Banco Delta Asia
Encyclopedia
Mação
Mação is a municipality in Portugal with a total area of 400.0 km² and a total population of 7,763 inhabitants.The municipality is composed of eight parishes, and is located in the Santarém District....
-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. It the 10th largest bank in Macao with eight branches and 150 employees.
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 BDA's business with the government of North Korea
North Korea
The Democratic People’s Republic of Korea , , is a country in East Asia, occupying the northern half of the Korean Peninsula. Its capital and largest city is Pyongyang. The Korean Demilitarized Zone serves as the buffer zone between North Korea and South Korea...
, which at that time kept $25 million at the bank in various accounts. The case is considered a notable use of Section 311 the USA Patriot Act
USA PATRIOT Act
The USA PATRIOT Act is an Act of the U.S. Congress that was signed into law by President George W. Bush on October 26, 2001...
to crack down on the use of the international financial system by "rogue states" and "state sponsors of terrorism".
Although virtually every bank in Macao handled North Korean funds, U.S. regulators singled out BDA because the shutdown of a smaller bank would create less financial disruption. North Korea was able to gain access to funds deposited at the bank by raising the issue with the United States at the Six Party Talks on nuclear weapons technology in Beijing. However, the bank remains under U.S. sanction and is therefore unable to conduct business in either U.S. dollars or in Hong Kong dollars. The sanctions are said to have intimidated other banks from doing business with North Korea and disrupted the country's system for transferring foreign exchange. Macau has responded by stepping up enforcement of anti money laundering laws.
North Korea and Six-Party Talks
The bank has been accused of engaging in money launderingMoney laundering
Money laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
and distribution of superdollar
Superdollar
A superdollar or superbill is a very high quality counterfeit United States one hundred-dollar bill, alleged by the U.S. Government to have been made by an unknown organization or government. Various groups have been suspected of creating such notes, and international opinion on the origin of the...
s for the government of North Korea. In September 2005, the impending imposition of sanctions by the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
was announced, which triggered a massive bank run. As a result, the Macao Government invoked a banking law to replace the bank's board by government appointees. As a result of this, several North Korean companies in Macao which had accounts with the bank, including Zokwang Trading
Zokwang Trading
Zokwang Trading Company is a North Korean state-run import-export business based in Zhuhai, China. It is reportedly controlled by Room 39, a secret department of the government of North Korea....
, had their accounts frozen. Kim Jong Nam, the eldest son of North Korea
North Korea
The Democratic People’s Republic of Korea , , is a country in East Asia, occupying the northern half of the Korean Peninsula. Its capital and largest city is Pyongyang. The Korean Demilitarized Zone serves as the buffer zone between North Korea and South Korea...
's leader Kim Jong Il, has lived in Macao since 2004, when the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
imposed sanctions
Economic sanctions
Economic sanctions are domestic penalties applied by one country on another for a variety of reasons. Economic sanctions include, but are not limited to, tariffs, trade barriers, import duties, and import or export quotas...
on a bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
in Macao for allegedly helping Pyongyang
Pyongyang
Pyongyang is the capital of the Democratic People's Republic of Korea, commonly known as North Korea, and the largest city in the country. Pyongyang is located on the Taedong River and, according to preliminary results from the 2008 population census, has a population of 3,255,388. The city was...
launder money. 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
Nuclear weapon
A nuclear weapon is an explosive device that derives its destructive force from nuclear reactions, either fission or a combination of fission and fusion. Both reactions release vast quantities of energy from relatively small amounts of matter. The first fission bomb test released the same amount...
arsenal.
An audit by Ernst & Young
Ernst & Young
Ernst & Young is one of the largest professional services networks in the world and one of the "Big Four" accountancy firms, along with Deloitte, KPMG and PricewaterhouseCoopers ....
commissioned by the Macao government found no evidence that the bank had facilitated money laundering.
On March 14, 2007, the U.S. Treasury Department
United States Department of the Treasury
The Department of the Treasury is an executive department and the treasury of the United States federal government. It was established by an Act of Congress in 1789 to manage government revenue...
ordered all U.S. banks and companies to sever ties with Banco Delta Asia, following an 18-month investigation. 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". A mini-bank run
Bank run
A bank run occurs when a large number of bank customers withdraw their deposits because they believe the bank is, or might become, insolvent...
ensued, although only 10% of the bank's cash reserves was drawn out.
In September 2007, the Monetary Authority of Macao ended its intervention and the bank was returned to management by owner Stanley Au. 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.
External links
- Homepage
- Patriot Act
- Richard S. Tracey, " Using the PATRIOT Act to Turn North Korea's Dirty Money into a Bargining Chip" Strategic Studies Quarterly, Summer 2009 http://www.au.af.mil/au/ssq/2009/Summer/tracey.pdf