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Tuesday July 25, 7:48 AM UPDATE 1-Bank of China freezes N. Korea assets in Macau- US (Repeats to send story to additional subscribers. Text unchanged.) (adds details, quotes, throughout) By Mark Felsenthal and Carol Giacomo WASHINGTON, July 24 (Reuters) - The state-owned Bank of China has frozen North Korea-related assets in its Macau branch, the United States has learned, two U.S. officials said on Monday. Although the development is only now coming to light, one official told Reuters it pre-dated Pyongyang's July 4 missile tests and hence does not reflect a post-test attempt by China -- Pyongyang's chief patron -- to increase pressure on the North to return to six-country nuclear negotiations, as the United States has demanded. The story was first reported by South Korea's Yonhap news agency, which quoted a South Korean legislator as saying suspicions Pyongyang printed fake Chinese currency prompted the Bank of China to freeze all of its North Korean accounts. A State Department spokesman said he was unable to confirm that account. "We've raised the issue of (North Korea's) illicit activities with the Chinese and encouraged all to be vigilant. We're pleased that jurisdictions are investigating these matters," he said. But two other U.S. officials, speaking on condition of anonymity because of the issue's sensitivity, said the administration was told the freeze affected the Macau branch. "They were frozen. We don't know how much," one official told Reuters. "I think it's a significant step forward for China but I think like everything else, the question is are they willing to put the same kind of scrutiny on what's going on in the mainland accounts as well," the official said, referring to North Korean accounts held by mainland Chinese banks. He said the Chinese action was getting attention now "because people see this as the Chinese using their leverage with the North Koreans" after the July 4 missile launches but "that's not how we see it." He speculated that Bank of China "wants to protect its reputation because it's trying to seek market entry into the United States, so they are trying to clean up their financial sector. This is probably part the effort." The United States has already instituted financial restrictions against North Korea aimed at halting what Washington says are illicit actions by the Pyongyang government or North Korean entities. That crackdown has caused friction in efforts to persuade Pyongyang to end its nuclear programs. North Korea withdrew from six-nation nuclear talks after Washington in September branded Banco Delta Asia in Macau a conduit for Pyongyang's counterfeiting and other illicit activities. Tensions escalated this month when the isolated Asian nation tested seven missiles, including a long-range missile theoretically capable of hitting Alaska. In April, China's central bank warned lenders to be on guard against high-quality counterfeit U.S. $100 bills that Washington says are being made by North Korea. Banco Delta Asia denied U.S. accusations it had been a "willing pawn" for illegal North Korean activities, but in February ended all business with Pyongyang and said it had improved its anti-money laundering policies. Treasury Deputy Assistant Secretary Daniel Glaser said in June in Hong Kong that the Banco Delta Asia designation had produced encouraging results and many Asian governments and banks were moving to cut ties with illegal North Korean businesses. Pyongyang has said it will not return to six-party nuclear talks until Washington lifts financial sanctions and $20 million in funds frozen by Macanese authorities at Banco Delta Asia are released. U.S. officials say the restrictions are a law enforcement matter and should not be linked to the diplomatic negotiations. The Bank of China is a state-owned commercial bank.