China Shuts Off Ties With North Korean Bank
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China’s second largest lender, the state-owned Bank of China, announced on Tuesday that it will be suspending its dealings with the Foreign Trade Bank of North Korea, North Korea’s main foreign exchange bank, following growing displeasure in Beijing over Pyongyang’s nuclear program.
According to a BOC statement, the Chinese bank will be suspending all of FTB’s accounts in China; and also halt all fund transfers related to these accounts.
China’s second largest lender, the state-owned Bank of China, announced on Tuesday that it will be suspending its dealings with the Foreign Trade Bank of North Korea, North Korea’s main foreign exchange bank, following growing displeasure in Beijing over Pyongyang’s nuclear program.
According to a BOC statement, the Chinese bank will be suspending all of FTB’s accounts in China; and also halt all fund transfers related to these accounts.
Though the closure will be the first openly acknowledged move by an institution in China against North Korean interests, Chinese regulators warned last month that they were ready to clamp down on any North Korean money laundering, siding with the U.S. over recent sanctions against its traditional ally.
Related: China to Curb North Korean Money Laundering
Related: China Agrees With US On North Korea Sanctions
According to the Wall Street Journal, U.S. Treasury Secretary Jacob Lew also specifically raised the issue of the FTB’s activities during his meetings with senior Chinese officials last month in Beijing. In March, the U.S. Treasury Department imposed sanctions against the FTB, effectively cutting it off from the U.S. financial system.
The BOC declined to provide any further details on FTB’s account besides the announcement. But the Financial Times reported that the BOC account was North Korea’s largest related to foreign exchange transactions, causing significant damage to the North Korean institution.
Nonetheless, FT speculated that other Chinese institutions, including small regional entities, are still capable of handling foreign currency deals for Pyongyang.
“Bank of China, of all the Chinese banks, has to adhere to international sanctions because they have a reputation to uphold,’’ said John Park, an expert in Chinese-North Korean relations at Harvard University’s Belfer Center, to the Los Angeles Times.
[quote]“What would be more substantive is if China revokes the work authorization documents for the North Korea state trading companies in China,” Park added.[/quote]Stephanie Kleine-Ahlbrandt, northeast Asia director at the International Crisis Group, further noted to CNN:
[quote]“This is part of a ratcheting up of pressure but with very clear limits. This is part of making North Korea feel some limited pain in an attempt to get them back to talks.”[/quote]Related: China & North Korea: A Historically Tense Alliance Built On Necessity
Related: The Time To Re-Engage North Korea Is Now: Dan Steinbock
Related: North Korea’s Brilliant Bluff – Why Kim Still Holds All The Trump Cards: George Friedman
The Obama administration in the U.S. quickly praised BOC’s actions on Tuesday, highlighting recent Beijing-Washington talks to ease tensions on the Korean peninsula.
“We welcome reports that banks throughout the world, including Bank of China, have announced that they have closed the accounts of North Korea’s Foreign Trade Bank. We will continue to work with China and our other international partners to encourage global compliance,” said Patrick Ventrell, deputy spokesman for the State Department, at a press briefing.
[quote]”You know they (the Chinese) have a special relationship and a special influence (with Pyongyang)…. And we continue to urge them to use that influence to help get North Korea to make better decisions,” Ventrell added.[/quote]
