Bank of China cuts ties with North Korea’s Foreign Trade Bank

Posted on : 2013-05-09 17:05 KST Modified on : 2019-10-19 20:29 KST
Move could be a sign that Chinese financial institutions will follow sanctions on North’s nuclear activities
 one of the four large Chinese state-owned commercial banks
one of the four large Chinese state-owned commercial banks

By Seong Yeon-cheol, Beijing correspondent

China’s leading state-owned bank has closed down its account at the Foreign Trade Bank of North Korea.

Bank of China spokesperson announced the move in a brief May 7 statement, “We have notified the Foreign Trade Bank (FTB) that all accounts and financial trade will be closed down”. They did not provide any explanation as to why these decisions were made. Bank of China has the world’s largest volume of foreign exchange transactions.

The FTB, which is responsible for all of North Korea’s foreign financial dealings, was alleged by the US government to have been used to fund North Korea’s nuclear weapons program. The US Treasury has designated FTB for sanctions. The designation bans dealings between the designee and any American entity. It also freezes any of the designees’ assets that may fall under American jurisdiction.

This is the first time a Chinese institution has made moves in line with the UN sanctions of the North Korean nuclear weapons program.

On Apr. 12, David Cohen, Under Secretary of the US Treasury for Terrorism and Financial Intelligence, visited China and requested they join the sanctions against North Korea. Some believe that Bank of China’s recent decision was a response to the request.

Zhang Liangui, a North Korea expert at China’s Central Party School, told Reuters that the move was a “very noteworthy action.” Zhang added, “In taking this action I think there are political considerations as well as considerations about [Bank of China’s] own interests.”

Starting from March, the Foreign Trade Bank has been the main target for sanctions against North Korea. Last month with the US Treasury announcing measures to be taken for sanctions, they have pointed out that the Foreign Trade Bank is the main source for funding the North Korea nuclear weapons and missile program. In addition the US has prohibited any institute, company and/or individuals to trade with this bank. They have also insisted that the EU and other countries to join sanctioning the bank. Japan and Australia have already agreed with the request.

The Financial Times wrote of Bank of China’s recent announcement, “The Bank of China has stopped doing business with a large North Korean bank, falling into line with a US-led sanctions push to restrict funding for Pyongyang’s nuclear programme. The decision to close the bank account follows an increase in tensions on the Korean peninsula and may be a sign that Beijing is willing to place more pressure on Pyongyang. Bank of China is the country’s biggest bank for foreign exchange transactions, so the account closure could hurt the North Korean institution. But the impact is likely to be minimal unless imposed across the board by all Chinese banks because other institutions, including small regional entities, are also capable of handling foreign currency deals.”

Following North Korea’s missile launch test and third nuclear test, China voted for the UNSC resolution to sanction North Korea in March. Additionally, on Apr. 17, the Chinese government notified all subordinate organizations to strictly execute the UNSC resolution and report any problems.

In February, the Chinese government sent an official document to all subordinate organizations to follow the UNSC resolution related to North Korea’s long-range missile launch. Since then, security on customs and inspection between China and North Korea have been strengthened, while there has also been a crackdown on North Korean defectors residing and trading in China.


Translated by Kim Kyung-min, Hankyoreh English intern


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