Friday, December 29, 2006

Vietnam Bank Halts Business With N.Korea

East Asia Commercial Bank of Vietnam closed all accounts linked to North Korea on Wednesday after the Macau government indicated it will keep the North’s accounts in its own Banco Delta Asia frozen “as long as legally possible.” EACB has been acting as a correspondent bank for customers to remit money to and from North Korea.

The U.K. Financial Times on Thursday quoted a letter from EACB deputy general director Nguyen Thi Ngoc Van to its North Korean customers and companies dealing with the communist state. "Recently, we have worked with American partners in strategic co-operation. Therefore, we apology that we must close all your nostro [correspondent] accounts with our bank,” it quoted the letter as saying. The accounts were denominated in euros, Hong Kong dollars, Japanese yen and U.S. dollars, sources said.

EACB formed a strategic partnership with Citibank of the U.S. in September. In addition, Vietnamese Military Bank launched an investigation into transactions with the North and Tanchon Commercial Bank in Pyongyang hurriedly closed its accounts there. Vietnam seems determined to cooperate in the financial sanctions against the North after joining the World Trade Organization last month. “Other banks, seeing the run on BDA and fearing they, too, might suffer, apparently voluntarily shut down all contacts with North Korea,” the FT writes. “North Korean banks cannot transfer funds electronically so have to carry large amounts of cash to correspondent banks for remittance.”

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