UPDATE 2-Chinese bank may face U.S. action in N. Korean sanctions probe - Washington Post




* 3 banks found to be in contempt for not complying with subpoenas

* Shanghai Pudong Development Bank could lose access to US dollars

* Shares in China Merchants, BoCom, Shanghai Pudong fall (Adds comments from China's foreign ministry, central bank publication)

June 25 (Reuters) - A U.S. judge has found three large Chinese banks in contempt for refusing to comply with subpoenas in a probe into North Korean sanctions violations, the Washington Post reported https://wapo.st/2X6ptOL, adding one of them could lose access to the U.S. financial system.

The banks were not identified by the judge, but details in the ruling align with a 2017 civil forfeiture action against Bank of Communications, China Merchants Bank and Shanghai Pudong Development Bank, the newspaper reported.

The U.S. Justice Department at the time accused the banks of working with a Hong Kong company, which allegedly laundered more than $100 million for North Korea's sanctioned Foreign Trade Bank, the paper said.

The Washington Post report comes as the United States and China have waged a year-long trade war marked by tit-for-tat tariffs on each other's goods.

The newspaper said the bank at risk of losing access to U.S. dollars appeared to be Shanghai Pudong Development Bank, whose ownership structure, limited U.S. presence and alleged conduct with other banks matched with the details disclosed in the court rulings.

Shanghai Pudong Development Bank doesn't have U.S. branch operations but maintains accounts in that country to handle dollar transactions, the report said, adding the subpoena battle will go before a federal appeals court in Washington on July 12.

"The ruling means that Attorney General William P. Barr or Treasury Secretary Steven Mnuchin can terminate the bank's U.S. account and ability to process U.S. dollar transactions," the Post said.

Shanghai Pudong Development Bank, asked about the report that it could lose access to the U.S. financial system, said in a statement that it will strictly abide by the relevant laws and regulations.

National joint-stock lender China Merchants Bank said on Tuesday it complies with related United Nations resolutions and Chinese laws, and is not involved in any investigations related to possible violations of sanctions.

Bank of Communications, China's fifth-largest bank, said the case involved U.S. courts seeking to obtain customer information that is stored outside the United States from Chinese commercial banks.

It said the bank carries out business activities in compliance with laws and regulations and currently it was not under any investigation involving suspected sanctions violations.

All three Chinese banks are listed on the Shanghai Stock Exchange. On Tuesday, shares of China Merchants Bank closed down 4.82%, after being off 8.5% earlier in the day, while Shanghai Pudong Development Bank declined 3.08% and Bank of Communications dropped 3.02%.


FRAMEWORK OF LAW

In May, a U.S. district judge ordered three Chinese banks to comply with U.S. investigators' demands that they hand over records connected to the alleged movement of tens of millions of dollars in violation of international sanctions on North Korea.

The publicly released court document did not name the banks, the Hong Kong company, or the North Korean entity at that time.

The subpoenas were issued in December 2017 as part of a U.S. investigation into violations of sanctions targeting North Korea's nuclear weapons programme, including money laundering and contravention of the U.S. Bank Secrecy Act.

Geng Shuang, a spokesman at the Chinese foreign ministry, said "We ask our companies and overseas branches to abide by local regulations and laws and operate within the framework of law, and cooperate with the local judicial and law enforcement bodies."

"At the same time, we are against U.S. so-called long arm jurisdiction on Chinese companies. We hope the U.S. will step up bilateral cooperation on finance with other countries," Geng said at a daily briefing in Beijing.

The People's Bank of China (PBOC) did not immediately respond to a faxed request for comment.

Currently, there's no conclusive information that Chinese banks will be sanctioned, PBOC publication Financial News reported on Tuesday, citing an unnamed industry veteran.

Chinese banks will not lose their U.S. dollar clearance qualifications, and the market should not over-interpret this, the same person was quoted as saying.

China is North Korea's neighbour and main trading partner but has committed to enforcing international sanctions aimed at pressing Pyongyang to give up its nuclear weapons.

The Group of 20 summit in Japan this weekend will be the first meeting between U.S. President Donald Trump and Chinese President Xi Jinping since trade talks between the two countries broke off in May. They will discuss issues such as tariffs, subsidies, technology, intellectual property and cyber security, among others.

The U.S. government has put some Chinese firms including telecoms equipment maker Huawei Technologies Co Ltd on a trade blacklist while China is also drawing up its own "Unreliable Entities List" of foreign firms, groups and individuals. (Reporting by Aishwarya Nair and Kanishka Singh in BENGALURU; Shu Zhang in SINGAPORE; Cheng Leng and Cate Cadell in BEIJING; Additional reporting by Felix Tam; Writing by Sumeet Chatterjee and Ryan Woo; Editing by Jacqueline Wong and Richard Borsuk)

COMMENTS

More Related News

China
China's debt tops 300% of GDP, now 15% of global total - IIF

China's total corporate, household and government debt rose to 303% of GDP in the first quarter of 2019, from 297% in the same period a year earlier, the IIF said in a report this week which highlighted rising debt levels worldwide. "While authorities' efforts to curb shadow bank lending

US wants role in efforts to settle South Korea-Japan dispute
US wants role in efforts to settle South Korea-Japan dispute

The United States will "do what we can do" to help resolve festering trade and political disputes between South Korea and Japan, a senior U.S. official said Wednesday after a series of meetings with Seoul officials. David Stilwell, the top U.S. diplomat for East Asian affairs, is in South Korea for three days, as Seoul is seeking U.S. help to resolve the spat between two of America's most important allies in the region.

China Investor Who Made 785% on Moutai Says He
China Investor Who Made 785% on Moutai Says He's Found Next Big Thing

(Bloomberg) -- Sign up for Next China, a weekly email on where the nation stands now and where it's going next.After years betting solely on Kweichow Moutai Co., Dong Baozhen is diversifying.The money manager's flagship fund has returned 785% since its inception in 2010. He trounced the Shanghai

Valuations in China Bonds Have Become Quite Attractive, Says StanChart
Valuations in China Bonds Have Become Quite Attractive, Says StanChart's Liu

Jul.16 -- Becky Liu, head of China macro strategy at Standard Chartered, discusses the rally in China bonds, China's debt profile and the job market. She speaks on "Bloomberg Markets: China Open."

3 Reasons Why Lenovo Is a Better Stock Than Xiaomi
3 Reasons Why Lenovo Is a Better Stock Than Xiaomi

China technology stocks Lenovo and Xiaomi are both popular with investors. But here are three reasons why I think Lenovo is the better pick.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.