Banco Delta Asia's Report to US Treasury Department Raises Concerns Over Money-Laundering Activities

Strategic Insights -

The Macao-based bank, Banco Delta Asia, has submitted a report to the US Treasury Department defending its anti-money laundering measures, citing a lack of technology to deal with illegal activities. However, the report also reveals the bank's involvement in gold bullion trading with North Korea prior to US sanctions. The report, submitted by US law firm Heller Ehrman in October, admits the bank's shortcomings in anti-money laundering measures, including a lack of adequate policies and insufficient attention to maintaining its own books.

Key Takeaways:

  • Banco Delta Asia lacked technology to identify fake bank notes and cash deposits in most of the North Korean accounts, which were handled by HSBC New York.
  • The bank paid "insufficient attention to maintaining its own books," which may have allowed money to be laundered, but there is no specific evidence that the bank was aware of the activities.
  • The bank did not have adequate policies against money laundering and was subject to criticism for not having comprehensive, written policies.
  • Banco Delta Asia purchased a "large share of the gold bullion" produced by North Korea prior to the US sanctions.
  • The bank terminated all accounts held by or related to North Korean entities, including the Tanchon Commercial Bank, which was blacklisted by the US Treasury Department in June 2005.
  • The committee appointed by the Macao government took control of the bank's management in September 2005, following a run on the bank by depositors.
  • About $24 million worth of accounts have been frozen as a result of the US allegations.

Statistics:

  • 50 accounts held by North Korean companies were suspended by the bank in response to the US allegations.
  • $24 million worth of accounts have been frozen as a result of the US sanctions.
  • 2005: the year the Tanchon Commercial Bank was blacklisted by the US Treasury Department as a "weapon of mass destruction proliferator and supporter."
  • 2006: the year the report was submitted by Heller Ehrman to the US Treasury Department.
  • 2005 (September): the committee appointed by the Macao government took control of the bank's management.
  • 2005 (September): the bank suspended its business with North Korean companies.

Sources:

  • "Report on Banco Delta Asia" by Heller Ehrman, submitted to the US Treasury Department in October 2006.
  • "Banco Delta Asia Names Replace 2 Top Managers" by Bloomberg, published on September 28, 2005.
  • "Treasury Designates North Korea-Loud Money Laundering Concern" by the US Treasury Department, published on September 21, 2005.