But the step paves the way for Macau authorities to unfreeze North Korean accounts containing US$24 million in what is rumored to be North Korean leader Kim Jong-il’s personal money in the bank. “Our investigation of BDA confirmed the bank's willingness to turn a blind eye to illicit activity, notably by its North Korean-related clients. In fact, in exchange for a fee, the bank provided its North Korean clients access to the banking system with little oversight or control,” Treasury Under Secretary Stuart Levey told reporters Wednesday. According to the department, BDA helped North Korea handle funds from illicit activities like counterfeiting U.S. dollars, manufacturing fake cigarettes and drug dealings. Some North Korean companies possibly laundered money through the bank, it said.

Despite the relatively paltry sum, the freeze of the accounts prompted North Korea to boycott six-party talks on its nuclear program for more than a year, and talks only resumed after the U.S. and North Korea met in Berlin in January and agreed to sort the matter out. The six-nation talks then swiftly produced an agreement in Beijing on Feb. 13 whereby North Korea promised to take initial steps toward disabling its nuclear facilities in return for energy aid from the other five.

However, the Treasury said the unfreezing of North Korean accounts is up to Macau authorities and declined to mention the exact amount that will be unfrozen. The department said it has informed Macau of the investigation results. As a result, Macanese authorities will probably unfreeze part of the money up to 12 million that apparently came from legal activities. Some observers believe China will unfreeze all of the accounts in consideration of ties with its Stalinist ally.

U.S. Treasury Under Secretary Stuart Levey announces measures against Macau-based Banco Delta Asia (BDA) during a press conference at the Treasury Department in Washington, DC on Wednesday. The U.S. concluded that the bank has been conducting illicit financial transactions, and has been a money-laundering channel for North Korea's illicit activities./Yonhap

Meanwhile, ahead of the official announcement, a South Korean government official quipped the BDA case would serve as “prize material for students of international relations and financial matters.” Since seeking a more conciliatory approach with North Korea, the U.S. has been wracking its brains how to handle the problem of the frozen $24 million. Until then, the U.S. heavily publicized the money-laundering allegations as a way to pressure the North, but since late last year, it has sought a way out to make progress in the six-party talks. The solution the U.S. appears to have come up with is to point out the unlawfulness of BDA's actions but wash its hands of the North Korean accounts. "It seems the U.S. has passed sentence but suspended it,” said Nam Sung-wook, a North Korea specialist at Korea University.

Financial experts, looking at past examples, describe the solution as a masterful touch. Despite allowing North Korea to retrieve the money, the U.S. is not publicly budging from its designation of the bank as a "primary money-laundering concern." Most of the financial institutions in countries like Lithuania and Burma the U.S. designated as primary money-laundering concerns in the past have either gone bankrupt or been taken over. At the moment, the North looks highly likely to get all of its money even if BDA goes bankrupt, and even before that it will get at least half of its money back.

Experts say the solution means nobody wins. Through a long-term investigation, the U.S. looked at some 100,000 North Korean financial transactions. A South Korean government official said, "We understand that after an investigation of about 50 North Korean accounts at BDA, the U.S. has obtained a considerable amount of information on the North's financial deals" -- enough, it would seem, to bring the BDA accounts up as a bargaining chip again any time it needs. But Washington could also face criticism that it exaggerated the information in the first place, considering that it did not present any decisive evidence, citing confidentiality, but let North Korea have the money.

North Korea, for its part, will find it more difficult to carry out international financial transactions now allegations of counterfeiting and money-laundering have been very publicly confirmed. But by digging in its heels over the BDA accounts, North Korea, once part of the “axis of evil”, was also able to win talks about normalization of diplomatic ties with the U.S. and other benefits.

(englishnews@chosun.com )