Bank of China Cuts Off N.Korea Bank Accused of Weapons Dealing

By Bloomberg News

May 7 (Bloomberg) -- Bank of China Ltd. closed the account of a North Korean lender accused by the U.S. of facilitating transactions linked to weapons of mass destruction.

North Korea’s Foreign Trade Bank has been notified of the account closure and cessation of all fund transfers related to it, a spokeswoman for Beijing-based Bank of China said by phone today, asking not to be named due to company policy. She didn’t say when or why the account was shut.

The action by the state-controlled Chinese lender may reflect rising frustration with the North and an attempt to join the U.S. in tightening the flow of cash to Kim Jong Un’s government. As the North’s closest ally and biggest trading partner, China’s involvement is crucial for any measures against North Korea’s nuclear weapons program.

The announcement comes nearly a month after the U.S. and China, in a rare display of unity, set out a joint commitment to end the North’s bid to develop nuclear weapons. During an April 14 visit to Beijing, Secretary of State John Kerry asked President Xi Jinping to make greater efforts to enforce United Nations sanctions and to toughen China’s message to Pyongyang leadership.

The United Nations Security Council unanimously agreed on March 7 to new sanctions against the North after it conducted a nuclear weapons test in February.

The measures target “illicit activity” by North Korean diplomats, bulk transfers of cash, and banks and companies funneling funds or materials to support the country’s ballistic missile and nuclear weapons programs.

Four days later, the U.S. Treasury department froze American assets of the North’s primary foreign exchange bank, saying in a statement that it “facilitated millions of dollars in transactions” benefiting the country’s premier arms dealer Korea Mining Development Corp.

Bank of China, the country’s fourth-largest lender by assets, was the monopoly foreign-exchange dealer until 1994.

To contact Bloomberg News staff for this story: Sangwon Yoon in Seoul atsyoon32@bloomberg.net; Jun Luo in Shanghai at jluo6@bloomberg.net

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