State Dept Asks Wachovia to Move Tainted DPRK Funds
by Richardson ~ May 17th, 2007. Filed under: America, Diplomacy, Economics, Engagement, Six-Party Talks. 
In a follow-up to this, from just over two hours ago via Reuters (h/t reader):
U.S.-based bank Wachovia Corp. said on Thursday it had been asked by the U.S. State Department to help with the transfer of $25 million in tainted funds that has delayed a shutdown of North Korea’s nuclear complex.
[. . .]
Although Washington agreed to unfreeze the funds, foreign banks have so far refused to accept the money, fearing they too would be tainted and cut off from the U.S. financial system.
The United States has been searching for a bank to help end the impasse, and Wachovia said it was asked “on a non-profit basis” to process the interbank transfer.
“We have agreed to consider this request and our discussions with various government officials are continuing,” said a statement from the bank, which is based in Charlotte, North Carolina.
“We take any request for assistance from our government seriously and endeavor to cooperate wherever possible,” added the statement.
[. . .]
Washington said weeks ago that the money, frozen at its request due to suspected links to illicit activity by Pyongyang, had been released and was awaiting collection.
[. . .]
[State Department spokesman Sean] McCormack said the goal was to get back to the six-party talks to denuclearize the Korean Peninsula rather than be tied down trying to resolve the problem with the tainted funds.
“It’s one that we hope we can get back to and impart some more momentum to those discussions,” he said.
[. . .]
Wachovia did not provide any specific details of its involvement but made clear it had fully complied with U.S. sanctions against North Korea and would not agree to any request without appropriate approval from regulators.
As I said previously, I’m reserving judgment - for a bit longer:
If the administration, once past the BDA issue, does not use North Korea’s next expected violation of the 13 February agreement (full disclosure of nuclear programs, including uranium enrichment), then I’ll have to admit I was wrong, and rather than having an actual plan, they are in fact clueless and have moved into “legacy mode.”
North Korea’s behavior, however, does tend to reaffirm Strategic Disengagement.
May 18th, 2007 at 5:19 am
I’ve heard this stuff repeated enough and long enough to give it more attention and it doesn’t make sense.
Why would banks be afraid of making a one-time transfer of funds if the US is begging them to do so?
The line about fearing sanctions from DC doesn’t make sense if all we are talking about is this $25 million…
May 18th, 2007 at 7:33 am
My guess is that it appears it would be illegal under U.S. law for banks to handle what the U.S. has said is ill-gotten funds. If the U.S. is offering some sort of waiver or immunity to Wachovia, which we don’t know since such details haven’t been released yet, then perhaps they are worried about image; being the bank that helped North Korea.
With world banks resisting touching North Korean money even with implicit – and now explicit – U.S. approval, it’s the perfect time to hammer them with total banking isolation.
But I’m not at all sure the Bush administration will do that.