China closes more RMB bank accounts linked to North Korea

UPDATE 2 (2017-9-12): According to the Global Times/Reuters (PR China):

Large State banks halt services for North Korean clients, tellers say

The big four Chinese State-owned banks have stopped providing financial services to new North Korean clients, according to branch staff, amid US concerns that the Chinese government has not been tough enough over North Korea’s repeated nuclear tests.

Tensions between the US and North Korea have increased after the sixth nuclear test conducted by Pyongyang on September 3 prompted the United Nations Security Council to impose further sanctions on Tuesday.

Chinese banks have come under scrutiny for their role as a conduit for funds flowing to and from North Korea.

China Construction Bank (CCB) has “completely prohibited business with North Korea,” said a bank teller at a branch in Northeast China’s Liaoning Province. The ban started on August 28, the teller said.

A person answering the customer hotline at the world’s largest lender, Industrial and Commercial Bank of China (ICBC), said the bank had stopped opening accounts for North Koreans and Iranians since July 16. The person did not explain why or answer further questions.

The measures taken by the largest Chinese banks began as early as the end of last year, when the city branch of Bank of China (BOC) in Dandong, Liaoning Province, which borders North Korea, stopped allowing North Koreans to open individual or business accounts, said a BOC bank teller who declined to be identified.

Existing North Korean account holders could not deposit or remove money from their accounts, the BOC teller said.

At Agricultural Bank of China (ABC), a teller at a branch in Dandong said North Koreans could not open accounts. The teller did not provide further details.

Official representatives for BOC, ICBC, CCB and ABC could not be reached for comment.

Banks in Dandong have been under the microscope as tensions have risen, given the city’s proximity to North Korea.

In June, the US accused the Bank of Dandong, a small lender, of laundering money for North Korea.

Attempts to slowly choke off the flow of funds to and from North Korea come after the US imposed sanctions on a Chinese industrial machinery wholesaler that it said was acting on behalf of a Pyongyang bank already covered by UN sanctions for supporting the proliferation of weapons of mass destruction.

UPDATE 1 (2017-9-11): According to the Financial Times:

China’s biggest banks have banned North Koreans from opening new accounts in an unprecedented move to clamp down on financial flows with the country’s unruly neighbour.

Multiple bank branches, including those of the country’s top four lenders, told the Financial Times they had imposed a freeze on new accounts for North Korean people and companies. Some are going even further, saying they are “cleaning out” existing accounts held by North Koreans by forbidding new deposits.

Banks implementing a ban on new accounts include the country’s big five — Bank of China, China Construction Bank, Agricultural Bank of China, and Industrial and Commercial Bank of China and Bank of Communications.

Branches of each of these banks in China’s north-eastern border towns, where trade with North Korea is concentrated, said they had been instructed to stop opening new bank accounts for North Korean individuals or companies.

Branches of three of the banks said they were in the process of cleaning out existing accounts, while the remainder did not comment on procedures for existing accounts.

Although some bank branches said they had received notice of the freeze on North Korean accounts last month, others said they had been told as early as January.

“Branches didn’t implement the rule all at the same time but it started recently,” said one branch of ABC in Dandong, the border city through which roughly 70 per cent of China’s trade with North Korea flows.

“Current bank accounts held by North Koreans should be cleared out,” said a representative of a branch of ICBC in Yanji, the trading hub closest to the nuclear blast site at Punggye-ri. “We implemented the restrictions long before last month’s sanctions.”

However, traders pointed out that there were ways to get around the account ban to continue doing legal business with North Korea.

“We always use Chinese citizens living in North Korea as intermediaries when doing business,” said one groceries trader in Dandong who wished to remain anonymous because of the political sensitivity around North Korean trade.

“There’d be no reason to freeze Chinese nationals’ accounts, unless they’re sanctioning individuals,” he added.

Two Chinese businesspeople who run companies in North Korea — one of whom is based in the Chinese border town of Hunchun and one in Pyongyang — said all their transactions, such as payments to North Korean staff, were made in cash in Chinese renminbi, avoiding the need to have dealings between North Korean and Chinese banks.

Read the fulls story here:
China’s biggest banks ban new North Korean accounts
Financial Times
Yuan Yang and Xinning Liu
2017-9-11

Here is additional coverage in the BBC.

ORIGINAL POST (2017-9-9): Daily NK reports that Beijing orders banks to close accounts for North Koreans:

Chinese banks have reportedly banned North Koreans living in China from opening up new accounts, and have ordered existing accounts to be closed.
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“The Chinese authorities have made no distinction between North Korean consular officials, laborers, or traders; all are banned from opening accounts,” a local source reported to Daily NK. “Previously, the banks were happy to open accounts for North Koreans living in China for personal reasons (mostly visiting relatives), provided they present their personal identity documents. This practice has ended as well.”

According to the source, the new order applies to the four major state banks, as well as the Construction Bank of China, and regional private banks such as Pudong Bank.

The new measures do not come without precedent. After North Korea’s third nuclear test, China implemented a provision of United Nations Security Council Resolution 2094 that involved suspension of a deal with North Korea’s Joson Trade Bank. However, the UN resolution did not address individual accounts.

Following this, the North Korean authorities began circumventing international financial sanctions by opening accounts in individuals’ names and remitting investment capital and commercial payments to and from Chinese companies.

Because the bank accounts of North Koreans residing in China are being closed, North Korean laborers are having difficulties remitting money back home.

“Under the old system, the monthly wages of North Koreans working in Chinese factories were transmitted through the bank account of the North Korean factory manager. This is no longer possible, so they are being paid in cash,” the source explained.

Also relevant to the measure is that North Korean-Chinese collaborative ventures have been banned from using bank accounts, so seed money is now required in cash.

“Normally, when North Korean merchants want to start a new business in China, they make a business plan and submit it to Pyongyang. Upon approval, they seek out cooperation and investment from Chinese investors. But now, even if the investment request is approved, it isn’t possible to open a bank account so the investor needs to use a third party to provide cash directly,” the source said.

A March 2017 Radio Free Asia (RFA) investigation reported a similar trend, noting, “Private Chinese banks are beginning to close bank accounts held by North Korean nationals. North Korean laborers earning foreign currency in China have been issued an emergency alert.”

The Chinese Ministry of Commerce announced on August 25th that it is banning new joint ventures with North Koreans in China and additional investments.

“The Chinese government is publicly announcing that they are banning business projects with North Koreans and closing North Korean bank accounts, but many loopholes remain in place. Money can be laundered on the North Korean side and passed through Southeast Asian nations,” a separate source in China with knowledge of the matter said.

Read the full story here:
Beijing orders banks to close accounts for North Koreans
Daily NK
2017-9-9

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