The US government has threatened Beijing with sanctions against China’s biggest banks if it fails to bring greater economic pressure to bear upon North Korea.
Senior Treasury official Marshall Billingslea said to the House foreign affairs committee on Tuesday that China has not proven adequately willing to “expunge North Korean illicit actors” from its banking system or stymie the Hermit Kingdom’s revenue sources.
Billingslea threatened China with further sanctions against its banks unless it imposes sterner economic measures upon Pyongyang.
“If China wishes to avoid future measures, such as those imposed on Bank of Dandong or the various companies sanctioned for illegal trade practices…it urgently needs to take demonstrable public steps to eliminate North Korea’s trade and financial access,” said Billingslea.
Ed Royce, the Republican head of the House foreign affairs committee, was also strident in his support for sanctions against Chinese banks.
“We must target major Chinese banks doing business with North Korea, such as China Merchants Bank and even big state-owned banks like Agricultural Bank of China,” said Royce.
Reports of further US sanctions against Chinese banks did the rounds earlier this month after regional Chinese lender Bank of Dandong was blacklisted by Washington for providing financial support to North Korea.
According to Billingslea the Bank of Dandong blacklist had a “very clear effect” and was a “very clear warning shot that the Chinese understood.”
China’s big four state-owned banks, who have emerged as the world’s biggest lenders in terms of assets since the Great Financial Crisis, would be hard hit by sanctions given recent efforts to expand into the United States with lending, bond issuance and trade financing operations.
The threat of potential sanctions against China’s leading banks arrives just after the country’s big five lenders – Bank of China, Bank of Communications, China Construction Bank, Agricultural Bank of China, Industrial and Commercial Bank of China, imposed a freeze on new accounts for North Korean citizens and companies.
According to The Financial Times, the branches of these banks in the Chinese north-east said they had received instructions to suspend the opening of new bank accounts for North Koreans, with some also indicating that they were “cleaning out existing accounts” by forbidding new deposits.