South Korea's president on Wednesday warned Washington against pressuring North Korea to force the totalitarian regime's collapse, while the North kept up its demands that Washington lift financial sanctions.

The North reiterated its vow to stay away from international nuclear disarmament talks until the U.S. lifts sanctions it recently imposed over allegations of Pyongyang's involvement in counterfeiting of U.S. currency and other illegal activities.

Appearing at his annual New Year's news conference, South Korean President Roh Moo-hyun avoided directly answering whether the South believes the North is engaged in counterfeiting, money laundering and drug trafficking, as Washington alleges.

He said the matter required review and consideration of how measures are "related to efforts to resolve the nuclear issue and if that involves any intention to pressure North Korea's regime."

But Roh said coercive steps were not the way to resolve the latest dispute over the North's nuclear ambitions, which erupted in late 2002 after U.S. officials accused Pyongyang of running a secret uranium enrichment program.

"I don't agree to some opinions inside the U.S. that appear to be wanting to take issue with North Korea's regime, apply pressure and sometimes wishing for its collapse," he said. "If the U.S. government tries to resolve the problem that way, there will be friction and disagreement between South Korea and the U.S."

He added that there's no such friction yet because the opinions don't reflect current U.S. policy.

Despite that, tensions between the South and Washington were laid bare when South Korea's Foreign Ministry said Wednesday that it hadn't been asked by a visiting U.S. Treasury Department delegation to take action to prevent illegal financial activity by the North.

The U.S. officials were on a trip through the region to present evidence of their claims against Pyongyang, and a statement from the U.S. Embassy on Tuesday said they had urged the South to strengthen controls to prevent proliferation of weapons of mass destruction by financially isolating those who seek to do so and their support networks.

"The U.S. Treasury Department team did mention the need for general cooperation ... but didn't urge our government to take specific actions, either officially or unofficially," the South Korean Foreign Ministry said.

The ministry said the embassy's press release on the visit "overstates some of what was discussed between the two sides and does not correctly reflect" the discussion.

But U.S. Embassy spokesman Robert Ogburn said "we still stand by our press release," declining to give details of what exact measures were discussed.

Washington has rebuffed Pyongyang's demands for lifting the sanctions to resume six-nation nuclear talks, saying the measures are unrelated to the weapons issue.

On Wednesday, the North repeated its demand.

"If the U.S. truly wants the resumption of the six-party talks and their progress, it had better opt for lifting its financial sanctions against (North Korea) and coexisting with it," the North's official Korean Central News Agency said in a commentary.

The nuclear talks have failed to make any progress since September on implementing an agreement where the North pledged to abandon its atomic programs in exchange for security guarantees and aid.

Seoul been noncommittal on whether it shares a U.S. belief that the North engaged in illicit activities, apparently out of concern it could affect a resolution of the nuclear crisis.

In September, the United States slapped sanctions on a bank in the Chinese territory of Macau, alleging it helped the North distribute counterfeit currency and engage in other illicit activities.

Washington also has sanctioned North Korean companies it claimed were fronts for proliferating weapons of mass destruction.

North Korea, which had used the Macau bank for decades as a main channel for outside funds, called the sanctions a "sheer lie" and evidence of U.S. hostility against the communist regime.

Wary of Pyongyang's anger, South Korea also hasn't committed itself to the Proliferation Security Initiative, which involves maritime drills to stop and search ships suspected of carrying nuclear, chemical and biological weapons, materials to make them, or missiles to deliver them.

But the South said Tuesday it will provide "possible cooperation" with the effort, such as sending delegates to observe exercises and including weapons of mass destruction interdiction drills in regular military exercises with the U.S.

South Korea made clear that it was not considering participation in PSI drills or providing logistical support.

About a dozen PSI drills have been held since the program was launched in 2003 with 11 countries. Since then, five other countries have actively participated, while 60 more expressed support of its goals.