The accounts were blocked in September 2005 by the U.S. Department of the Treasury over alleged counterfeiting and money laundering. The United States agreed to unfreeze the reclusive Communist state's bank accounts prior to the new round of six-party talks in order to persuade North Korea to abandon nuclear research.
Kenichiro Sasae said Pyongyang will not participate in further discussion until it is convinced that the money frozen at BDA bank has been transferred to the Bank of China.
South Korean sources in Beijing said North Korean funds from the frozen accounts will be transferred to the Bank of China March 21.
Under the U.S.-North Korean agreement, the money should be returned by the end of the current round of talks on Wednesday.
Progress at the talks, which have been ongoing since August 2003 and have involved Russia, South and North Korea, the United States, China, and Japan, has been stalled mostly over Pyongyang's disagreements with Washington and Tokyo.
The previous round of North Korea talks in February yielded a breakthrough deal when Pyongyang agreed to shut down its reactor producing weapons-grade plutonium in exchange for energy aid, and a diplomatic compromise with the U.S. and Japan.
But North Korea's chief delegate Kim Kye Gwan warned the six-party agreements were fragile and the situation could be aggravated. He reiterated that his country would only suspend its Yongbyon reactor and let in UN inspectors after the bank accounts had been fully restored.
The current negotiations have also seen North Korea's Kim Kye Gwan threatening to exclude Japan from the talks if it failed to meet its commitments.
Japan is demanding a return to the issue of Japanese abductees in the 1970s-80s. The North said it would consider re-investigating the matter if Japan agreed to compensate North Korea for its colonial aggression in 1910-1945, end pressure on pro-North Korean residents in Japan, and lift sanctions imposed after Pyongyang conducted its first nuclear bomb tests in October.
Under the February 13 agreement, the six negotiating nations set up five working groups, including two on North Korea's relations with the U.S. and Japan. All the five groups met ahead of the current negotiations on March 15-18.
North Korea conducted its ballistic missile launches in the summer and its first nuclear bomb tests in October, triggering international condemnation and UN and unilateral sanctions from Japan and South Korea.