An Unusual Apparent Win-Win on North Korea
By Jonathan Winer
It looks like the Treasury strategy to sanction Banco Delta Asia (BDA) may have worked.
Today, North Korea announced not only its renewed participation in the Six Party Talks on nuclear proliferation, but also its intention immeditaely to halt its nuclear activities as soon as all of its funds frozen at a Macau bank in response to US pressure are released.
"If the Banco Delta Asia (BDA) issue is completely resolved, (North Korea) will halt its nuclear activities at Yongbyon," North Korea's lead negotiator, Kim Kye Gwan was quoted as saying in a keynote speech at the opening of the latest round of talks over the country's nuclear weapons program.
In return, the U.S. gave up $25 million in frozen North Korean government funds held at BDA, but with limitations that made the deal a face-saver for all parties, and achieved U.S. objectives. As stated today by Treasury Deputy Assistant Secretary Dan Glaser, the U.S. government's lead negotiator on the disposition of the frozen assets, North Korea has agreed to use the funds for specific humanitarian and educational purposes, while the bank itself remains on U.S. sanctions lists having been forced in September 2005 into receivership by US action, sending a strong message to other banks to be careful of handling any transactions involving North Korea that could be related to illicit activity. As DAS Glaser warned in a Treasury press release:
"Financial institutions that facilitate weapons proliferation, terrorist financing, narcotics trafficking, and other illicit financial activity should be on notice of the significant consequences they face."
BDA is a nice case study of what a financial institution should not do if it wishes to remain in business. Which financial institution will be the next terrorist finance or proliferation poster child?
