News / Economy

China Moves Against Key N. Korean Bank

In this undated file photo, men in Guangzhou, southeastern Guangdong province, share a newspaper outside a branch of the state-run Bank of China, which recently halted business with North Korea's Foreign Trade Bank, in the latest sign of Beijing-Pyongyang tensions.
In this undated file photo, men in Guangzhou, southeastern Guangdong province, share a newspaper outside a branch of the state-run Bank of China, which recently halted business with North Korea's Foreign Trade Bank, in the latest sign of Beijing-Pyongyang tensions.
Reuters
Bank of China Ltd has shut the account of North Korea's main foreign exchange bank, which was hit with U.S. sanctions in March after Washington accused it of helping finance Pyongyang's nuclear weapons program.
       
The state-run Foreign Trade Bank was told its transactions had been halted and its account closed, Bank of China, the country's biggest foreign exchange bank, said in a brief statement on Tuesday. It gave no reason for the closure and the bank declined to comment further.
       
The closure is the first significant, publicly announced step taken by a Chinese entity to curb dealings with North Korea in the wake of international pressure to punish Pyongyang over its banned nuclear and ballistic missile programmes.
       
"I think it is indeed a very noteworthy action,'' said Zhang Liangui, a North Korea expert at China's Central Party School, adding that Bank of China was probably concerned about its reputation and thus closed the account.
       
"In taking this action I think there are political considerations as well as considerations about its own interests.''
       
The U.S. sanctions prohibit any transactions between U.S. entities or individuals and the Foreign Trade Bank.
       
Japan has followed suit while Australia is expected to do the same soon. Washington has also urged the European Union to impose sanctions on the Foreign Trade Bank and has raised the issue with China, although Beijing has not commented publicly on the bank.
       
"We welcome reports that banks throughout the world, including Bank of China, have announced that they have closed the accounts of North Korea's Foreign Trade Bank,'' a senior U.S. Treasury official said on Tuesday, adding that the Foreign Trade Bank has facilitated millions of dollars in transactions that have benefited North Korea's arms dealer.
       
The official added that U.S. Treasury Secretary Jack Lew talked with Chinese officials about the matter during his visit to Beijing in March.
       
Experts have said Washington's move was designed to make foreign banks that do business in the United States think twice about dealing with the Foreign Trade Bank, in much the same way that banks have become wary about having ties with financial institutions in sanctions-hit Iran.
       
China is North Korea's traditional ally and its biggest trading partner. It is unclear how much of the $6 billion in annual bilateral trade goes through the Foreign Trade Bank.
       
Among China's other large banks, a spokesman at China Construction Bank said the bank did not do any business with the Foreign Trade Bank.
       
Industrial and Commercial Bank of China and Agricultural Bank of China were not immediately available for comment.
       
China has become increasingly frustrated with North Korea in recent months. It agreed to new U.N. sanctions after Pyongyang conducted its third nuclear test in February.
       
Those sanctions, announced on March 7, target the North's attempts to ship and receive cargo related to its nuclear and missile programmes and tighten financial curbs, including the illicit transfer of bulk cash.
       
The U.N. measures did not address the Foreign Trade Bank. Washington imposed its own sanctions several days later.

North Korean bank widely used

Not much is known about the Foreign Trade Bank, whose assets and investments are a state secret. But foreign embassies, non-governmental organisations and U.N. agencies in Pyongyang all use it.
       
Germany and France have expressed concern about the possible impact on aid groups as well as European embassies should the EU place sanctions on the bank, sources with knowledge of the matter have previously said.
       
Washington has targeted North Korea's limited financial links to the global community before. In 2005, some $25 million in North Korean money was frozen in a U.S. Treasury-inspired raid on Macau-based Banco Delta Asia, which Washington alleged handled illicit funds for Pyongyang.
       
Reuters reported in April that Chinese banks had to rate their clients' risk of criminal conduct on a scale of 1-5 as part of the central bank's moves to curb money laundering and fraudulent transactions estimated at hundreds of billions of dollars a year.
       
The new rules come as some experts cite China as the world's biggest source of "dirty'' funds and as it faces growing foreign pressure to scrutinise its financial links with North Korea and block cash transfers tied to Pyongyang's nuclear ambitions.
       
South Korea's Yonhap news agency in March said Beijing had warned North Korean banks to stay within the remit of their permitted operations in China or risk penalties. Chinese regulators have not commented on that report.
       
China has said it wants the U.N. measures enforced, but few analysts believe Beijing will take steps that significantly hurt North Korea as it is committed to a policy of engagement with Pyongyang.
       
China has stepped up checks on shipments to and from North Korea, but the flow of goods in and out of the reclusive state appears largely unaffected, according to more than a dozen trading firms Reuters spoke to recently.

You May Like

Turbulent Transition Imperils Tunisia’s Arab Spring Gains

Critics say new anti-terrorism laws worsen Tunisia's situation while others put faith in country’s vibrant civil organizations, women’s movement More

Burundi’s Political Crisis May Become Humanitarian One

United Nations aid agencies issue warning as deadly violence sends tens of thousands fleeing More

Yemenis Adjust to Life Under Houthi Rule

Locals want warring parties to strike deal to stop bloodletting before deciding how country is governed More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Seoul Sponsors Korean Unification Fairi
X
Brian Padden
May 29, 2015 1:27 PM
With inter-Korean relations deteriorating over the North’s nuclear program, past military provocations and human rights abuses, many Koreans still hold out hope for eventual peaceful re-unification. VOA’s Brian Padden visited a “unification fair” held this week in Seoul, where border communities promoted the benefits of increased cooperation.
Video

Video Seoul Sponsors Korean Unification Fair

With inter-Korean relations deteriorating over the North’s nuclear program, past military provocations and human rights abuses, many Koreans still hold out hope for eventual peaceful re-unification. VOA’s Brian Padden visited a “unification fair” held this week in Seoul, where border communities promoted the benefits of increased cooperation.
Video

Video Purple Door Coffeeshop: Changing Lives One Cup at a Time

For a quarter of his life, Kevin Persons lived on the street. Today, he is working behind the counter of an espresso bar, serving coffee and working to transition off the streets and into a home. Paul Vargas reports for VOA.
Video

Video Modular Robot Getting Closer to Reality

A robot being developed at Carnegie Mellon University has evolved into a multi-legged modular mechanical snake, able to move over rugged surfaces and explore the surroundings. Scientists say such machines could someday help in search and rescue operations. VOA’s George Putic reports.
Video

Video Shanghai Hosts Big Consumer Electronics Show

Electronic gadgets are a huge success in China, judging by the first Asian Consumer Electronics Show, held this week in Shanghai. Over the course of two days, more than 20,000 visitors watched, tested and played with useful and some less-useful electronic devices exhibited by about 200 manufacturers. VOA’s George Putic has more.
Video

Video Forced to Return Home, Afghan Refugees Face Increased Hardship

Undocumented refugees returning to Afghanistan from Pakistan have no jobs, no support system, and no home return to, and international aid agencies say they and the government are overwhelmed and under-resourced. Ayesha Tanzeem has more from Kabul.
Video

Video Britain Makes Controversial Move to Crack Down on Extremism

Britain is moving to tighten controls on extremist rhetoric, even when it does not incite violence or hatred -- a move that some are concerned might unduly restrict basic freedoms. It is an issue many countries are grappling with as extremist groups gain power in the Middle East, fueled in part by donations and fighters from the West. VOA’s Al Pessin reports from London.
Video

Video 3D Printer Makes Replica of Iconic Sports Car

Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video Al-Shabab Recruitment Drive Still on In Kenya

The al-Shabab militants that have long battled for control of Somalia also have recruited thousands of young people in Kenya, leaving many families disconsolate. Mohammed Yusuf recently visited the Kenyan town of Isiolo, and met with relatives of those recruited, as well as a many who have helped with the recruiting.
Video

Video A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensions

When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.

VOA Blogs

World Currencies

EUR
USD
0.9205
JPY
USD
123.69
GBP
USD
0.6508
CAD
USD
1.2456
INR
USD
64.051

Rates may not be current.