China gets tough on North Korea fund transfers in wake of sanctions

Most North Korean bank offices are based in China.
By Elizabeth Shim  |  March 3, 2016 at 11:29 AM
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DANDONG, China, March 3 (UPI) -- The latest round of sanctions adopted at the United Nations Security Council are expected to get tough on a key financial channel for North Korea: Pyongyang's state-run banks in China.

Resolution 2270, which passed unanimously at the Council on Wednesday, includes provisions that ban foreign financial firms from opening branches in North Korea without approval and forbids North Korean banks from opening offices overseas.

All existing branches of North Korean banks in U.N. member states are to be closed within 90 days, and in China authorities are tightening restrictions on remittances to North Korea, South Korean television network SBS reported Thursday.

Most North Korean bank offices are based in China, and when Beijing implements sanctions, the consequences could be more serious than the freezing of North Korean assets at Macau-based Banco Delta in 2005.

In Dandong, a Chinese border city that's central to North Korea trade, authorities have blocked money transfers taking place at Chinese-owned banks.

SBS reported North Korean traders and merchants who are typically seen in a street lined with banks have vanished as the firms have been ordered to suspend North Korea operations.

A Chinese bank representative at the Bank of Dandong told South Korean media North Koreans "can't send money from anywhere," and that some are taking wads of cash into the country directly.

But transporting money on trucks is also not easy, as Chinese customs checks have stepped up inspections of cargo going into North Korea.

A North Korean trader who spoke on the condition of anonymity said there is talk that the Chinese embargo on North Korean funds transfers could be limited to official and Pyongyang-sanctioned commerce, but it is not clear whether China would also crack down on transfers from migrants or defectors.

China has condemned North Korea for its January nuclear test and its state media has said the U.N. resolution was the "right step forward," according to Xinhua news agency.

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