China's central bank tells banks to stop doing business with North Korea: sources

BEIJING/HONG KONG (Reuters) - China's central bank has told banks to strictly implement United Nations sanctions against North Korea, four sources told Reuters, amid U.S. concerns that Beijing has not been tough enough over Pyongyang's repeated nuclear tests.

Tensions between the United States and North Korea have ratcheted up after the sixth and most powerful nuclear test conducted by Pyongyang on Sept. 3 prompted the United Nations Security Council to impose further sanctions last week.

Chinese banks have come under scrutiny for their role as a conduit for funds flowing to and from China's increasingly isolated neighbour.

The sources said banks were told to stop providing financial services to new North Korean customers and to wind down loans with existing customers, following tighter sanctions against Pyongyang by the United Nations.

The sources said lenders were asked to fully implement United Nations sanctions against North Korea and were warned of the economic losses and reputational risks if they did not do so.

Chinese banks received the document on Monday, the sources said.

China's central bank did not immediately respond to a request for comment.

"At present, management of North Korea-related business has become an issue of national-level politics and national security," according to the document seen by the sources.

The document directed banks to explain to any North Korean customers that "our bank is fulfilling our international obligations and implementing United Nations sanctions against North Korea. As such, we refuse to handle any individual loans connected to North Korea."

The document did not specify whether existing North Korean account holders could still deposit or remove money from their accounts.

U.S. President Donald Trump ordered new sanctions on Thursday that open the door wider to blacklisting people and entities doing business with North Korea, including its shipping and trade networks, further tightening the screws on Pyongyang's nuclear and missile program.

Trump stopped short of going after North Korea's biggest trading partner, China, and praised its central bank for ordering Chinese banks to stop doing business with North Korea.

Frustrated that China had not done more to rein in North Korea, the Trump administration considered new sanctions in July on small Chinese banks and other firms doing business with Pyongyang, two senior U.S. officials told Reuters.

China's Big Four state-owned banks have stopped providing financial services to new North Korean clients, Reuters reported last week, with some measures beginning as early as the end of last year.

(Reporting by the Beijing, Hong Kong and Washington newsrooms; Writing by Sue-Lin Wong; Editing by Jacqueline Wong and Chizu Nomiyama)