N.Korea hints at curbing money laundering

WASHINGTON (Reuters) - North Korea, facing a U.S. crackdown on suspected illicit activities, has hinted it might observe international standards on money laundering but Washington wants action, Assistant Secretary of State Christopher Hill said on Wednesday.

In a Reuters interview, Hill, who heads the U.S. delegation to six-country talks aimed at persuading Pyongyang to abandon its nuclear programs, said the hint came when he met in Beijing last week with North Korean counterpart Kim Kye-gwan and Chinese officials in an effort to restart the stalled negotiations.

The United States in recent months has cracked down on several firms suspected of involvement in counterfeiting, money laundering and drug trafficking by North Korea.

Pyongyang is believed to earn as much as $1 billion annually from these activities, which U.S. officials say benefit the elite at the expense of an impoverished population.

The North has said it would be unthinkable to return to the nuclear talks when Washington is trying to bring down its rulers with "financial sanctions."

But in the Beijing meeting, Hill said the North Koreans "indicated they would be prepared to subscribe to international norms with respect to money laundering and would want to cooperate internationally on these issues."

Hill, who has tried to convince Pyongyang the crackdown is a law enforcement matter unrelated to the six-party talks, refused to provide more details or say if the North's comments were a hopeful sign.

"We're not looking here for words. We're more interested in actions. We'd like to see this (illicit) activity cease," he said.

Hill said he "made very clear that financial measures -- what we'd call defensive measures -- are quite separate from the issue of the six-party talks and the way to end those measures was to end the activity that those measures were designed to counter."

The United States is determined "to protect ourselves against money laundering and other activities which we believe very much lie in the law enforcement area" and this is no different from other countries who guard against "unlawful behavior coming from abroad," he said.

Analysts have said North Korea is feeling a pinch from the crackdown but U.S. officials said neighboring China and South Korea, fearful of a North Korean collapse, are easing the shortfall with increased aid.

A team of U.S. Treasury Department financial crimes investigators on Monday briefed South Korean officials on the North's illicit activities.

Afterward, South Korea refused to take sides in the North Korea-U.S. row and urged that Washington's crackdown should be separated from the nuclear talks.

Hill, stressing he has nothing to do with the crackdown because he is not a law enforcement official, said he believes the U.S. Treasury is satisfied with South Korean cooperation.

He insisted U.S.-South relations "are really quite good" and accused South Korean media of trying to exaggerate differences over the North.

On a surprise trip to China this month, Kim Jong-il toured industrial and commercial facilities as Chinese officials tried to show how the North "could have a better future if they opened up and embraced a market economy," Hill said.

The Chinese, hosts of the six-party process, were optimistic nuclear negotiations stalled since last November would resume in February, but so far no date has been agreed, Hill said.

Last September, the North agreed in principle to scrap its nuclear arms in exchange for aid and security guarantees but there has been no progress since then.