SEOUL: The United States plans to freeze some 100 overseas bank accounts believed linked to illicit North Korean transactions, South Korean media reports said Friday.

"The assets in those accounts are likely to be money (leader) Kim Jong-Il needs to operate his regime, so this will deal a serious blow to the North," the JoongAng Ilbo newspaper quoted a diplomatic source as saying.

Other major Korean-language newspapers and Yonhap news agency carried similar reports.

Most said the clampdown began after the March sinking of a South Korean warship, allegedly by a North Korean torpedo, with the loss of 46 lives.

The bank probe began weeks before Secretary of State Hillary Clinton announced on Wednesday that the United States would impose new sanctions on the North for the sinking.

The reports said US investigators had discovered about 200 overseas accounts linked to Pyongyang. It was closely monitoring about 100 of them, which were believed to hold proceeds of arms exports or other banned activities.

The accounts are in about 10 banks in Southeast Asia, southern Europe and the Middle East and were opened under false names, JoongAng Ilbo said.

The paper said the banks have already frozen the accounts following US notification of their suspect status, while other reports said action had not yet been taken.

"Bank accounts used to deposit money earned from the North’s exports of arms, in violation of UN Security Council resolutions 1718 and 1874, were studied, along with accounts used to purchase luxury goods believed to be supplied to the North’s leadership," JoongAng quoted the source as saying.

The resolutions passed after the North`s missile and nuclear tests ban the North`s arms exports, transactions linked to its nuclear and atomic activities and the supply of luxury goods to Pyongyang.

Apart from arms sales, cash in the accounts was presumed to have come from counterfeiting, money laundering and drug trafficking, JoongAng said.

Reports said Washington would handle the account closures quietly, contrary to its tactics in the Banco Delta Asia affair in 2005.

At that time Washington publicly blacklisted the Macau bank for alleged links to North Korean counterfeiting, a charge it denied. The move led to a freeze of 25 million dollars in the North`s accounts there.

The measure reportedly hit the North hard after other financial institutions also cut ties to Pyongyang for fear of similar action. The funds were unfrozen in 2007 in a bid to restart nuclear disarmament negotiations.

During her visit to Seoul Wednesday, Clinton announced new sanctions "directed at the destabilising, illicit, and provocative policies" of the North`s regime.

She also announced greater efforts under existing regulations, to freeze the North`s suspect assets.

The State Department said Wednesday that Robert Einhorn, the US envoy on nonproliferation, would travel to the region in early August to encourage enforcement of sanctions.

"We would like to see other countries also take the same kinds of national steps that we`ve announced," said spokesman Philip Crowley.

BDST: 10:07 HRS, July 23, 2010