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NKorea fund transfer via US mulled: report

TOKYO (AFP) - The United States is considering transferring North Korean funds via a US bank to end a financial standoff holding up a nuclear disarmament deal, a report said Thursday.

Japan's Kyodo News, citing anonymous sources in Washington, said that the US government hoped to resolve the row within a few days and was looking into letting a US bank handle North Korean money as a "special case."

Macau's Banco Delta Asia would transfer the cash to a US bank which would in turn send it to a third country, Kyodo News said.

North Korea has refused to comply with February's breakthrough six-nation nuclear deal until it receives $25 million stuck in Macau.

The United States said the funds were the suspected proceeds of money-laundering and counterfeiting. In an attempt to move the nuclear pact forward, Washington announced in March that the funds had been unfrozen.

But foreign banks are unwilling to handle the suspicious cash for fear of sullying their own reputations.

North Korea cited the dispute as a reason to boycott six-nation talks for more than a year, during which it tested an atomic bomb.

It signed a disarmament-for-aid agreement on February 13 but refused to carry out its commitments to shut down the Yongbyon nuclear reactor and allow in UN inspectors by April 14, saying it was waiting to see the money.

Japan, which has tense relations with North Korea, has taken the hardest line in the six-way talks and has threatened new sanctions unless Pyongyang meets its commitments.

"We will soon, maybe within a week or so, talk with the United States about how we have had enough," Foreign Minister Taro Aso told a lower house panel Wednesday.

Prime Minister Shinzo Abe said that Japan "won't stay patient forever."

"If North Korea does not carry out what it had promised, we will have to think about a variety of options," Abe told reporters late Wednesday.

Japan has already imposed sweeping sanctions against North Korea including a ban on all imports. Advocates of stronger action have suggested measures such as banning exports and blacklisting ships that travel to the communist state.

Japan has refused to fund February's US-backed deal, saying it will not help North Korea until an emotionally charged kidnapping dispute is resolved.

North Korea in 2002 admitted that it kidnapped 13 Japanese in the 1970s and 1980s to train spies in Japanese language and culture.

Pyongyang returned five, but Japan has rejected its claim that the rest are dead.

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