In September 2005, 52 North Korean accounts worth $25 million were frozen in Banco Delta Asia (BDA) at Washington's request. In March 2007, the sanctions were lifted, but U.S. financial institutions were banned from further deals with the Macao-based bank.
The U.S. has failed to provide any evidence of North Korean violations involving the bank.
South Korea's news agency Yonhap quoted some diplomatic sources as saying that a final decision to help return the funds to Pyongyang will be made as soon as it becomes clear whether there is a U.S. bank ready to act as a go-between.
South Korea is also considering mediation in transferring North Korea's BDA funds to third countries, the newspaper Chosun Ilbo said citing well informed sources Monday.
It said the South Korean government was discussing the possibility of allowing Pyongyang to use Korea Eximbank accounts to move BDA funds.
John Park, an expert on Northeast Asia security issues at the Washington-based United States Institute of Peace think tank, said Friday the only way out of the protracted crisis is through the use of "market mechanisms."
He said Chinese authorities have turned to various financial institutions across the world, but to no avail, adding that attempts to establish contacts with Russian or Italian banks are unlikely to produce results.
"There's a very low probability" that the funds could be transferred soon, he said.
Park said the BDA problem cannot be solved at governmental level, adding the bank's license should be sold to a private buyer, who could set up a new bank that would send the funds back to North Korea.
The Macao-based newspaper Aomen Ribao reported Thursday that BDA dispatched a $13 million tranche to several banks in Russia and Italy, and that the transfer would take two to three days. However, the paper did not name any of the foreign banking organizations supposedly participating in the transaction, nor did it specify where the remaining $12 million would go.
A Russian deputy foreign minister was also unable to confirm that the North Korean funds were being transferred to Russia and Italy after being unfrozen by Washington.
"I do not know how reliable that information is," Alexander Losyukov said.
He said talks on the debt issue were continuing along banking channels and were not yet complete for fear of sanctions by the U.S. financial system.
The BDA bank has neither confirmed nor denied Aomen Ribao's report to RIA Novosti.
Under an agreement reached at the latest round of the North Korean nuclear talks, Pyongyang must shut down and seal its Yongbyon reactor. However, it said it would do so only after its account with BDA was unfrozen.
