SHANGHAI, Mar 16 -- A MACAU bank said today it would challenge a US decision to cut ties between the lender and the US financial system because of allegations the company helped North Korea launder money and handle counterfeit currency, The Associated Press said.

The small family-owned lender, Banco Delta Asia, also denied that it "knew or suspected" that its North Korean customers were engaged in money laundering, said Stanley Au, chairman of Delta Asia Group (Holdings) Ltd. The bank is a unit of the group.

Au said at a news conference the bank regrets the US announcement on Wednesday that America would sever ties between the lender and the US financial system -- a move that could seriously cripple the bank.

The group "expects Banco Delta Asia to continue to appeal against the US rule making," he said.

Macau's regulators have frozen about US$25 million in North Korean assets held by Banco Delta Asia. The assets have been a key sticking point in six-party negotiations about North Korea's nuclear program.

Some expect a portion of those funds will be released, and a US delegation planned to discuss the matter with Macau's government this weekend.

Au said it was up to Macau's government to decide how to handle the North Korean money. "The disposal of these funds is beyond my concern and responsibility," he said.

He added that Banco Delta Asia closed the North Korean accounts after US investigators alleged in 2005 the bank was involved in illegal North Korean activities. Au said the bank has had no contact with North Korea since then and it had no plans to resume ties.

"As far as the future is concerned, unless North Korea normalizes its diplomatic relationship with America ... I don't think I would like to meet them," he said.

The businessman said he was not worried about the bank's future as the lender has already been cut off from the US financial system since 2005 and has been doing fine.

"I feel very calm because in Buddhist teaching, if you do no wrong, you can trust in a higher being," he said.