THE STATE-OWNED BANK OF CHINA HAS FROZEN NORTH KOREA-RELATED ASSETS IN ITS MACAU BRANCH, THE UNITED STATES HAS LEARNED, A U.S. OFFICIAL SAID ON MONDAY, ACCORDING TO REUTERS. THIS FOLLOWS U.S. FINANCIAL RESTRICTIONS AGAINST NORTH KOREA AIMED AT HALTING WHAT WASHINGTON SAYS ARE ILLICIT ACTIONS BY THE PYONGYANG REGIME OR NORTH KOREAN ENTITIES. THE U.S. FINANCIAL CRACKDOWN HAS CAUSED FRICTION IN EFFORTS TO PERSUADE PYONGYANG TO END ITS NUCLEAR PROGRAMS. NORTH KOREA LAST YEAR WITHDREW FROM SIX-NATION NUCLEAR TALKS IN RESPONSE TO THE U.S. BRANDING OF A MACAU BANK IN SEPTEMBER AS A CONDUIT FOR WHAT THE UNITED STATES SAYS ARE ILLEGAL FINANCIAL ACTIVITIES BY NORTH KOREA. TENSION SURROUNDING NORTH KOREA'S NUCLEAR INTENTIONS ESCALATED THIS MONTH WHEN THE ISOLATED ASIAN NATION FIRED SEVEN MISSILES IN A TEST. IN APRIL, CHINA'S CENTRAL BANK WARNED LENDERS TO BE ON GUARD AGAINST HIGH-QUALITY COUNTERFEIT U.S. $100 BILLS THAT WASHINGTON SAYS ARE BEING MADE BY NORTH KOREA. THE STATEMENT BY THE PEOPLE'S BANK OF CHINA DID NOT SPECIFY THE ORIGIN OF THE FAKE CURRENCY, BUT SAID IT CAME FROM OUTSIDE CHINA. THE U.S. TREASURY DEPARTMENT IN SEPTEMBER DESIGNATED MACAU FINANCIAL INSTITUTION BANCO DELTA ASIA AS CONNECTED TO CRIMINAL ACTIVITY BY NORTH KOREA, INCLUDING COUNTERFEITING. THE ANNOUNCEMENT SPARKED A TWO-DAY RUN ON THE BANK DURING WHICH CUSTOMERS WITHDREW AROUND $38 MILLION, OR ABOUT 10 PERCENT OF TOTAL DEPOSITS. BANCO DELTA ASIA DENIED U.S. ACCUSATIONS THAT IT HAD BEEN A "WILLING PAWN" FOR ILLEGAL NORTH KOREAN ACTIVITIES, BUT IN FEBRUARY ENDED ALL BUSINESS WITH NORTH KOREA AND SAID IT HAD IMPROVED ITS ANTI-MONEY LAUNDERING POLICIES. THE UNITED STATES HAS HELD DISCUSSIONS WITH ASIAN NATIONS ON WHAT IT BELIEVES ARE ILLEGAL FINANCIAL ACTIVITIES BY NORTH KOREA. TREASURY DEPUTY ASSISTANT SECRETARY DANIEL GLASER SAID IN JUNE IN HONG KONG THAT THE BANCO DELTA ASIA DESIGNATION HAD PRODUCED ENCOURAGING RESULTS AND THAT MANY ASIAN GOVERNMENTS AND BANKS WERE MOVING TO CUT TIES WITH ILLEGAL NORTH KOREAN BUSINESSES. PYONGYANG HAS SAID IT WILL NOT RETURN TO SIX-PARTY NUCLEAR TALKS UNTIL WASHINGTON LIFTS FINANCIAL SANCTIONS. U.S. OFFICIALS SAY THE RESTRICTIONS ARE A LAW ENFORCEMENT MATTER AND SHOULD NOT BE LINKED TO THE DIPLOMATIC NEGOTIATIONS. THE BANK OF CHINA IS A STATE-OWNED COMMERCIAL BANK.