LEAD: N. Korea offers to crack down on illegal financial moves: sources

0 Comments | Asian Political News, Jan 2, 2006

BEIJING, Dec. 30 Kyodo

(EDS: ADDING DETAILS, BACKGROUND)

North Korea has told China it would crack down on alleged illegal financial activities in the country if they can be proved, in a move believed to be aimed at halting U.S. sanctions on a Macao-based bank suspected of laundering money for the North, diplomatic sources said Friday.

North Korean Vice Foreign Minister Kim Kye Gwan made the comment to Chinese Vice Foreign Minister Wu Dawei in a meeting in the northeastern Chinese city Shenyang last week, according to the sources.

The comment comes at a time when a dispute between Pyongyang and Washington over the U.S. sanctions is preventing the resumption of six-party talks aimed at curbing the North's nuclear ambitions.

Kim is North Korea's chief delegate to the six-party talks, while Wu is China's head delegate and host of the multilateral meeting.

In the meeting in Shenyang, Kim repeated the North's position that it will not return to the six-party negotiating table until the U.S. sanctions are removed, according to the sources.

But Kim also told Wu that North Korea will consider punishing those involved in illegal financial activities under the North's domestic laws if the United States can prove that such activities are indeed taking place, the sources said.

North Korea has so far denied allegations that it is laundering money gained through illegal activities and counterfeiting U.S. dollars.

While Washington has also imposed sanctions against North Korean entities for allegedly proliferating weapons of mass destruction, diplomats say the sanctions on the Macao-based Banco Delta Asia SARL is particularly hurting North Korea.

''There is every indication that the sanctions on the bank have been a huge blow for North Korea,'' a senior Asian diplomat in Beijing said.

''That is why the North is insisting that they be lifted. But I cannot imagine the United States doing so on political grounds, as the sanctions are technically not a political move against North Korea but are aimed at tackling illegal activities,'' the diplomat said.

The latest round of the six-party talks was held in Beijing in November before entering what officials described as a ''recess.'' The talks involve the two Koreas, the United States, China, Japan and Russia.