Most of the North Korea funds long frozen in a Macao bank have been transferred, an official said yesterday, raising the prospect of an end to the deadlock stalling a nuclear disarmament deal with Pyongyang.

"Francis Tam confirmed that Banco Delta Asia has remitted a sum of over US$20 million out of Macao," a Macao government spokesman said, referring to the special administrative region's secretary for economy and finance.

He added the bank declined to say where the money was transferred, citing privacy concerns.

North Korea has refused to honor a February agreement to begin shutting its Yongbyon nuclear reactor and source of material for atomic weapons until US$25 million at Macao's Banco Delta Asia are released through normal banking channels.

The funds were blocked after the US blacklisted Banco Delta Asia, accusing it of laundering illicit funds for Pyongyang.

Japan's Kyodo news agency, citing Macao financial authorities, said the funds were expected to be transferred through the New York branch of the Federal Reserve and Russia's central bank to a Russian bank where North Korea holds accounts.

Russia said on Wednesday it would allow one of its banks to transfer the US$25 million, provided Washington gave written guarantees that it would not fall foul of US sanctions against Pyongyang.

(China Daily June 15, 2007)