Signs of an Emerging Policy, Part I: A Plot Thicker Than the Great Wall

Remember a couple of weeks back, when I blogged about the big Chinese mafia bust–the one where the FBI agents posed as a couple and arrested scores of gangsters on their “wedding” day? The one that ended up with the feds taking possession of a large quantity of North Korean supernotes? At the time, I had a number of questions to which I wished I knew the answers, and here are two of them:

7. Were any of those caught connected to the Chinese government?
8. In the end, how badly will this hurt the finances of the North Korean regime?

The answers are starting to filter in:

The U.S. is investigating several banks including the Bank of China in a drive to stop North Korea’s cash flow.

The Asian Wall Street Journal (ASWJ) reported Thursday that U.S. judicial authorities were investigating the Bank of China — China’s largest Bank — and Banco Delta Asia SARL and Seng Heng Bank, both based in Macau. The banks are suspected of laundering money from North Korea’s counterfeiting and drug and weapons deals.

The paper said the U.S. started to suspect the banks of illegal dealings with the North after it moved to shut down North Korean corporations it says dealt in drugs and exported counterfeit bills and cigarettes. The banks could face tough sanctions if the suspicions are confirmed.

The probe concludes a three-year investigation by U.S. judicial authorities with other Asian nations of North Korea’s distribution network for counterfeit bills and illicit arms deals. It comes ahead of the restart of six-party talks on North Korea’s nuclear programs next week and the Bank of China’s listing on the New York Stock Exchange next year.

All of this follows on the heels of that same bust. The Bank of China, China’s largest bank, is a parastatal, an entity controlled by the Chinese government, and it’s no stranger to scandal. We may be seeing the start of the The Big Squeeze on the North Korean regime. With a new round of talks set for next week, the timing of this leak about an investigation of two nations that will take seats at the negotiating table is almost certainly not a coincidence.

This appears to be a much bigger story than the U.S. media understand it to be.