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

Could Nemtsov Threaten Putin in Death as in Life?

Dynamic and debonair opposition leader had supported liberal economic reforms, criticized Russian president's aggression in Ukraine More

Oil Smuggling Highlights Challenges in Shutting Down IS Finances

Pentagon spokesman says Islamic State 'certainly continues to get revenue from the oil industry black market' but that airstrikes have made a dent More

India Focuses on Infrastructure, Investment to Propel Economy

Government expects economy to grow at 8 to 8.5 percent in next fiscal year More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Supreme Court Hears Hijab Discrimination Casei
X
Katherine Gypson
February 25, 2015 11:30 PM
The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video US Supreme Court Hears Hijab Discrimination Case

The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video Falling Gas Prices Hurt Nascent Illinois Hydraulic Fracturing Industry

Falling oil prices are helping consumers purchase cheaper petroleum at the pump. But that’s made hydraulic fracturing or “fracking” less economically viable for the companies in the United States invested in the process. VOA’s Kane Farabaugh reports on one Midwestern town that was hoping to change its fortunes by cashing in on the next big U.S. oil boom.
Video

Video Fighting in Sudan's South Kordofan Fuels Mass Displacement

Heavy fighting in Sudan's South Kordofan state is causing hundreds of thousands to flee into uncertain conditions. Local aid organizations estimate as many as 400,000 civilians have been internally displaced since the conflict began more than three years ago, while another 250,000 have fled across the border to refugee camps in South Sudan. VOA's Adam Bailes reports.
Video

Video Lao Dam Project Runs Into Opposition

A Lao dam project on a section of the Mekong River is drawing opposition from local fishermen, international environmental groups and neighboring countries. VOA's Say Mony visited the region to investigate the concerns. Colin Lovett narrates.
Video

Video A Filmmaker Discovers Her Biracial Identity in "Little White Lie

Lacey Schwartz grew up in an upper middle-class Jewish family, in a town in upstate New York where almost everyone she knew was white. She assumed that she was, as well. Her recent documentary, Little White Lie, tells the story of how she uncovered the secret of her true racial background. VOA’s Carolyn Weaver has more on the film.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.
Video

Video US-Cuba Normalization Talks Resume Friday

Negotiations aimed at normalizing diplomatic relations between the U.S. and Cuba resume Friday. On the table: lifting a half-century trade embargo and easing banking and travel restrictions. There's opposition in Congress, but some analysts say there may be sufficient political and economic incentives in both nations for a potential breakthrough this year. VOA's Mil Arcega reports.
Video

Video Pakistan's Deadline For SIM Registration Has Cellphone Users Scrambling

Pakistani cell phone users have until midnight Thursday to register their SIM cards, or their service will be cut off. While some privacy experts worry about government intrusion, many Pakistanis are just worried about keeping their phone lines open. VOA Deewa reporter Arshad Muhmand has more from Peshawar.
Video

Video Myanmar Warns Factory Workers to End Strikes

Outside Myanmar's main city Yangon, thousands of workers walked off their jobs earlier this month demanding a doubling of their wages, pay raises after a year and input from labor unions on industrial regulations. Since Friday, the standoff has grown more tense as police moved in to disrupt the sit-ins, resulting in clashes that injured people from both sides. VOA correspondent Steve Herman visited industrial zones which have become a focus of Myanmar's fledgling workers rights movement.
Video

Video Oscar Winners Do More Than Thank the Academy

The Academy Awards presentation is Hollywood’s night to reward the best movies from the previous year. It’s typically a lot of glitter, a lot of thank you’s, a lot of speeches. But many of this year’s speeches carried messages beyond the thank you's. VOA’s Carolyn Presutti takes a look.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

World Currencies

EUR
USD
0.8896
JPY
USD
119.26
GBP
USD
0.6475
CAD
USD
1.2451
INR
USD
61.816

Rates may not be current.