Date
18 December 2017
China Construction Bank has “completely prohibited business with North Korea”, according to a bank teller at a branch in Liaoning province. Photo: Bloomberg
China Construction Bank has “completely prohibited business with North Korea”, according to a bank teller at a branch in Liaoning province. Photo: Bloomberg

China big banks said to have stopped services for North Koreans

China’s Big Four state-owned banks have stopped providing financial services to new North Korean clients, Reuters reports, citing branch staff.

Tensions between the United States and North Korea have ratcheted up after the sixth and most powerful nuclear test conducted by Pyongyang on Sept. 3 prompted the United Nations Security Council to impose further sanctions on Tuesday.

Chinese banks have come under scrutiny for their role as a conduit for funds flowing to and from China’s increasingly isolated neighbor.

China Construction Bank (CCB) (00939.HK,601939.CN) has “completely prohibited business with North Korea”, said a bank teller at a branch in the northeastern province of Liaoning. The ban started on Aug. 28, the teller said.

Frustrated that China had not done more to rein in North Korea, the Trump administration was mulling new sanctions in July on small Chinese banks and other firms doing business with Pyongyang, two senior US officials told Reuters.

A person answering the customer hotline at the world’s largest lender, Industrial and Commercial Bank of China Ltd (ICBC) (01398.HK, 601398.CN), said the bank had stopped opening accounts for North Koreans and Iranians since July 16. The person did not explain why or answer further questions.

The measures taken by the largest Chinese banks began as early as the end of last year, when the Dandong city branch of China’s most international lender, Bank of China Ltd. (BoC) (03988.HK, 601988.CN), stopped allowing North Koreans to open individual or business accounts, said a BoC bank teller who declined to be identified.

Existing North Korean account holders could not deposit or remove money from their accounts, the BoC bank teller said.

At Agricultural Bank of China Ltd (AgBank) (01288.HK, 601288.CN), a teller at a branch in Dandong, a northeastern Chinese city that borders North Korea, said North Koreans could not open accounts. The teller did not provide further details.

Official representatives for BoC, ICBC, CCB and AgBank could not be reached for comment.

Banks in Dandong have been under the microscope as tensions have risen, given their proximity to North Korea.

In June, the US accused the Bank of Dandong, a small lender, of laundering money for Pyongyang.

Attempts to slowly choke off the flow of funds to and from North Korea come after the US sanctioned a Chinese industrial machinery wholesaler that it said was acting on behalf of a Pyongyang bank already sanctioned by the United Nations for supporting the proliferation of weapons of mass destruction.

The Chinese wholesaler was found to be operating through 25 accounts at banks in China.

Although measures are in place, some bankers questioned how well the rules would be enforced.

Chinese lenders have experienced high-profile failures to police money-laundering in recent years, with some facing allegations that bankers were complicit in the movement of illicit funds.

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CG

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