- The Washington Times - Tuesday, January 24, 2006

SEOUL — U.S. Treasury officials briefed their South Korean counterparts yesterday on suspect North Korean financial activities that led to U.S. action against Pyongyang’s overseas bank accounts.

The U.S. Embassy widely publicized the meeting, possibly hoping to allay suspicions in South Korea that hawks within the Bush administration, which first aired the charges in September, were seeking to frustrate improvement of North-South ties.

Analysts said the Treasury delegation — which will also visit Beijing, Hong Kong, Macau and Tokyo — may present Asian financial authorities with indisputable evidence of Pyongyang’s financial crimes in the hope of winning support for a crackdown.

But South Korean President Roh Moo-hyun said today he opposes pressuring North Korea to resolve the nuclear standoff.

“I don’t agree to some opinions in the U.S. that appear to … be wanting to pressure North Korea and its collapse,” Mr. Roh said during a nationally televised news conference. “If the U.S. tries to resolve the problem that way, there will be friction between South Korea and the U.S. But, so far, there is no disagreement.”

Daniel Glaser, the Treasury’s deputy assistant secretary for terrorist financing and financial crimes, met South Korean officials “to bolster defenses against illicit financial activity in the region,” according to a press release from the U.S. Embassy in Seoul.

It continued: “Money laundering, currency counterfeiting and [financing for] weapons-of-mass-destruction proliferation constitute a grave threat to global security.”

The statement said Mr. Glaser had “stressed the need for rapid practical steps to ensure that financial institutions such as the Banco Delta Asia … do not provide a facilitative environment for North Korean illicit activities and other criminal conduct.”

Macau-based Banco Delta Asia was targeted by U.S. authorities in September, when the Treasury called the bank “a willing pawn for the North Korean government to engage in corrupt financial activities.”

The Treasury said Macau’s second-largest bank had worked for North Korean government agencies and front companies engaged in multimillion-dollar transactions, including money laundering, currency counterfeiting and the sale of pirated tobacco products. It also accused Pyongyang of drug trafficking.

Invoking the USA Patriot Act, the Treasury required U.S. financial institutions to take “special measures” against the bank, which in effect froze Pyongyang’s assets.

North Korea called the U.S. steps “sanctions,” and has said it will not return to six-party nuclear talks until Washington drops the measures.

Analysts say North Korea has directorates engaged in activities ranging from gold production and the sale of missile technology to narcotics trading and currency counterfeiting. The directorates purportedly provide hard cash for Northern leader Kim Jong-il.

Neither Beijing nor Seoul has publicly supported the U.S. move against Pyongyang’s overseas banking. Seoul-based North Korea watchers question whether South Korea — which prefers gradual change in the North to an abrupt collapse — is prepared to implement policies that could be seen as pushing the North toward rapid regime change.

South Korea has “plenty of quote-unquote evidence” of the North’s illicit financial activities, said Choi Jin-wook of the Korea Institute of National Unification, “so I do not think there is any friction with the U.S.”

But, he said, “I do not expect any South Korean reaction beyond comments.”

Other experts believed Washington has decided to adopt a harder line against Pyongyang, squeezing Seoul between its northern neighbor and its most important ally.

“I am sure there is some frustration in Washington that they have to come here to prove that they are not making this up,” said Peter Beck of the International Crisis Group.

Alexander Vershbow, the U.S. ambassador to Seoul, caused a storm in both North and South Korea in December when he called North Korea “a criminal regime.”

Pyongyang characterized him as “the worst ambassador in history,” and some Southern politicians called for his replacement.

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