.

Moscow will get a guarantee from Washington that it will not be penalized for handling the transaction, according to the reports.

South Korean Foreign Minister Song Min-soon was optimistic about the resolution of the banking dispute.

"At this point, it's too early to say it is resolved, but it is moving quickly," Song told reporters.

Asked about the envisaged intervention of the U.S. Federal Reserve Bank, Song gave a high mark for that. "It would not be subject to Clause 311 of the Patriot Act. It would go beyond legal and technical barriers." The stalemate of the banking dispute has held back a six-nation denuclearization deal in which the North is required to shut down and eventually disable its nuclear facilities. The first deadline passed on April 14 without any implementation.

Sources in Seoul said over the weekend that negotiations to move North Korea's money to Russia were under way in what could be a breakthrough in the stalemate. They said a resolution is possible this week.

South Korea's top nuclear envoy, Chun Yung-woo, arrived in Washington to discuss the BDA situation and overall issues related to the six-party talks, a denuclearization forum involving South and North Korea, the U.S., China, Russia and Japan.

Chun's U.S. counterpart, Christopher Hill, heads to Mongolia late Thursday to attend a regional meeting, commonly called the "Williamsburg Conference," hosted by the Asia Society. State Department officials said there were no plans yet for other stops or further contacts with North Korean counterparts but that Hill might use the opportunity if necessary while in the region.

The conference is slated for June 15-18.

WASHINGTON/SEOUL, June 12 (Yonhap News)