A sign reads Shanghai Pudong Development Bank in Beijing. Photo: VCG

China's Foreign Ministry on Tuesday commented that Chinese banks may be faced with US restrictions for allegedly refusing to comply with court subpoenas in a probe into violations of unilateral US sanctions against North Korea, saying Chinese banks have been adhering to UN resolutions.

China always opposes US long-arm jurisdiction on Chinese companies, Foreign Ministry spokesperson Geng Shuang said at a routine press conference on Tuesday.

"We hope the US enhances bilateral cooperation in financial regulation and management, including information exchanges that conform to different sides' domestic laws, and resolves problems in cross-border information sharing through judicial assistance and supervision cooperation," Geng said.

A US judge is holding three Chinese banks in contempt for refusing to comply with probes into violations of North Korea sanctions, and one of them risks losing access to US dollars, a "death sentence" to a financial institution, the Washington Post reported on Monday.

The banks have yet to be identified, but details in court rulings align with a 2017 civil forfeiture action on China Merchants Bank (CMB), Bank of Communications (BOCOM) and Shanghai Pudong Development Bank (SPDB), the report said.

Responding to the US media report, the three Chinese banks said on Tuesday that they were not being investigated for any suspected violations.

CMB said that it has always strictly complied with Chinese laws, relevant UN resolutions and other applicable sanctions and the laws of the countries where they have offices, and has not been investigated for suspected violation of any sanctions, domestic financial media 21jingji.com reported on Tuesday.

US authorities ought to follow an agreement signed by the governments of China and the US on "mutual legal help in criminal matters for cross-border evidence collection," said CMB, adding the bank has always abided by Chinese and UN laws related to North Korea.

BOCOM and SPDB also issued a response, saying that they were not being investigated for any suspected violations of laws, according to media reports.

SPDB said in a statement that it received a US requirement to provide information about a client, in addition to other data and information. But, according to Chinese law, any individual or organization must not disclose information to overseas parties without prior permission, the Shanghai-based bank said.

The ruling against the three Chinese banks will not be made until next month. Business insiders predicted that no Chinese banks are likely to lose their access to US dollar settlements, and market should not over-interpret the reports, said financialnews.com.cn, a domestic financial media under China's central bank.

It's still not clear whether the assumed restriction will become actual legal action, because the report was based on a federal judge's words, Song Guoyou, director of Fudan University's Center for Economic Diplomacy, told the Global Times on Tuesday.

However, if the US will bring the possible restriction into action, it will cause great threat to China's economic and financial security, Song said.

Banking stocks in China's stock market performed poorly in mid-day trading and recovered some of their losses on Tuesday afternoon.
Newspaper headline: China slams possible US restrictions on banks