4 major Chinese banks halt money transfers to North Korea

May 10, 2013

THE ASAHI SHIMBUN

BEIJING--China’s four largest state-owned commercial banks have suspended money transfers to North Korea as part of sanctions against Pyongyang’s missile launch and nuclear test.

The action was based on a direct instruction from a government agency, sources close to the banks said.

The Bank of China, the Industrial and Commercial Bank of China, the China Construction Bank and the Agricultural Bank of China took the step following North Korea’s third nuclear test in February, the sources said.

“North Korea came under sanctions over issues including the launch of ballistic missiles,” said a senior official at a branch of the China Construction Bank.

A source close to the Bank of China, which trades heavily in foreign currency, said the bank received instructions from a government agency that manages foreign currency trade.

The Bank of China also confirmed that it had shut down the account of the Foreign Trade Bank, North Korea’s main financial institution for the settlement of foreign trade transactions.

“We have notified North Korea of the closure of the Foreign Trade Bank’s account and suspended handling remittances and disbursements to the account,” an official told The Asahi Shimbun on May 9.

China’s move over financial transactions with North Korea is believed to have affected bilateral trade to a certain extent.

A Chinese trading company in Dandong, a city in Liaoning province bordering North Korea, has been unable to transfer money to North Korea, a source close to the company said.

North Korean workers in China are also believed to be having difficulties sending money home.

However, the effectiveness of these financial sanctions remains to be seen since the amount of money North Korea’s Foreign Trade Bank has handled is unknown.

Much of the trade between China and North Korea is settled in cash or barter, a diplomatic source in Beijing explained.

An official at a Chinese trading company also said money can be brought into North Korea by human couriers.

The United States is in favor of China’s stance.

“We welcome steps that increase the sanctions,” Patrick Ventrell, a State Department acting deputy spokesman said May 8. “We continue to urge them to use (their) influence to help get North Korea to make better decisions.”

The U.S. Treasury Department in March banned banks in the United States from dealing with the Foreign Trade Bank because it was suspected of providing funds for North Korea's nuclear weapons development program.

But the step appears to have a limited effect because only a few transactions are believed to have occurred between banks in the United States and the North Korean bank.

(This article was written by Atsushi Okudera in Beijing and Tokuhiko Saito in Shanghai.)

THE ASAHI SHIMBUN
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A man uses an ATM machine at a Bank of China branch in Beijing, China, on May 8. The bank, one of China's biggest banks, said it has halted business with the Foreign Trade Bank of North Korea accused by the U.S. of financing Pyongyang's missile and nuclear programs in the latest sign of Beijing's anger with its estranged ally. (AP Photo)

A man uses an ATM machine at a Bank of China branch in Beijing, China, on May 8. The bank, one of China's biggest banks, said it has halted business with the Foreign Trade Bank of North Korea accused by the U.S. of financing Pyongyang's missile and nuclear programs in the latest sign of Beijing's anger with its estranged ally. (AP Photo)

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  • A man uses an ATM machine at a Bank of China branch in Beijing, China, on May 8. The bank, one of China's biggest banks, said it has halted business with the Foreign Trade Bank of North Korea accused by the U.S. of financing Pyongyang's missile and nuclear programs in the latest sign of Beijing's anger with its estranged ally. (AP Photo)