WASHINGTON - The United States Wednesday cleared the way for the release of millions of dollars of North Korean money frozen in a Macau bank, a pivotal demand of North Korea under a deal aimed at dismantling its nuclear arms program.

The move by the US Treasury came within a 30-day deadline stemming from a February 13 agreement, under which Pyongyang pledged to scrap its atomic drive in exchange for aid and a normalization of relations with Washington.

In September 2005, the Treasury accused Banco Delta Asia (BDA) of helping North Korea to circulate fake 100-dollar bills, and of laundering funds from narcotics and weapons trafficking.

Under a new ruling announced Wednesday, US banks are formally barred from any dealings with BDA, which effectively cuts the family-owned bank off from the global financial system.

But the formal ruling also ends the limbo that left BDA in receivership and the money beyond North Korea's reach, as it permits the authorities in the Chinese territory of Macau to resolve the bank's legal status.

"Our investigation of BDA confirmed the bank's willingness to turn a blind eye to illicit activity, notably by its North Korean-related clients," Stuart Levey, Treasury under secretary for terrorism and financial intelligence, said.

However, the bank had already collapsed under the weight of the US accusations, and North Korea can now gain access to some of its BDA accounts. Washington has conceded that not all the money was illicit.

More than 25 million dollars in North Korean accounts were frozen by authorities in Macau, near Hong Kong. It remains unclear how much of the funds the autonomous territory's administration will unblock.

A US willingness to resolve the banking dispute played a key role in enticing North Korea back to nuclear negotiations late last year, resulting in last month's landmark deal with leading diplomatic players.

A first round of bilateral normalization talks took place in New York last week and the full six-nation negotiations involving China, Japan, Russia, North and South Korea, and the United States are due to resume on March 19.

"Everyone's got obligations," State Department deputy spokesman Tom Casey said. "Everyone intends to meet their obligations. At least we do."

The head of the UN's atomic watchdog said Wednesday his agency's first direct talks with North Korea in more than four years had been useful and the nation remained committed to disarming.

However, International Atomic Energy Agency chief Mohamed ElBaradei also cautioned in Beijing that North Korea's nuclear weapons program would not end "overnight."

And he warned that Pyongyang remained insistent that the US banking sanctions must be lifted if the disarmament deal is to hold.

"Once that takes place they said they would be ready to fully cooperate and implement the (February) agreement," ElBaradei said.

North Korea kicked out IAEA inspectors in December 2002, then went on to conduct its first atomic test in October last year, but now appears to favor talks over confrontation.

US Treasury officials have met with the North Koreans three times over the past year to thrash out their accusations that North Korea routinely abuses the banking system.

The US government is prepared to continue bilateral talks with North Korea to discuss "the steps it could take if it truly wishes to alleviate its isolation from the international financial community," Levey said.

He also congratulated Macau for having instituted, with the backing of China's central government in Beijing, tough new laws against money-laundering and counterfeit currency.