BEIJING — Chinese banks that do business with North Korea stand to lose several billion dollars in the wake of new United States Treasury Department sanctions on all such foreign institutions, analysts said on Friday.
The new sanctions were announced days before a visit to Beijing by Secretary of the Treasury Jacob J. Lew and Secretary of State John Kerry for an annual meeting on economic and security issues that starts on Monday and whose agenda this year includes North Korea.
The Chinese banks most affected by the sanctions will be comparatively small regional ones that facilitate the bulk of North Korea’s business in China, the analysts said. Major banks in China suspended their North Korean accounts in 2013 after the Chinese president, Xi Jinping, criticized a nuclear test conducted by the North that year, the analysts said.
The Bank of China, for example, which has been expanding its operations in the United States and did not want its American business tainted by cooperation with North Korea, closed the account of North Korea’s most important financial institution, the Foreign Trade Bank, in May 2013.
The smaller banks in the northeast area of China that borders North Korea would probably not want to risk continuing to do business with the North because the cost of sanctions by the United States would far outweigh the benefits of such commercial ties, said Jin Qiangyi, dean of the institute of Northeast Asian Studies at Yanbian University in Yanji.
China is by far North Korea’s biggest trading partner.
Using a provision of the Patriot Act, the Treasury Department designated North Korea on Wednesday as a “primary money-laundering concern,” a move that will enable Washington to take aggressive measures to cut off its access to the United States financial system.
Under the new designation, non-American banks and other entities are banned from conducting dollar transactions on behalf of North Korea, a prohibition intended to crimp the North’s economic activities and its ability to further expand its nuclear program.
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