The Bank of China and two banks based in Macau are under US scrutiny for possible connections to North Korea's illicit fundraising network, which Washington believes finances Pyongyang's nuclear program, the Wall Street Journal reported yesterday.
A Hong Kong spokeswoman for Bank of China, Clarina Man (
In a written response to faxed questions from the Journal, she added that the bank has "always been attaching great importance to anti-money-laundering activities."
The banks, which could face stiff sanctions, are caught up in a US operation to shut down lucrative North Korean enterprises producing narcotics, counterfeit US currency and fake cigarettes, the newspaper said.
It said law-enforcement officials from several countries described the wide-ranging US operation, while several North Korean defectors gave accounts of Pyongyang's financial network.
The operation comes as multilateral negotiations aimed at dismantling North Korea's nuclear-weapons program are set to resume next week, with China playing a key role.
It also comes amid plans for an initial public offering next year by Bank of China, which recently hired the Goldman Sachs Group of New York, to prepare the move. Recently, Bank of China secured a pledge of US$3.1 billion in investment from a consortium that includes Royal Bank of Scotland Group, Merrill Lynch & Co and Hong Kong billionaire Li Ka-shing (
The affair is also likely to reverberate in Asia because of the wealthy players behind the two Macau banks, the report said.
One of the Macau lenders, Banco Delta Asia, is controlled by Stanley Au (區宗傑), a major player in the Hong Kong financial markets who is also a legislator in Macau and serves as an adviser to the Chinese government.
The other bank, Seng Heng Bank, is controlled by billionaire gambling tycoon Stanley Ho (何鴻燊), who started a casino in Pyongyang and has close ties to Pyongyang and Beijing.
The Journal said that executives at Banco Delta Asia had no comment.
A spokesman for Seng Heng Bank told the newspaper: "We have nothing to provide you. We have no comment."
Banco Delta Asia, a unit of Delta Asia Financial Group, has been under scrutiny by the US Secret Service and other US agencies since a publicly disclosed 1994 counterfeiting case by the Secret Service and Macau police that led to the arrests of North Korean officials in Macau, the Journal said.
The bank is a top candidate for being placed on a Treasury Department blacklist of entities allegedly involved in money laundering, people familiar with the matter said. Inclusion on the blacklist, which could be proposed shortly, could make it difficult for the bank to do business internationally.
Talks with North Korea on dismantling its nuclear program will resume next week, China said yesterday, but Pyongyang raised a possible obstacle to progress by renewing its demands for the withdrawal of US troops from the Korean Peninsula as a sign of good faith.
Talks are due to resume this Tuesday, Chinese Foreign Ministry spokesman Qin Gang (