NATIONAL

‘Chinese banks cannot escape U.S. sanctions’

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  • Published : Jul 26, 2010 - 17:55
  • Updated : Jul 26, 2010 - 17:55

Chinese banks ― mostly bigger institutions with international operations ― will not be able to avoid the sanctions that the U.S. is pursuing against North Korea, an official here said Monday.

“The bigger banks cannot avoid the sanctions because all of its transactions go through the U.S.,” he said.

He stressed that even smaller institutions ― such as Banco Delta Asia in the past ― could come under scrutiny because all wiring services go through New York.

“This means that for everyone dealing with North Korea, it will become difficult for them to send and receive money from the North,” the official said on the condition of anonymity.

The U.S. has already called for a dozen banks around the world including those in China to freeze the North Korean assets in their accounts, according to diplomatic sources in Washington. The accounts are suspected of being used for illicit activities by the North, such as purchasing weapons, luxury goods and trading in counterfeit.

All of these acts are banned under the U.N. Security Council Resolution 1874 adopted after Pyongyang conducted its second nuclear test in May, 2009.

The U.S. State Department’s special adviser on nonproliferation Robert Einhorn is said to have toured countries in Europe for their cooperation and will visit the Asian region early next month.

Einhorn serves as the Obama administration’s point man on devising and implementing sanctions on North Korea.

The U.S. is currently scrutinizing all accounts the North has around the world that appear to be suspicious, sources have said.

The U.S. is likely to officially announce the list of accounts it finds to be guilty of suspicious activities following Einhorn’s visit, officials here said.

“We expect a full list of accounts and financial institutions,” said one government official.

Many have likened the latest sanctions to a “surgical attack,” in contrast to past sanctions on Banco Delta Asia, which were seen as more of a “general attack.”

This is because the U.S. has said it will be zeroing in on specific accounts, instead of focusing on just one bank in general.

U.S. Secretary of State Hillary Clinton announced that Washington would be pursuing new sanctions against North Korea last week during a meeting between the allies.

The move was tit-for-tat for North Korea’s failure to own up to attacking the Cheonan in March, and also refusing to take steps toward complete and irreversible denuclearization.

The six-party talks aimed at ending Pyongyang’s nuclear activities have been stalled since last year.

Cooperation from China ― still the North’s closest ally ― will be critical for the new sanctions to have effect, experts and officials have noted.

Following South Korea, China was found to have the greatest number of financial transactions with the North, according to a U.N. report. The European Union followed China.

With the South reticent to restart trade or any other form of transactions with the North, China and Europe are Pyongyang’s best bet at staying afloat.

The North has suffered increased difficulty in exporting or importing weapons and related materials, which are the main source of its income.

China has so far sided with the North, saying that it was time to put the Cheonan issue in the past and move on to revive the six-way dialogue that it chairs.

The Cheonan was a 1,200-ton South Korean ship that sank on March 26, killing 46 of the sailors aboard.

Seoul, along with a team of multinational investigators, concluded that Pyongyang was culpable for the incident.

By Kim Ji-hyun  (jemmie@heraldcorp.com)