Chinese banks will be closely watching the ongoing slanging match between Washington Pyongyang over sanctions by the US on North Korea, as they could be hard hit should hawkish voices prevail and economic measures on the DPRK become tighter.
Senator Chris Van Hollen told US cable news network MSNBC on Thursday: "We say to China, 'You have a choice whether you do business with North Korea, or you do business with the US', but you can't do both."
In July, Van Hollen sponsored a bill that would impose secondary sanctions targeting banks that did business with North Korean entities.
Sino-North Korean trade was worth US$2.6 billion in the first half of this year, according to Chinese customs figures, with trade in oil and coal being key components.
A UN report from earlier this year alleged that North Korean banks and firms have maintained access to international financial markets through a network of Chinese-based front companies.
Coal exports from North Korea have since been stopped under UN sanctions, and the UN Security Council (including China) unanimously agreed further sanctions last Saturday.
The most recent agreement seems to have protected the Chinese banks in the short term.
"The decision by the Chinese to sign up to UN sanctions on Saturday was a trade off to prevent secondary sanctions being imposed by the US on large Chinese corporates or banks," said Andrew Gilhom, director of analysis greater China and North Asia, at Control Risks.
However, with the rhetoric coming out of the White House growing increasingly intense, the United States may return to the topic of secondary sanctions if it feels the Chinese authorities are not providing the help the US believe it needs.
"If secondary sanctions were brought in against Chinese banks, they may have little choice but to comply," said Jessica Bartlett, a senior associate at Freshfields Bruckhaus Deringer based in Hong Kong.
"US regulators have the ultimate weapon of forbidding a bank from clearing US dollars, and since the vast amount of trade is conducted in dollars that would make it near impossible for many Chinese banks to do business," she said.
"As such, any bank that relies on doing business in US dollars who breaches US sanctions would have no choice but to pay the penalty in fines."
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These could be vast. In 2015, BNP Paribas was fined US$8.9 billion for breaching US sanctions on Iran, and they could be even larger in any case involving North Korea.
"The areas on which the regulators choose to focus, the pace with which they move and the amount of fines they levy are affected by the US political climate," said Bartlett.
At present, it would not be to the benefit of a Chinese bank deemed to be supportive of North Korea's nuclear programme, even if geopolitical concerns have protected Chinese banks thus far.
"Sanctioning Chinese companies for doing business with North Korea is a tool the US has to influence Chinese policy makers – but so far they have only taken action against smaller players.
"The political ramifications of cutting off a large bank from the US financial system would be very large," said Gilholm.
Only one Chinese bank, so far, has fallen foul of US regulators when it comes to sanctions on North Korea, when in June the Trump administration announced new sanctions against the Bank of Dandong in China, which sits across the border from North Korea.
Treasury officials and FinCEN (the Financial Crimes Enforcement Network) alleged that "Bank of Dandong had acted as a conduit for illicit North Korean financial activity and was a foreign bank of primary money laundering concern".
However, the case against Bank of Dandong, is probably unrelated, at least technically, from the latest political tensions.
"It not entirely clear to me that FinCEN's action represents anything like a policy change or reaction to recent North Korean activities and might represent the gradual tightening of sanctions on North Korea that started under Obama,"said Bartlett.
"The targeting of Bank of Dandong probably came out of a criminal complaint and forfeiture action filed by the US Department of Justice against Dandong Hongxiang Industrial Development (DHID), and its majority owner, Ma Xiaohang and three top executives last year."
The action filed by the DoJ alleged that "Ma Xiaohong had conspired with other senior managers working for DHID to create or acquire numerous front companies that were used to conduct financial transactions designed to evade U.S. sanctions related to certain North Korean entities.... To facilitate this conduct, Ma, DHID, and officers and employees of DHID used front companies to establish numerous bank accounts at various banks in China."
"In these situations, it is common the authorities start with one act of wrongdoing, and then use that to explore the situation further," said Bartlett.
The action against DHID said the company also had accounts at Agriculture Bank of China, Bank of Communications, China Construction Bank, China Merchants Bank, Guangdong Development Bank, and Industrial and Commercial Bank of China, in which it had deposited funds that were in breach of US sanctions. These funds would be forfeited, it said.
It is not known, what, if any action US regulators are taking against the other banks named in the DoJ's action.
Of course, as Bartlett says, this case is technically separate from the current machinations between the United States and others about how best to proceed with North Korea.
However, what US regulators look into, how aggressively they do so, and how large the fines they charge are affected by political concerns.
Few things at the moment, are higher on the agenda of the White House than North Korea.