S. Korea Pinpoints Illegal Bank Accounts Used by N. Korea

South Korea has informed the U.S. of up to 20 overseas bank accounts North Korea may use for counterfeiting and money laundering, a report said as key nations agreed Wednesday on tough new U.N. sanctions for the North's second nuclear test.

The banking information could help Washington identify targets as it considers punishing North Korea with its own financial sanctions apart from any U.N. measures.

On Wednesday, seven key nations reached agreement on a new U.N. Security Council resolution to toughen sanctions against the communist regime for defying the Security Council and conducting a second nuclear test on May 25, diplomats said.

South Korea gave the U.S. the information about some 10 to 20 North Korean bank accounts in China and Switzerland at Washington's request, South Korea's Chosun Ilbo newspaper reported, citing an unidentified government official.

South Korea's spy agency, the National Intelligence Service, the Foreign Ministry and the Finance Ministry said they could not confirm the report.

The North has long been accused of counterfeiting $100 bills and money laundering — accusations it denies.

Analysts say North Korea has an exclusive department, known as Room 39 or Bureau 39, to control illicit business activities such as counterfeiting, drug smuggling and weapons sales.

Room 39 has 120 foreign trade companies under its jurisdiction, Lim Soo-ho, a research fellow at the Samsung Economic Research Institute in Seoul, told The Associated Press.

Though the bureau formally falls under the ruling Workers' Party, in reality it is directly controlled by North Korean leader Kim Jong Il, he said.

Lim said North Korea earns U.S. dollars and other foreign currencies through drug trafficking and other illicit activities. The U.S. government claims North Korea also sells military technology such as missiles.

A 2007 report published by the Millennium Project of the World Federation of United Nations Associations said North Korea makes an estimated $500 million to $1 billion annually from criminal enterprises.

In 2005, the U.S. imposed financial restrictions on Banco Delta Asia, a bank in the Chinese territory of Macau, over allegations of money laundering and other financial crimes involving North Korea. The move effectively cut the North off from the global financial system.

On Wednesday, ambassadors from the five permanent U.N. Security Council nations — the U.S., China, Russia, Britain and France — and the two countries most closely affected by the test, Japan and South Korea, reached agreement on a draft U.N. resolution after two weeks of closed-door negotiations, the diplomats said.

The diplomats spoke on condition of anonymity ahead of the presentation of the draft resolution to the 15-member Security Council late Wednesday morning for consideration.

The draft, obtained by The Associated Press, would expand an arms embargo against North Korea, seek to curtail the North's financial dealings with the outside world, freeze assets of additional North Korean companies, and authorize searches of ships on the high seas suspected of carrying banned weapons and nuclear material if the country whose flag the vessel is flying gives consent.

However, former South Korean Foreign Minister Han Sung-joo doubted the U.N. sanctions would work.

"Sanctions will only drive them away further, alienate them," Han said. "They will use the sanctions as an excuse to maybe start their uranium enrichment program, but then, they would have done it anyway. So there's no easy answer."

Faced with growing international pressure, North Korea fought back with tough words Wednesday.

The Rodong Sinmun newspaper described the nuclear protection provided by the U.S. to South Korea and Japan as an "undisguised declaration of nuclear war" against North Korea.

"It's self-evident that we cannot just sit by and wait to die when the U.S. publicly declared it will attack our republic with nuclear weapons," the newspaper said in a commentary carried by the country's official Korean Central News Agency.

Also Wednesday, South Korean Vice Defense Minister Chang Soo-man described "brisk movements" by North Korea's military in the wake of last month's nuclear test. No further detail was available.

He told lawmakers that South Korea has been preparing for any North Korean provocation, the ruling Grand National Party said in a statement.

The missile and nuclear tests come amid reports that Kim has chosen his third and youngest son, Kim Jong Un, as his successor as leader of the communist nation of 24 million.

Little is known about the 26-year-old. Japan's Asahi TV broadcast a photo of a man in sunglasses it claimed was Kim Jong Un.

But South Korea's Yonhap news agency later identified him as a South Korean citizen named Bae who claimed the image was taken from a photo he posted to a blog in February.