In a statement published Tuesday in major newspapers in Hong Kong and Macau, Banco Delta Asia said it had been engaged in business with North Korean banks and trading companies since the 1970's. But it called the U.S. Treasury Department's accusation that the bank is a money laundering conduit for North Korea "unfounded".
On Thursday, the Treasury Department designated Banco Delta Asia as a "primary money laundering concern" under the USA Patriot Act, which was passed in the aftermath of the September 11, 2001, terrorist attacks on New York and Washington.
The department said Banco Delta has been a "willing pawn" for North Korean agencies and companies to engage in "corrupt financial activities through Macau." It said the bank has met North Korea's needs and demands "with little oversight or control."
Stanley Au, the bank's chairman, told Hong Kong television the allegations are not true.
The bank says it will appeal the designation, and has announced that it has suspended all transactions with North Korean clients.
On Friday and Saturday, thousands of panicked depositors in Macau lined up to withdraw money from the bank.
In a bid to maintain public confidence, the Macau government appointed two independent bankers to help run Banco Delta Asia while it is under investigation. The Hong Kong Monetary Authority Friday also appointed a representative to manage a bank subsidiary in Hong Kong.
Joseph Yam, the head of the Hong Kong Monetary Authority, said Tuesday the investigation into the bank should proceed carefully in order to protect depositors.
The Treasury Department's Financial Crimes Enforcement Network has proposed a new rule that would prohibit U.S. financial institutions from dealing with Banco Delta Asia.
The department characterized Macau as a region in need of "significant improvement" in money laundering controls. The former Portuguese enclave reverted to Chinese sovereignty in 1999, and is best known for its booming gambling industry.