“Bank of China has sent North Korea’s Foreign Trade Bank a notice that it has closed its account and has also halted all fund transfers related to this account,” Bank of China said on Tuesday. It declined to provide any details about how much money was affected or the timing of the move.
Bank of China is the country’s biggest bank for foreign exchange transactions, so the account closure could hurt the North Korean institution. But the impact is likely to be minimal unless imposed across the board by all Chinese banks because other institutions, including small regional entities, are also capable of handling foreign currency deals.
“This is part of a ratcheting up of pressure but with very clear limits. This is part of making North Korea feel some limited pain in an attempt to get them back to talks,” said Stephanie Kleine-Ahlbrandt, northeast Asia director at the International Crisis Group.
The move by Bank of China may also reflect risk management by the bank itself rather than bigger diplomatic motives. The US Treasury had warned financial institutions around the world to be wary of the risks of doing business with Foreign Trade Bank.
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