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Banco Delta Asia, the small Macao bank accused by Washington of laundering money for North Korea, said it would launch an appeal against the US Treasury Department over the charge.
The lender said all allegations by the US were "totally unfounded" and that it had always complied with rules to tackle money laundering and terrorism.
The US Treasury Department designated in mid-September BDA as a "primary money laundering concern", saying the bank was "a willing pawn" for the North Korean government to engage in corrupt financial activities through Macao. It also criticised the former Portuguese colony as "a region that needs improvement in its money laundering controls".
Edmund Ho, chief executive of the self-governing Chinese territory of Macao, has called for evidence to support the allegations.
He appointed two senior government officials to help run the bank and told the Macao general public not to believe in "rumours" after hundreds of frantic customers queued outside the banks' eight branches to withdraw their deposits.
BDA said it had appointed US law firm Heller Ehrman to challenge the claims by the US. It said its business relationship with North Korean banks and trading companies, which began in the 1970s, had been "confined to the importation of commodities and consumer goods", while BDA collected payments on behalf of its customers.
The payments, BDA said, "have been mostly remittances from other major international banks and financial institutions whom BDA believes would have carried out the same level of due diligence on their customers".
The bank also said it was not linked to the communist state's nuclear weapons programme: "To the best knowledge and belief of BDA, there has been no reason to believe that BDA has been involved in financing the North Korean mass destruction weapons programme."
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Exclusive to FE under syndication arrangement
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