Six-Party Talks

The March 14 ruling prohibiting U.S. financial institutions from opening or maintaining correspondent accounts for or on behalf of BDA follows months of investigation as to whether the bank, operating in the Macau autonomous region of China, had illicit financial dealings on behalf of North Korea.

Speaking at a press conference in Washington March 14, U.S. Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey said “BDA allowed its North Korean clients to use the bank to facilitate illicit conduct and engage in deceptive financial practices” and it “did not conduct due diligence to attempt to verify the source of these unusually large currency deposits.”

The United States first declared Banco Delta Asia a “primary money laundering concern” in September 2005. Since that time, the bank has been in receivership by the financial authorities of Macau, which froze more than $25 million in accounts held by clients connected with North Korea. (See related article.)

The fate of North Korean accounts frozen during the BDA investigation will be decided by Macanese authorities, U.S. officials said March 14.

North Korea has demanded the release of these funds as a condition to continue the Six-Party Talks among South Korea, China, Russia, Japan, North Korea and the United States. Under the February 13 agreement, North Korea agreed to shut down its Yongbyon nuclear reactor in return for a U.S. promise to resolve the issue of the BDA and the frozen assets. (See related article.)

	U.S. Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey (© AP Images)

Assistant Secretary of State for East Asian and Pacific Affairs Christopher R. Hill said he is “pretty convinced” the issue of the funds will not pose a problem for the Six-Party Talks on the North Korean nuclear program. Hill is in Beijing to consult with other parties involved in the six-party process. The North Koreans are going to join the group March 16.

Hill said he expects North Korea to proceed with the promised shutdown and that the move will lead to a full abandonment of the nuclear program.  “The next stage after that will be that it’s dismantled. We see it as a one-way ticket, if you will,” he said.

In return, Hill said, the United States, together with South Korea, Russia and China, is committed to dealing with North Korean economic and energy needs “in an equitable way,” and is very interested in improving the humanitarian situation of the North Korean people, which, he said, is affected by a number of things “including energy shortages.”

Both Levey and Hill expressed their appreciation for the cooperation of the Macanese authorities who, they said, took significant steps to reform their anti-money-laundering laws and to improve internal controls at the BDA.

The U.S. officials said, however, that the United States continues to be concerned about the ownership and long-term management of BDA. If the bank’s long-term management were transferred to a “responsible member of the financial community” U.S. officials immediately would take another look at the issue to see if U.S. financial institutions could be allowed to deal with BDA, they said.

The full text of the press release announcing the BDA final rule is available on the Treasury Department Web page.