Washington - The US Treasury Department is scrutinizing US$24 million in North Korean accounts frozen in a Macao bank to see if some of the money could be released to Pyongyang, US officials say.

Several officials told reporters they believe the Bush administration is now inclined to find a solution to the year-long dispute over the accounts in Banco Delta Asia, which Washington has called a "willing pawn" in Pyongyang's counterfeiting and money-laundering activities.

But they stressed this would not affect UN sanctions and US laws and regulations that provide other authority for cracking down on Pyongyang's finances and weapons trade.

North Korea has cited the frozen Banco Delta Asia (BDA) accounts as a major reason for stonewalling six-country talks on ending its nuclear program.

Chief US negotiator Chris Hill met his North Korean counterpart in Berlin on Tuesday to discuss resuming the talks and the BDA issue was expected to be on the agenda.

"There are a number of North Korean accounts in Banco Delta Asia that the (Treasury) accountants are looking at. They are comparing these accounts," said one US official who spoke on condition of anonymity.

It is possible that accounts reflecting "legitimate" business activity could be segregated from "illegitimate" accounts and "a lot of resources are being applied to make that kind of assessment," he said.

Segregating Accounts

Previously, US officials argued it was impossible to differentiate among Pyongyang's accounts because the country's entire financial system is based on illicit activities such as counterfeiting and money-laundering.

Experts say $7.5 million of the $24 million was from Daedong Credit Bank, a British bank representing foreign companies doing business in North Korea.

The Treasury Department on Tuesday refused to comment on the status of the BDA investigation and whether it was looking for a compromise solution.

But a second US official said: "They are taking another look at this (BDA) issue. There is active discussion within the administration on whether to make concessions and if so, how far, how fast and under what conditions."

Hill is "hoping to close" Treasury's investigation on Banco Delta Asia, he added.

Macao, not the United States, has control over BDA and the North Korean accounts. US officials said if Treasury closed its BDA probe, this could be interpreted by Macao as a signal to release at least some of the $24 million.

Some officials are deeply troubled by what they see as a more accommodating US approach toward Pyongyang and say Hill has been given greater flexibility to negotiate. They say North Korea can't be trusted to honor any deal.

But other officials say North Korean counterfeiting and money-laundering, while important to stop, should not be allowed to thwart a possible deal that could halt the North's vastly more dangerous nuclear weapons-related activities.

Pyongyang has dramatically advanced its nuclear program during US President George W. Bush's tenure. It tested its first weapon last October.

During the last round of six-party talks in Beijing in December, North Korea refused to even discuss a September 2005 statement under which it agreed to abandon its nuclear programs in return for economic aid and security guarantees.

All Pyongyang's negotiator "wanted to talk about was one issue -- BDA -- and the return of the $24 million," one US official said. A US-North Korea financial working group expected to meet soon would discuss the "substance" of the BDA accounts, a US official said.

Six-party talks in November 2005 broke off after Washington squeezed Pyongyang's access to the world financial system to punish it for its illegal activities. Banco Delta Asia accounts were frozen after Washington declared the bank a "primary money laundering concern" under section 311 of the USA Patriot Act.