NEWS
House Foreign Affairs
Committee
U.S. House of Representatives
Ileana Ros-Lehtinen, Ranking
Republican
CONTACT: Sam Stratman, (202) 226-7875,
June 12, 2007
Lee Cohen,
(202) 226-1139
For IMMEDIATE Release
Ros-Lehtinen, GOP Members Request GAO Evaluation
of U.S. Efforts to Transfer Frozen Banks Funds to North Korea
(WASHINGTON)
- A group of House Republicans led by U.S. Rep. Ileana Ros-Lehtinen (R-FL), the
Ranking Member of the House Foreign Affairs Committee, today asked the
Government Accountability Office (GAO) to evaluate whether a U.S. Government
effort to facilitate the transfer of $25 million to the North Korean regime is
consistent with anti money laundering and counterfeit laws.
North
Korea has linked transfer of the funds to
fulfillment of its commitment made in the February 13th Six-Party
Joint Statement in which it agreed to begin dismantling its nuclear program in
exchange for economic and political concessions. The funds are currently on
deposit at a bank in Macau identified by U.S. authorities as engaging in
money laundering.
According to the U.S. Treasury Department, a sizable portion
of the $25 million being held in North Korean accounts in Banco Delta Asia, the
Macau bank, has been derived from such illicit
activities as missile and arms sales to rogue regimes, drug smuggling and
counterfeiting of U.S.
currency. The accounts have been frozen for nearly two years.
At issue is whether official actions taken by the Department of State and
the Department of the Treasury to facilitate the transfer of funds from Macau
to North Korea using private
banks in the U.S., Russia, China
or Europe violate U.S.
money laundering and counterfeiting laws. U.S.
officials are now reportedly examining a role for the U.S. Federal Reserve
Bank, which is not subject to U.S.
laws barring commercial transactions involving illicit funds.
In September, 2005, the U.S. Treasury Department designated
Banco Delta Asia as a “primary money laundering concern” under the USA Patriot
Act.
“If history is any indication, I have little confidence that
the North Korean regime will adhere to any agreement despite our good faith
efforts to honor our side of the bargain,” Ros-Lehtinen said. “For more than 50
years this regime has repeatedly broken its commitments to the international
community. What gives our diplomats or their colleagues in the Six Party Talks
any newfound confidence that transferring tainted money to this regime will
result in an outcome different from previous failed negotiations?,” she asked.
In addition to Ros-Lehtinen, the letter is signed by U.S.
Reps. Christopher H. Smith (NJ), Dan Burton (IN), Edward R. Royce (CA), Mike
Pence (IN) and Joseph R. Pitts (PA).
Text of the letter to the GAO:
The Honorable David M. Walker
Comptroller General of the United States
U.S. Government
Accountability Office
441 G Street, N.W.
Washington, D.C.
20548
Dear Mr. Walker:
A number of us who presently serve, or who have served in the past, on the
Committee on Foreign Affairs have been concerned about recent reports
that U.S. government officials may have been engaged in efforts to
expedite the transfer of North Korean funds held in Macau-based Banco Delta
Asia. According to past U.S. Treasury Department statements, a
sizable portion of the $25 million being held in North Korean accounts in the
Macau bank has been derived from illicit activities – including missile and arms
sales to rogue regimes, drug smuggling and counterfeiting of U.S.
currency.
A September 15,
2005 press release noted in part: “The U.S.
Treasury Department today designated Banco Delta Asia as a ‘primary money
laundering concern’ under Section 311 of the USA Patriot Act because it
represents an unacceptable risk of money laundering and other financial
crimes. Banco Delta Asia has been a willing pawn for the North Korean
government to engage in corrupt financial activities through Macau, a region
that needs significant improvement in its money laundering controls.” The
Treasury Department further noted in a March 19, 2007 statement released in Beijing that “the events
of the past eighteen months demonstrate our lack of tolerance for illicit
activity conducted in the global financial system. Financial institutions
that facilitate weapons proliferation, terrorist financing, narcotics
trafficking, and other illicit financial activity should be on notice of the
significant consequences they face.”
Daniel Glaser,
the Treasury Department’s Deputy Assistant Secretary for Terrorist Financing
and Financial Crimes, remained in Beijing for
several days in March to seek to facilitate the resolution of the Banco Delta Asia issue with Chinese authorities. Pyongyang has
successfully linked transfer of the funds to fulfillment of its commitment to
denuclearization made in the February 13th Six-Party Joint Statement
– although the Statement makes no mention of the Banco Delta Asia funds.
There have been
repeated press reports in recent weeks that Administration officials have been
actively engaged in efforts to secure the transfer of these formerly frozen
North Korean funds to banking institutions in China,
Russia, or Western
Europe. The Washington Post
carried a report on May 17th that the State Department had even made
a request to an American financial institution, Wachovia Bank, to transfer the
funds, despite Banco Delta Asia being
blacklisted earlier by the Treasury Department. Assistant Secretary of State Christopher
Hill was quoted as stating at a Korea
Society event that “I can assure you…we are not going to allow $25 million or
even $26 million to get between us and a deal that will finally do something
about nuclear weapons on the Korean peninsula.”
We find the
above set of circumstances to be disturbing. We would note that the funds in
Banco Delta Asia were frozen by Macau authorities only after the U.S.
Government had cited Patriot Act concerns about both the bank’s operations and,
specifically, the North Korean accounts. We therefore request that GAO
evaluate whether State Department and Treasury Department actions undertaken to
facilitate the transfer of North Korean funds are fully consistent with the
enforcement of Section 311 of the Patriot Act and with the sanctions regime
imposed under UN Security Council Resolution 1718, which our Government
actively supported in its vote on October 14, 2006. We would also request
that GAO evaluate whether all U.S. official actions undertaken in connection
with support for the transfer of North Korean funds held in Banco Delta Asia
accounts are in keeping with the prohibitions regarding money laundering and
counterfeiting as stipulated in the U.S. Criminal Code, Title 18, sections 1956
and 1957.
#####