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Last Updated: Thursday, 14 June 2007, 13:16 GMT 14:16 UK
N Korea fund transfer under way
Macau-based Banco Delta Asia (file photo)
Unblocking the BDA accounts has long been a sticking point
The transfer of North Korean funds from a bank in Macau - a key sticking point to nuclear disarmament talks with the US - is under way.

A Macau official said that most of the $24m frozen in the Banco Delta Asia had now been moved elsewhere.

The move marks a breakthrough in a dispute between North Korea and the US.

North Korea had insisted it would only shut its Yongbyon nuclear facility if it had access to the funds, stalling a previously negotiated deal.

It is not yet clear where the money is being sent to, but it is expected to be wired to the US before being transferred elsewhere.

Recent reports suggest the funds will eventually end up in a North Korean bank account in Russia, after Moscow signalled earlier this week that it would help resolve the row.

Significant pathway

"Banco Delta Asia transferred more than $20m out of the bank this afternoon, in accordance with the client's instruction," said Francis Tam, Macau's secretary of economy and finance.

Satellite view of North Korean nuclear reactor at Yongbyon - file photo 2002
N Korea has pledged to shut down its main reactor at Yongbyon
"We have heard reports in foreign media that the money can be wired via the US or Russia, for example. I think these routings are possible," he said.

The route the funds take is significant, according to the BBC correspondent in Seoul, Charles Scanlon.

Until now, banks around the world have refused to touch the money, which is alleged by the US to be the proceeds of drug smuggling and counterfeiting.

North Korea hopes that by transferring it through the US, the move will signal an end to a global squeeze on its financial activities.

Our correspondent says the transfer represents a major concession by the Bush administration, which initially said there could be no promise over what it called the North's criminal activities.

But despite this step forward, analysts have cautioned that the financial wrangle is only the first of many obstacles in the path towards denuclearisation.

They say that North Korea has made no clear commitment to hand over the nuclear weapons and the stockpile of fissile material that it has already developed.






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