Blacklisted Bank to Return to Original Owner

By DONALD GREENLEES

HONG KONG, Sept. 28 — A small family-owned bank in Macao accused by the United States of laundering money for North Korea will be returned to its original owner despite earlier warnings from the United States Treasury that to do so invited a return to illegal activity by the bank.

Stanley Au, a prominent Macao businessman and adviser to the Chinese government, is to resume control of Banco Delta Asia from a state-appointed administrative committee on Saturday, the Monetary Authority of Macao said Friday.

The monetary authority said the decision to allow Mr. Au to resume full control was taken in light of “remarkable improvement” in the bank’s operations and Mr. Au’s own “persistent requests.”

Mr. Au is an influential figure in Macao, a member of the Chinese People’s Political Consultative Conference and a former candidate to be Macao’s first chief executive.

Banco Delta Asia, among the top 10 largest banks in the gambling enclave, was blacklisted by the United States Treasury in March following allegations that it had committed financial crimes on behalf of North Korea, including laundering the proceeds of narcotics and weapons sales and passing counterfeit dollars.

The bank was prohibited from dealing with any American financial institution and effectively frozen out of the international banking system.

It has been under state supervision since September 2005, when the Treasury Department publicly revealed it was investigating the bank as a “primary money laundering concern.” At the time, the Macao government, under pressure from the United States, also froze $25 million in accounts in the bank held by North Korea-linked entities.

North Korea demanded that the accounts be released and refused to participate in nuclear disarmament talks until the United States agreed this year to support the return of the frozen funds to account holders.

Despite the release of the North Korean money, the Treasury Department pushed ahead with the ruling in March to exclude Banco Delta Asia from the American financial system.

In an explanation of the ruling, it said the “primary concern” was a pattern of activity by the former management and owners “to ignore, facilitate or even encourage illicit activity.” It also warned that there was a “likelihood of recidivism” if the bank was returned from state control to its previous owners.

But under local law, the Macao government was unable to further extend the mandate of the administrative committee in charge of Banco Delta Asia. It had the options of returning the bank to Mr. Au, liquidating it or selling it to new owners.

In a statement welcoming the Macao government’s move Friday, Mr. Au said the American decision to support the release of the frozen North Korean funds had proved that the bank was not involved in any financial crime.

“If the account holders in question were involved in illicit business transactions or money laundering as accused, then the money should have been confiscated,” he said.

The Macao government has made considerable efforts to clean up a reputation as a money laundering center to protect a gambling industry that is outstripping Las Vegas in terms of revenue. It has implemented new laws and imposed stiff penalties against money laundering and terrorist financing in the past year.

Under the supervision of the administrative committee, Banco Delta Asia also instituted new anti-money laundering procedures. But it remains unable to conduct operations using either American or Hong Kong dollars because of the Treasury sanctions.