Problems With Macao's Banks....

I saw on the TV yesterday, that there was a run on Macao bank Delta Asia after being accused of complicity by the United States in money laundering supporting North Korea's nuclear weapons program.

Banco Delta Asia, part of the Delta Asia Financial Group headed by Stanley Au, a Hong Kong financier and Macao legislator, was designated under the Patriot Act for alleged money-laundering activities. The move could result in the bank being barred access to US financial markets.

The Treasury Department alleged that a "significant amount" of the bank's business for the past two decades had involved North Korea. Its banking services had "specifically facilitated the criminal activities of North Korean government agencies and front companies", the Treasury said

In addition, Bank of China's Macau branch may also be investigated since nothing in Macao happens without their knowledge. Stanley Ho's Seng Heng Bank is also targeted in the probe. This comes at a very awkward time for Bank of China since they are in the process of listing the bank on foreign stock exchanges and any sniff of running afoul of terrorism laws may jeopardize the share issuance.

If any of Macau's banks are found to have abetted terrorists in the form of the rogue North Korean regime, business with American banks may be restricted or eliminated. Additionally, guilty Macao banks could have further problems with other global non-US banks fearing to do business with them in the future leading to a loss of market position and all-important confidence leading to a destabilizing run as depositors try to get their money out.