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The Banco Delta Asia affair: The USA patriot act and allegations of money laundering in Macau

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Abstract

The anti-money laundering laws of the US are the most powerful in the world. Their broad provisions and extra-territorial reach pose risks to financial institutions around the world. Although they are not widely understood, recent cases demonstrate how these laws operate. In this paper I briefly describe Macau, the new gambling capital of the world; analyze the alleged role of Banco Delta Asia (BDA), a small, family-owned bank in Macau, in money laundering on behalf of North Korea; and offer some observations on the controversial use of Section 311 of the USA Patriot Act.

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Notes

  1. Under Article X of the Treaty on Non-proliferation of Nuclear Weapons, signatories have the right to withdraw if “extraordinary events jeopardize the supreme interests of the country. However, the signatory must notify all other parties of the treaty three months before the withdrawal becomes effective. North Korea announced its intentions to withdraw in March 1993, but “suspended its intention to withdraw” 1 day before the effective date [18].

  2. Under Section 311, the Treasury Department has designated the following financial institutions to be of “primary money laundering concern”:

    Banco Delta Asia (Macau), September 15, 2005;

    VEF Banka and Multibanka (Latvia), April 21, 2005;

    First Merchant Bank (‘Turkish Republic of Northern Cyprus’), August 24, 2004;

    Infobank (Belarus), August 24, 2004;

    Commercial Bank of Syria and Syrian Lebanese Commercial Bank, May 11, 2004;

    Myanmar Mayflower Bank, November 19, 2003;

    Asia Wealth Bank of Burma (Myanmar), November 19, 2003.

    Under Section 311, the Treasury Department has designated the following jurisdictions to be of “primary money laundering concern”:

    Myanmar, November 19, 2003;

    Nauru, December 20, 2002;

    Ukraine, December 20, 2002.

    On April 15, 2003, the Treasury Department rescinded the Section 311 finding against the Ukraine “in recognition of important steps taken to improve its anti-money laundering regime.”

  3. The seizure of BDA by the Macau government occurred in an irregular, if not to say illegal, manner. “Was there ever a court order? I’ve never seen one,” said a Macau lawyer. In Macau, bank records can be released only under such orders and must be published in local newspapers. BDA’s were not [17].

  4. In late 2006 BDA stated that it bought 9.2 tons of gold from North Korea in the three years to September 2005, selling it through Delta Asia Credit, its Hong Kong unit, and taking a commission of $1.50 per ounce. BDA said this raised $120 million for Pyongyang. BDA also acknowledged that it had provided services to North Korea’s Tanchon Commercial Bank, which had been blacklisted 3 months earlier by the US, deeming it the main North Korean financial agent for sales of conventional arms, ballistic missiles and related goods. Moreover, BDA blamed outdated technology for its inability to generate reports on unusual deposits and for “possible shortcomings” in screening retail cash deposits for counterfeit currency [24].

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Acknowledgement

I would like to thank John F. Galliher and the anonymous reviewers for helpful comments on an earlier draft of this manuscript.

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  1. Chinese University of Hong Kong, Hong Kong, China

    Mark S. Gaylord

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Correspondence to Mark S. Gaylord.

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Gaylord, M.S. The Banco Delta Asia affair: The USA patriot act and allegations of money laundering in Macau. Crime Law Soc Change 50, 293–305 (2008). https://doi.org/10.1007/s10611-008-9127-3

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