Sudan has to "terminate all business ties" with North Korea before any talks could begin for removing Khartoum from the US "terrorism" blacklist, a top US official said on Monday.
Washington lifted its decades-old trade embargo imposed on Khartoum in October, but kept Sudan in its list of "state sponsors of terrorism", which Sudanese officials say makes international banks wary of doing business with Sudanese banks, and in turn hampers an economic revival in the African country.
Sudanese officials have been pushing to remove Sudan from the blacklist — which also includes North Korea, Syria and Iran — as they grapple with surging inflation, high debt and the loss of oil earnings.
But Washington insists Khartoum must provide a complete assurance it has cut relations with nuclear-armed Pyongyang, which rattled the international community last year with a flurry of nuclear and missile tests.
The US is also pushing Sudan to improve its record on human rights, religious freedom and other rights issues to take its negotiations with Khartoum to the next phase.
"Above all is the importance of terminating any business ties to North Korea," a top US official familiar with Washington's negotiations with Khartoum said on condition of anonymity.
"There is lot more that we need to see in the way of evidence provided to us that the business has been terminated."
"No more business, period. Give us the evidence that in fact you are stopping it. That's what they have to do with us."
Khartoum says it is committed to respecting all resolutions passed by the UN Security Council against North Korea.
"Sudan confirms it has no relations with Democratic People's Republic of Korea at any level," the Sudanese foreign ministry said in a statement on Sunday.
Read more: US and Sudan rebuild ties after decades of sanctions
The call on Sudan comes as there are signs of a thaw in relations between Pyongyang and the outside world, with leader Kim Jong-un meeting his South Korean counterpart on Friday, ahead of an planned summit with US President Donald Trump.
Sudan and North Korea have had no diplomatic relations for years, but some rights and campaign groups allege that the two have engaged in military ties.
Washington imposed sanctions in 1997 over Sudan's alleged support of militant groups. Al Qaeda founder Osama bin Laden lived in Sudan between 1992 and 1996.
After decades of strained diplomatic relations, ties between Washington and Khartoum improved under the presidency of Barack Obama, later resulting in the lifting of sanctions by Mr Trump last year.
Sudan's overall economy was hit hard after the south separated from the north in 2011, taking with it about 75 per cent of greater Sudan's oil earnings.
With a foreign debt of more than $50 billion and a plunging pound against the dollar because of an acute shortage of foreign currency, a quick economic revival that Sudan was expecting after lifting of the sanctions has failed to materialise.
"They got to make immediate progress on the SSTL concerns and issues to clear the way on all the other financial and debt issues that they face," the US official said.
With the lifting of the sanctions, Sudanese banks are now eligible for corresponding banking relations with the United States, the official said, but clarified that it was not for Washington to restore US-Sudan banking ties.
US banks would make their own decisions based on answers to questions like whether Sudan is still on the SSTL or how effective Khartoum is at stopping money laundering, the official said.
"But I would say that the door is now open. There is a chance for banking ties to be resumed."