U.S. says way found to transfer North Korea funds

By Sue Pleming

WASHINGTON (Reuters) - The United States has found a way to transfer frozen funds to North Korea and U.S. negotiator Chris Hill will leave for the region on Sunday to refocus attention on denuclearization, the State Department said on Friday.

State Department spokesman Sean McCormack said the United States supported the release of the entire $25 million in funds held at Banco Delta Asia in Macau.

"We have consulted with the interested parties and assured them that there is a potential solution that is consistent with international banking laws," said McCormack.

"That implementation does not involve the United States," he added.

A U.S. Treasury Department spokeswoman was more circumspect about the arrangements for a transfer, saying that North Korean parties needed to ensure the funds would be used for humanitarian purposes.

"Based on progress achieved, the U.S. government has communicated its support for release of all funds," said Treasury spokeswoman Molly Millerwise.

"We stand ready to assist the Macanese authorities in their efforts to release the funds and with all parties to effectuate the North Korean pledge that any money received by them would be used for humanitarian purposes of benefit to the North Korean people," she said in a statement.

It was not immediately clear whether the other parties involved in the dispute were of the same view or whether the issue of the frozen funds had been entirely resolved.

"We have worked with all parties to ensure this is consistent with our mutual domestic and international obligations regarding safeguarding the world's financial system," Millerwise added.

APRIL 14 DEADLINE

Hill, the U.S. Assistant Secretary of State for East Asian and Pacific Affairs and the lead U.S. negotiator in the six-party talks over North Korea's nuclear program, would head for the region on Sunday, with stops in Beijing, Tokyo and Seoul, for consultations to refocus attention on denuclearization, said McCormack.

The dispute over the transfer has held up implementation of a February 13 agreement by the two Koreas, the United States, Japan, China and Russia, which gave North Korea 60 days to shut its nuclear facilities in return for energy aid.

"We have identified a way to potentially implement fully the agreement," McCormack told reporters,

U.S. Treasury officials spent the past 10 days in Beijing trying to find a way to resolve the issue and McCormack said it appeared a solution had been found.

The U.S. delegation led by the Treasury's deputy assistant secretary for terrorist financing, Daniel Glaser, left Beijing for Washington on Friday morning.