A small Macau bank accused by the US of money laundering and distribution is accused of providing letters of credit (L/Cs) to North Korean clients, according to an audit report recently obtained by The Associated Press (AP).

The bank in question, Banco Delta Asia (BDA), denies allegations of wrongdoing in respect of its business with North Korean clients and banks.

US sanctions

BDA had sanctions imposed on it by Washington in 2005, following which the bank's executive board resigned to be replaced by government appointees.

They froze the accounts of several North Korean companies in Macau that banked with BDA, an action that caused fury amongst senior North Korean officials as well as the account holders.

Conflicting reports

Accounting firm Ernst & Young prepared the report AP says it has obtained. The news agency says the report it has seen describes how BDA bought gold from North Korean clients, helped handle foreign exchange margin trading for them and provided them with L/Cs.

Earlier media reports suggested that the Ernst & Young report revealed no evidence of BDA's participation in money laundering.

Investigations

In March 2007, the US Treasury Department ordered all US banks and companies to sever ties with BDA following an 18-month investigation. BDA plans to challenge this ruling.

The US Treasury blacklisted BDA in June 2005, labelling it a "weapons of mass destruction proliferator and supporter."

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