- The Washington Times - Sunday, June 11, 2006

SEOUL — The head of the only foreign-run bank in North Korea is considering legal action against the Macau government to free funds frozen at the Chinese enclave’s Banco Delta Asia — a step that could cause strains between Pyongyang and Beijing.

The U.S. Treasury Department in September designated the bank as “a primary money-laundering concern” and, invoking the USA Patriot Act, required U.S. financial institutions to take “special measures” against it.

About $24 million in North Korean assets were subsequently frozen at the bank, which handles the secretive nation’s overseas accounts, and Pyongyang, blaming the United States, has since refused to return to six-nation talks on its nuclear programs until the funds are released.

However, Nigel Cowie, general manager since 1995 of Pyongyang-based Daedong Credit Bank, said in an interview that he is contemplating legal action against the Monetary Authority of Macau to win the release of Daedong’s own funds frozen at the bank.

Such action would effectively shift responsibility for the freeze from Washington to Beijing — which controls Macau as a special administrative region similar to Hong Kong — and potentially drive a wedge between North Korea and its most important ally.

Mr. Cowie, a Briton, explained to The Washington Times how the Banco Delta Asia (BDA) affair has affected the communist state’s international financial transactions.

“People think it’s $24 million of dirty money, but it’s not so much the $24 million, which is relatively small fry,” said Mr. Cowie, 44. “This affects the ability of the business community to do normal business in the DPRK, as other banks in Singapore and Europe have closed their accounts.

“There have been aggressive statements by U.S. Treasury officials that people in the DPRK undertaking illicit activities will try to open accounts. They are tarring everyone with the same brush.”

The Democratic People’s Republic of Korea, or DPRK, is the official name of North Korea.

When it acted in September, the U.S. Treasury called BDA “a willing pawn for the North Korean government to engage in corrupt financial activities.” The 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 said.

Last week in Hong Kong, Donald Glaser, the U.S. Treasury’s deputy assistant secretary for terrorist financing and financial crimes, said investigations into BDA were continuing. But a U.S. Embassy spokesman in Seoul said the probes was being handled by Macau authorities, not the United States.

“There are good reasons why BDA handled North Korean accounts, as they are one of the only banks that handle cash transactions,” Mr. Cowie said, adding that BDA was the only bank he knew of that had links with all North Korean banks.

“Trading is always done in foreign exchange, but the North Korean currency is not convertible,” he continued. “The DPRK has no reciprocal correspondent arrangements with overseas banks because its currency is not convertible and overseas banks do not want to have accounts in DRPK because of the country risk.”

With North Korea’s financial transactions having to be undertaken with cash, suspicions of money laundering are unsurprising, analysts say.

“One option is legal action against whoever is preventing the release of our money — presumably the Monetary Authority of Macau,” said Mr. Cowie, whose bank’s assets include “a substantial amount” of the frozen $24 million.

“We have been hesitant to take aggressive action as we have been in the same boat as all DPRK banks, and I presume the DPRK government is doing things with the Chinese government. But some colleagues overseas have suggested action against the MAM. Perhaps we will, as we are the only one affected who is a majority foreign-owned bank.”

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