April 10, 2007 / 7:43 AM / in 11 years

Macau set to unfreeze North Korea funds, says U.S.

WASHINGTON (Reuters) - Macau is set to release the frozen funds North Korea has cited as a reason for refusing to shut its nuclear facilities, the U.S. Treasury Department said on Tuesday.

North Korean soldiers march in the truce village of Panmunjom, in the demilitarised zone separating the two Koreas, about 34 miles north of Seoul, April 4, 2007. Macau authorities are set to release all of the frozen funds North Korea has cited as a reason for refusing to shut its nuclear facilities, the U.S. Treasury Department said on Tuesday. REUTERS/Jo Yong-Hak

North Korea, formally called the Democratic People’s Republic of Korea (DPRK), walked out of six-party talks aimed at ending its nuclear weapons program last month when the transfer of $25 million held at Banco Delta Asia in Macau never happened.

“The United States understands that the Macau authorities are prepared to unblock all North Korean-related accounts currently frozen in Banco Delta Asia,” a Treasury Department statement said.

It did not say when the funds would be released or give a precise dollar figure. Authorities in Macau, a Chinese territory near Hong Kong, were expected to make their own announcement, a U.S. official said.

“Based on previous discussions with Chinese, Macanese and DPRK officials, as well as understandings reached with the DPRK on the use of these funds, the United States would support a decision by the Macau authorities to unblock the accounts in question,” the statement said.

A Macau government spokeswoman reached after the Treasury announcement was made said it had no new information on the transfer of funds.

A file photo of Stanley Au (R), chairman of Delta Asia Financial, attending a news conference in Macau, China March 16, 2007. Macau authorities are set to release all of the frozen funds North Korea has cited as a reason for refusing to shut its nuclear facilities, the U.S. Treasury Department said on Tuesday. REUTERS/Paul Yeung

An official at the Macau Monetary Authority said there would be an announcement “within these few days” but gave no details, and a spokesman at Banco Delta Asia said he had not heard of any change.

North Korea insisted it had to receive the $25 million before it would begin to implement a February 13 agreement among the two Koreas, the United States, Japan, China and Russia that gave the North 60 days to shut its nuclear facilities in return for energy aid. That deadline falls on Saturday.

The funds were frozen after U.S. authorities designated the Macau bank as a “primary money-laundering concern” in September 2005 and accused North Korea of illicit activities, including counterfeiting U.S. currency and smuggling drugs.

A Chinese Foreign Ministry spokesman suggested that Bank of China, which had been initially lined up to accept the frozen funds on behalf of Pyongyang, still needed more reassurances it would not be penalized for taking the money.

“Related Chinese banks are listed companies and need to fulfill relevant international obligations and laws,” spokesman Qin Gang told a news conference.

In lengthy negotiations on ending the freeze of the funds, North Korea said it would use the released cash for humanitarian or educational purposes. Experts said it would be difficult to verify what Pyongyang actually does with the money.

Additional reporting by Beijing and Hong Kong newsrooms

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