North Korea has been isolated further from the global financial system with the decision of a Vietnamese bank to order the immediate closure of all accounts linked to Pyongyang. East Asia Commercial Bank made the move even as diplomats tried to make progress during six-party nuclear talks last week.Since the US started targeting the regimeÂ’s financial activities a year ago, banks, including those in friendly communist countries such as China and Vietnam, have closed North Korean accounts, making it near-impossible for Pyongyang to transfer money, illicitly earned or otherwise.
East Asia Commercial Bank in Vietnam, which acts as a “correspondent bank” for customers wanting to remit money into and out of North Korea, last week told Pyongyang-based customers, including a foreign joint venture bank, to close their accounts by Wednesday. “Recently, we have worked with American partners in strategic co-operation,” Nguyen Thi Ngoc Van, deputy general director of East Asia Commercial Bank, wrote in a letter obtained by the Financial Times. “Therefore, we apology [sic] that we must close all your nostro [correspondent] accounts with our bank.”
| "We value our relationship with our American clients more than we value you. Now scram." |
It was not clear if the “partners” were US Treasury-related officials enforcing financial sanctions against North Korean entities accused of counterfeiting dollars and laundering illicit income.
As Vietnam prepares to join the World Trade Organisation and forge closer economic ties with the US, Hanoi has been co-operating with the US crackdown on North Korean financing. Hank Paulson, the US Treasury secretary, in September thanked Vietnam for co-operating with the crackdown by investigating North Korean bank accounts.
Pyongyang-based Tanchon Commercial Bank, which the US labelled the primary financial facilitator of North KoreaÂ’s ballistic missile programme, hastily shut its accounts after VietnamÂ’s Military Bank said it would go through the transactions.
East Asia Commercial Bank has ties to Citibank. In September it signed a strategic partnership agreement with the US bank, linking their credit and bank card networks and pledging to work together on training.
| That's one big American partner. |
US officials freely admit to being pleasantly surprised by the knock-on effects. Other banks, seeing the run on BDA and fearing they, too, might suffer, apparently voluntarily shut down all contacts with North Korea.
North Korean banks cannot transfer funds electronically so have to carry large amounts of cash to correspondent banks for remittance. North Korean customers used BDA in particular because it is one of the few banks to accept large deposits over the counter.