Tuesday, 17 April 2007

The BDA's "black money"

Stanley Au, the head of the troubled Banco Delta Asia is now threatening to sue the U.S. Treasury. He also gave a name to and explained why the funds are still in his bank.

MACAU (AP) - ``I believe no money had been taken away from the bank yet ... because they cannot transfer the money out,'' Stanley Au told The Associated Press, referring to the US$25 million (euro18.4 million) worth of North Korean funds that had been frozen at the bank.
``There are no banks accepting the so-called black money,'' he added. ``The only thing they can do at the moment is to take the money in bank notes out of the bank.''
Other banks are apparently worried about accepting funds from Banco Delta Asia that were the center of criminal investigations.

After seeing what happened to Stanley's little bank, it is hardly surprising. I tried explaining the conundrum over the “release” of the funds to a colleague today by using what I thought was a simple analogy.
My colleague was insisting, as was the U.S. administration, that the “ball was in Pyongyang's court,” and there was no reason why the money had not been withdrawn, allowing the next stage of implementation of the Beijing Agreement to go ahead.
I said, imagine releasing a prisoner from a cage in the middle of the desert, with no food or water, with the words, “you are now free to go.”
The U.S. Treasury created the “desert” by blacklisting the BDA. Sure, they set the funds free, but without correspondent banks, and with nobody willing to take the risk associated with accepting a transfer, the money really has nowhere to go.
And let's be realistic, it is simply not reasonable to assume that Treasury did not anticipate this eventuality.

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Jon Allen said...

why are the account holders so reluctant to take the money out as notes?

Ok, so they might have some problems explaining to the new bank why they are handing in notes, but surely their accounts can explain where the money came from? Maybe that's the problem...

Chris Gelken said...

The bottom line. They want the same access to the international banking system as they had before September 2005. The right to conduct legitimate business and be subject to the same scrutiny as any other user of the banking system.