China on Thursday said it deeply regretted the US decision to ban American banks from dealing with Banco Delta Asia after concluding that the Macao bank had helped North Korea launder money.

The ban by US Treasury will test whether Pyongyang will follow through on last month’s agreement to dismantle its nuclear programme, but also paves the way for the bank to release a portion of the $25m in North Korean assets that was not related to illicit activity.