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Last Updated: Monday, 25 June 2007, 08:19 GMT 09:19 UK
N Korea confirms funds transfer
Olli Heinonen of the IAEA arrives in Beijing en route to Pyongyang - 25/06/07
The IAEA team has arrived in Beijing en route to Pyongyang
North Korea has confirmed it has received $25m (12.5m) following a funding row that had hindered progress on a nuclear disarmament deal.

The foreign ministry said in a statement: "The issue of the frozen funds has finally been settled."

Pyongyang said the money would be used for humanitarian purposes.

The ministry also confirmed it would begin implementing a deal to shut down its main reactor - a day before UN nuclear inspectors are due to visit.

Now we are going to negotiate how to verify and make sure the reactor will be shut down and sealed, so this is the next step on this long trip
Olli Heinonen
Head of IAEA delegation

The team from the International Atomic Energy Agency (IAEA) is travelling at the request of Pyongyang to discuss procedures for monitoring the shut down of the Yongbyon nuclear reactor.

Washington's chief nuclear negotiator, Christopher Hill, said at the weekend that Pyongyang had agreed to shut down the reactor within three weeks.

Banking concerns

"As the funds that had been frozen... have been transferred as we demanded, the troublesome issue of the frozen funds is finally resolved," a foreign ministry spokesman was quoted by official media as saying.

The money will be used "for improving the lives of our people and other humanitarian purposes as planned," the spokesman went on.

He also confirmed that North Korea "is set to start negotiations on the shutdown" of Yongbyon with the IAEA team.

North Korean nuclear reactor at Yongbyon. File photo
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Earlier the Russian bank Dalkombank - in the country's Far East - confirmed it had transferred the money to North Korea's Bank of Foreign Trade.

The money had frozen for nearly two years in a Macau bank after the US said it had been gained through drug smuggling and counterfeiting.

The block on the money was lifted after North Korea agreed in a landmark deal last February to "shut down and seal" Yongbyon in return for badly-needed fuel aid and other benefits.

But the transfer of the money had been held up because of concerns within the international banking community about handling the funds.

After weeks of stalling, progress on the nuclear issue finally picked up when the Russian bank agreed to act as an intermediary in the transfer of funds.

It led to North Korea's invitation to IAEA inspectors, and a surprise visit by US chief nuclear negotiator Christopher Hill to Pyongyang last week.

Mr Hill said at the weekend that the North had agreed to shut Yongbyon within three weeks, and that a fresh round of multi-party disarmament talks would be held in July.

The four-member IAEA team arrived in Beijing on Monday en route for the five-day visit to Pyongyang.

"Now we are going to negotiate how to verify and make sure the reactor will be shut down and sealed, so this is the next step on this long trip," the head of the team, Olli Heinonen, told reporters.

It will be the first time the IAEA has visited the country since inspectors were forced to leave in 2002.

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