Banco Delta Asia

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Administration centre of Banco Delta Asia

Banco Delta Asia (滙業銀行) is a Macau-based bank owned by the Delta Asia Financial Group and founded in 1935 by Au Wing Ngok, father of Stanley Au, the current chairman and majority shareholder.^[1] It the 10th largest bank in Macau with eight branches and 150 employees.^[2]^[3]

In March 2007, the U.S. Treasury ordered U.S. companies and financial institutions to cut links with the bank on account of allegations concerning DBA's business with the government of North Korea, which at that time kept $25 million at the bank in various accounts. North Korea was able to gain access to these funds by raising the issue with the United States at the Six Party Talks on nuclear weapons technology in Beijing. The bank remains under U.S. sanction and is therefore unable to conduct business in either U.S. dollars or in Hong Kong dollars.^[2]

[edit] North Korea and Six-Party Talks

The bank has been accused of engaging in money laundering and distribution of superdollars for the government of North Korea. In September 2005, the impending imposition of sanctions by the United States was announced, which triggered a massive bank run. As a result, the Macau Government intervened, under the Macau banking law, and replaced the bank's board by government appointees.^[4]^[5] As a result of this, several North Korean companies in Macao which had accounts with the bank, including Zokwang Trading, had their accounts frozen.^[6] Kim Jong Nam, the eldest son of North Korean dictator Kim Jong Il, has lived in Macau since 2004, when the United States imposed sanctions on a bank in Macau for allegedly helping Pyongyang launder money.^[7] However, the United States agreed to resolve the issue of frozen North Korean bank accounts in Macau's Banco Delta Asia if North Korea disarms its atomic arsenal.^[8]

However, an audit by Ernst & Young revealed no evidence that the bank had facilitated money laundering and according to the 2006-10-18 filing by the bank's U.S. attorneys there was almost no way that North Korea could have laundered counterfeit U.S. currency through the bank.^[9] The audit indicated that the only time Banco Delta Asia had knowingly handled counterfeit money was in 1994 when it discovered and turned over $10,000 in counterfeit $100 bills to local authorities.^[10] The allegations against the bank were levied under a provision of the PATRIOT Act that provides for an administrative procedure that doesn't permit the bank to see the evidence of the accusations or defend itself in court while allowing the United States to freeze a foreign bank out of the U.S. financial system.^[9]

On 2007-03-14, the U.S. Treasury Department ordered all U.S. banks and companies to sever ties with Banco Delta Asia, following an 18-month investigation. The bank plans to challenge this ruling. U.S. Treasury Under-Secretary Stuart Levey stated that the investigation confirmed the bank's "willingness to turn a blind eye to illicit activity, notably by its North Korean-related client". Both the People's Republic of China and the Macau Monetary Authority expressed "deep regret" at the development, but the ruling also allowed the bank to be removed from receivership and return some of North Korea's money. Banco Delta Asia's chairman, Stanley Au, stated that he was not worried about the ruling.^[11]

Christopher Hill, lead negotiator for the U.S. at the Six-Party Talks of March 2007, stated that despite the ruling, he was "confident" that the talks would continue.^[11]^[12] However, North Korean negotiator Kim Kye-gwan has warned that North Korea will not abandon its nuclear programme unless its funds are released by the U.S.^[13]

On 2007-03-19, the U.S. announced that the $25 million held in Banco Delta Asia would be transferred to a Bank of China account in Beijing. But delegates from North Korea refused to attend the talks the next day, citing that they would not participate until North Korea can confirm that it can access the money.^[14] The transfer of funds was subsequently delayed due to unexplained problems, and North Korea's chief negotiator left Beijing for North Korea on 2007-03-22, ending the round of Six Party Talks.^[15]

The transfer of the money was stalled because the international banking community was concerned about how to handle the funds. A Russian bank finally agreed to act as an intermediary, and in June, North Korea confirmed that it had received the funds previously frozen in Banco Delta Asia. North Korea's foreign ministry stated that the money would be used for humanitarian aid, and also that it would begin implementing a deal to shut down its main nuclear reactor.^[16]

On September 2007 the Monetary Authority of Macao ended its intervention and the bank was returned to management by owner Stanley Au.^[2] No criminal charges were ever filed in Macau. The bank remains blacklisted by the U.S. Treasury Department and is not authorized to conduct transactions in either U.S. dollars or in Hong Kong dollars.^[2]