US to press N Korea on illicit finance -Treasury

WASHINGTON, Jan 10 (Reuters) The Bush administration will press North Korea again to end illicit financing activities when talks resume on US financial curbs on Pyongyang, a top US Treasury official said.

North Korea, which has defied international pressure to scrap a develop nuclear weapons program, has demanded the financial sanctions be lifted as a condition for progress on the nuclear issue, although the United States contends they are not linked.

The two countries met in December to discuss the sanctions, which include a freeze on North Korea's international banking relationships, and are due to meet again.

Stuart Levey, the Treasury's undersecretary for terrorism and financial intelligence, said yesterday he was looking forward to further ''business-like'' discussions with North Korea.

''Our objectives would be to continue the kind of discussion that we had, where we laid out our concerns and made it clear that our concerns relate to the systemic abuse of the international financial system for illicit conduct, including drug trafficking and the other things that we've made public in the past,'' Levey told a news conference in Washington.

''Those are the types of concerns that we need to see addressed,'' he added.

Levey declined to confirm any dates for a second round of talks. South Korea's Foreign Minister Song Min-soon said over the weekend that a tentative deal was reached to resume the talks on January 22.

US State Department spokesman Sean McCormack said on Monday the United States hoped to resume the talks this month but the date and location was yet to be fixed. ''We would suggest New York,'' he said.

The previous round of financial talks, which took place on the sidelines of six-nation nuclear negotiations in Beijing, proved to be a logjam for the broader nuclear issue. North Korea said it would not scrap its atomic weapons programme until the United States ended its financial sanctions.

ACCOUNTS FROZEN At the center of the dispute is the Treasury's designation of Banco Delta Asia in the Chinese enclave of Macau as a primary money laundering concern, which effectively cut off North Korea's main banking conduit to the international financial system. North Korean accounts containing some 24 million dollar remain frozen at Banco Delta Asia, which is now under the control of the Macau government.

The Treasury has accused the bank of distributing counterfeit US currency made by North Korea and handling transactions for North Korean front companies involved in illegal drug trade. The Treasury also has accused North Korea of long manufacturing and circulating a 100 dollar counterfeit ''supernote'' that is detectable only by the most sophisticated experts.

US officials have demanded that such activities be ended, citing them as a law enforcement issue separate from the nuclear issue.

The UN Security Council imposed sanctions on North Korea after it defied international warnings and conducted its first nuclear test on October 9.

Last Friday, the United States warned North Korea of deeper isolation if the North conducts a second atomic test, amid a report from American TV network ABC that Pyongyang has been preparing to detonate nuclear another device.

Levey also said he was concerned about the development of financial links between Iran and North Korea. Earlier yesterday, he announced a prohibition on US transactions with Iran's state-owned Bank Sepah, accusing it of aiding Iran in the acquisition of North Korean ballistic missile technology.

Reuters DKS VP0515