Bankers in Hong Kong are running the numbers on the biggest gamble yet in the gaming mecca of Macau. If the deal goes down, millions would go to an unlikely player – the reclusive, nuclear-armed communist regime in North Korea.

Along the way, a money-laundering bank would be rescued, Western bankers would wind up with a potentially lucrative banking license in fast-growing Macau, and North Korea would be expected to begin shutting down a nuclear reactor.

This is not your ordinary distressed asset deal. Rather, it’s designed to solve a diplomatic crisis.

In February, Pyongyang agreed to dismantle its Yongbyon nuclear reactor. That deal is conditioned on the release of $25 million in North Korean funds frozen since 2005 in accounts at Banco Delta Asia, a Macau bank the U.S. accuses of laundering money on behalf of North Korean clients.

But the money still hasn’t made it to North Korea, in part because in March, the U.S. Treasury Department dropped a bomb of its own: it barred Banco Delta Asia from any direct or indirect dealings with U.S. financial institutions, effectively barring it from using the international financial system.

Despite the fact that the U.S. and other countries participating in the six-party talks on North Korea have agreed to release North Korea’s money, the world’s biggest banks don’t want to touch the $25 million. None will wire it to Pyongyang, worried that they would be perceived as helping an international pariah get its hands on money gained from illicit activities.

Even the Bank of China won’t touch the funds, despite China’s role in brokering the diplomatic disarmament deal. The $25 million is in a financial no-man’s land, as unreachable as a political protester in a North Korean prison.

To solve the impasse, diplomats have been scrambling to find banks willing to wire the funds from Macau to North Korea, with various reports surfacing that the money will soon be en route to South Korea, Russia, Italy, or even to Singapore. So far, it has stayed in Macau.

So Hong Kong bankers are discussing models pioneered in mainland China and South Korea to resuscitate failed financial institutions there. First, Macau’s banking regulator, the Monetary Authority of Macau, would strip the radioactive $25 million from Banco Delta Asia. Since most non-North Korean depositors have already withdrawn their funds, the only asset of value left would be the Macau bank’s banking license.

The government of Macau would then recapitalize the bank and auction the banking license of the scrubbed-up bank. That would give the buyer – likely a deep-pocketed Western financial institution, perhaps in partnership with private equity players – a small but healthy bank and a foothold in the fast-growing Macau market. Investment banks like Goldman Sachs (nyse: GS - news - people ), Morgan Stanley (nyse: MS - news - people ), UBS (nyse: UBS - news - people ) and Merrill Lynch (nyse: MER - news - people ) would likely be interested in gaining a financial foothold in Macau.

As for the $25 million, it could become a hastily drawn up bridge loan wired to a newly opened bank account designated to fund humanitarian activities. The $25 million could be funded by a government involved in the six-party talks, a private firm or even a state-owned company. The money would be recouped from proceeds of the sale of the Macau banking license.

This structure is being floated by North Korea expert John Park, a former Goldman Sachs banker in Hong Kong and restructuring expert at Boston

Consulting Group in Seoul who is now coordinator of the Korea Working Group of the congressionally funded United States Institute of Peace in Washington, D.C.

Macau is a special administrative region of China, and Park says he modeled the Macau bank bailout on Western investment banks’ joint ventures with Chinese brokerage firms – like Goldman’s joint venture with Gao Hua Securities, which allowed it to enter the now-lucrative Chinese IPO market.

The potential deal also takes inspiration from restructuring deals pioneered by KAMCO (Korea Assets Management Corp.), the Korean government agency responsible for securitizing and selling bank loans that went bad during the Asian financial crisis of the late 1990s.

If the deal goes through and North Korea gets its $25 million, the rest of the world would find out whether the erratic, nuclear-armed nation will keep its part of the bargain and shut down its Yongbyon nuclear reactor.

North Korea has balked plenty of times in the past, but it had shown a willingness to progress along with the six-party talks until its money was frozen. “It has taken many by surprise that a financial issue has derailed de-nuclearization work,” says Park.

Would this deal just bail out the bad guys? There aren’t many good solutions to the North Korean nuclear impasse.

The disarmament deal reached in February hinges on promises that North Korea would get its money back.

“We should give it a fighting chance,” says Park.

If carving out the radioactive $25 million and recapitalizing a bank are steps toward making the Korean Peninsula less radioactive, it could be worth the gamble.