This is big news. The Bank of China has frozen DPRK-owned bank accoounts for one of two reasons:
1. The Bank of China plans to list on the New York Stock Exchange (NYSE), as a result, it has to comply with western regulations and concerns…making its role as the new faciltator of DPRK monetary transactions more difficult to accept.
2. The Chinese now suspect the DPRK of counterfeiting the Chinese Yuan.
I am not sure of the real reason just yet. Anyway, here is the coverage in the South Korean press:
From the Joong Ang Daily:
Bank of China freezes North’s money accounts
Lawmaker, citing U.S. official, blames counterfeiting concerns
by Brian Lee
The state-run Bank of China has frozen its North Korean bank accounts due to concerns over counterfeit money, a Grand National Party lawmaker claimed yesterday.
Lawmaker Park Jin said his information came from a former senior U.S. government official of the Bush administration, who served at the White House.
Nevertheless, an official with the Foreign Ministry said yesterday that there was no information in regard to Mr. Park’s claim while the Chinese Embassy to Seoul said it was not in a position to comment.
Mr. Park visited in Washington recently with ruling and opposition lawmakers.
The lawmaker said that after Washington initiated an operation called “Smoking Dragon” in September of last year, which was designed to target North Korean counterfeit activities, a Macao-based bank was put under financial sanctions and North Korea moved its bank accounts to China in response.
Mr. Park said the former official told him that continuing probes by Washington led to the measure taken by the Chinese bank.
Mr. Park said yesterday that the Chinese bank was opting to list its stock at the New York Stock Exchange and was told it had little choice but to freeze the accounts.
The lawmaker said he didn’t know the exact timing of when the Chinese bank had frozen the North Korean accounts but speculated that a recent rift between Beijing and Pyongyang was due in part to that incident.
China agreed to a UN resolution passed earlier this month that was drafted in response to North Korea’s missile launch, which occurred despite Beijing’s efforts to stop it.
Mr. Park asserted that Pyongyang is also forging Chinese yuan currency. However, Unification Minister Lee Jong-seok who was asked about it yesterday at a briefing to the National Assembly’s Unification, Foreign Affairs and Trade Committee, said Seoul had no information one way or the other about the forging.
From the Korea Times:
China freezes N.K. accounts: lawmaker
By Lee Joo-hee
A South Korean lawmaker yesterday claimed that the Bank of China froze its North Korean accounts in relation to the alleged counterfeiting activities of the communist regime.
Citing former and incumbent Washington officials, Grand National Party lawmaker Park Jin said the latest move by China was connected with the United States’ financial measures against North Korea’s counterfeiting and laundering of money.
“This is a virtual ban against dealing with North Korea by China, leaving North Korea all the more devastated,” Park said. Park was in Washington to attend a seminar that started on July 15.
Last September, the U.S. Treasury Department cautioned American banks from dealing with Banco-Delta Asia, a Macau-based bank, which allegedly helped circulate North Korea’s counterfeit U.S. dollars.
The measure eventually forced the Macau bank to freeze the North Korean accounts, which amounted to $24 million.
North Korea immediately protested the move and has since boycotted the six-party talks.
“According to U.S. officials, although the $24 million may not appear to be a large sum, North Korea is sensitive to this issue because most of the funds are used for bribery and purchases of weapon components,” Park said.
Park said that following the freeze of BDA, the U.S. Treasury Department trained their radars onto other banks in Macau. North Korea has moved its accounts into banks in China since, he said.
Washington is currently evaluating the data from BDA for proof that North Korea counterfeited U.S. dollars.
North Korea is apparently concerned that the BDA measure could also affect some $200 million to $300 million accounts that are scattered in Singapore, Austria, Switzerland and Russia.
In yesterday’s parliamentary session, Park questioned Unification Minister Lee Jong-seok over North Korea’s counterfeit currency.
Park contended that North Korea was also counterfeiting Chinese yuan, but Lee responded that he did not have any specific information about it.
Reports in Tokyo yesterday said Japan was contemplating revising foreign exchange and trade laws, as part of its additional sanctions on North Korea over its missile launches.
The revisions are likely to require about 300 Japanese-based companies with business ties with North Korea to suspend exports of about 40 materials to destinations that are believed to be linked to the North’s missile program, the Yomiuiri newspaper reported.
It will require the companies to report to the Trade Ministry the details of their exports of targeted materials, including large trucks, titanium alloys and carbon fiber, the Yomiuri said.
Japan is also considering banning cash remittances and freezing North Korean assets in the country.
From Yonhap:
Chinese bank said to freeze N.K. accounts for currency counterfeiting
North Korea is suspected of having printed fake Chinese currency, which prompted the Bank of China (BOC) to freeze all of its North Korean accounts in an apparent retaliation, a South Korean legislator asserted on Monday.
Quoting a number of unidentified U.S. officials, Rep. Park Jin of the main opposition Grand National Party (GNP) said the freezing of North Korean accounts at the BOC is tantamount to virtual imposition of sanctions by Beijing on the North.
“I understand the North is even more frustrated because this means China is in fact imposing sanctions on North Korea,” the opposition lawmaker told Yonhap News Agency in a telephone interview.
Park has just returned to the country after a three-day trip to Washington along with 12 other ruling and opposition party legislators.
The GNP lawmaker claimed Washington may have been aware of the Chinese bank’s move as early as late last year when its Treasury Department imposed sanctions on a Macau bank suspected of circulating counterfeit U.S. dollars printed in the North.
“I suspect (the United States) did not announce the part related to China considering the sensitivity of the issue,” Park said.
He later claimed Beijing may be working with Washington to crack down on Pyongyang’s alleged counterfeiting of Chinese yuan.
“Following U.S. dollars, North Korea is also counterfeiting China’s currency, the yuan,” Park said during a meeting of the National Assembly Unification, Foreign Affairs and Trade Committee.
The claim, if found true, is expected to further complicate the stalled negotiations over North Korea’s nuclear weapons program as the United States has been looking to China to convince the North to return to the multilateral talks.
Pyongyang has been staying away from the talks since November, shortly after Washington imposed sanctions on the Macau bank, Banco Delta Asia.
