[House Report 113-560]
[From the U.S. Government Publishing Office]
113th Congress Rept. 113-560
HOUSE OF REPRESENTATIVES
2d Session Part 1
======================================================================
NORTH KOREA SANCTIONS ENFORCEMENT ACT OF 2014
_______
July 28, 2014.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Royce, from the Committee on Foreign Affairs, submitted the
following
R E P O R T
[To accompany H.R. 1771]
[Including cost estimate of the Congressional Budget Office]
The Committee on Foreign Affairs, to whom was referred the
bill (H.R. 1771) to improve the enforcement of sanctions
against the Government of North Korea, and for other purposes,
having considered the same, report favorably thereon with an
amendment and recommend that the bill as amended do pass.
TABLE OF CONTENTS
Page
The Amendment.................................................... 1
Summary and Purpose.............................................. 14
Background and Need for the Legislation.......................... 15
Hearings......................................................... 22
Committee Consideration.......................................... 22
Committee Oversight Findings..................................... 23
New Budget Authority, Tax Expenditures, and Federal Mandates..... 23
Congressional Budget Office Cost Estimate........................ 23
Directed Rule Making............................................. 24
Non-Duplication of Federal Programs.............................. 24
Performance Goals and Objectives................................. 25
Congressional Accountability Act................................. 25
New Advisory Committees.......................................... 25
Earmark Identification........................................... 25
Section-by-Section Analysis...................................... 25
Changes in Existing Law Made by the Bill, as Reported............ 27
The Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``North Korea
Sanctions Enforcement Act of 2014''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.
TITLE I--INVESTIGATIONS, PROHIBITED CONDUCT, AND PENALTIES
Sec. 101. Statement of policy.
Sec. 102. Investigations.
Sec. 103. Briefing to Congress.
Sec. 104. Prohibited conduct and mandatory and discretionary
designation and sanctions authorities.
Sec. 105. Forfeiture of property.
TITLE II--SANCTIONS AGAINST NORTH KOREAN PROLIFERATION, HUMAN RIGHTS
ABUSES, AND ILLICIT ACTIVITIES
Sec. 201. Determinations with respect to North Korea as a jurisdiction
of primary money laundering concern.
Sec. 202. Ensuring the consistent enforcement of United Nations
Security Council resolutions and financial restrictions on North Korea.
Sec. 203. Proliferation prevention sanctions.
Sec. 204. Procurement sanctions.
Sec. 205. Enhanced inspections authorities.
Sec. 206. Travel sanctions.
Sec. 207. Exemptions, waivers, and removals of designation.
Sec. 208. Sense of Congress on enforcement of sanctions on North Korea.
TITLE III--PROMOTION OF HUMAN RIGHTS
Sec. 301. Information technology.
Sec. 302. Report on North Korean prison camps.
Sec. 303. Report on persons who are responsible for serious human
rights abuses or censorship in North Korea.
TITLE IV--GENERAL AUTHORITIES
Sec. 401. Suspension of sanctions and other measures.
Sec. 402. Termination of sanctions and other measures.
Sec. 403. Regulations.
Sec. 404. Effective date.
SEC. 2. FINDINGS.
Congress finds the following:
(1) The Government of North Korea has repeatedly violated its
commitments to the complete, verifiable, irreversible
dismantlement of its nuclear weapons programs, and has
willfully violated multiple United Nations Security Council
resolutions calling for it to cease its development, testing,
and production of weapons of mass destruction.
(2) North Korea poses a grave risk for the proliferation of
nuclear weapons and other weapons of mass destruction.
(3) The Government of North Korea has been implicated
repeatedly in money laundering and illicit activities,
including prohibited arms sales, narcotics trafficking, the
counterfeiting of United States currency, and the
counterfeiting of intellectual property of United States
persons.
(4) The Government of North Korea has, both historically and
recently, repeatedly sponsored acts of international terrorism,
including attempts to assassinate defectors and human rights
activists, repeated threats of violence against foreign
persons, leaders, newspapers, and cities, and the shipment of
weapons to terrorists.
(5) North Korea has unilaterally withdrawn from the 1953
Armistice Agreement that ended the Korean War, and committed
provocations against South Korea in 2010 by sinking the warship
Cheonan and killing 46 of her crew, and by shelling Yeonpyeong
Island, killing four South Koreans.
(6) North Korea maintains a system of brutal political prison
camps that contain as many as 200,000 men, women, and children,
who live in atrocious living conditions with insufficient food,
clothing, and medical care, and under constant fear of torture
or arbitrary execution.
(7) The Congress reaffirms the purposes of the North Korean
Human Rights Act of 2004 contained in section 4 of such Act (22
U.S.C. 7802).
(8) North Korea has prioritized weapons programs and the
procurement of luxury goods, in defiance of United Nations
Security Council resolutions, and in gross disregard of the
needs of its people.
(9) Persons, including financial institutions, who engage in
transactions with, or provide financial services to, the
Government of North Korea and its financial institutions
without establishing sufficient financial safeguards against
North Korea's use of these transactions to promote
proliferation, weapons trafficking, human rights violations,
illicit activity, and the purchase of luxury goods, aid and
abet North Korea's misuse of the international financial
system, and also violate the intent of relevant United Nations
Security Council resolutions.
(10) The Government of North Korea's conduct poses an
imminent threat to the security of the United States and its
allies, to the global economy, to the safety of members of the
United States armed forces, to the integrity of the global
financial system, to the integrity of global nonproliferation
programs, and to the people of North Korea.
(11) The Congress seeks, through this legislation, to use
nonmilitary means to address this crisis, to provide diplomatic
leverage to negotiate necessary changes in North Korea's
conduct, and to ease the suffering of the people of North
Korea.
SEC. 3. DEFINITIONS.
In this Act:
(1) Applicable executive order.--The term ``applicable
Executive order'' means--
(A) Executive Order 13382 (2005), 13466 (2008), 13551
(2010), or 13570 (2011), to the extent that such
Executive order authorizes the imposition of sanctions
on persons for conduct, or prohibits transactions or
activities, involving the Government of North Korea; or
(B) any Executive order adopted on or after the date
of the enactment of this Act, to the extent that such
Executive order authorizes the imposition of sanctions
on persons for conduct, or prohibits transactions or
activities, involving the Government of North Korea.
(2) Applicable united nations security council resolution.--
The term ``applicable United Nations Security Council
resolution'' means--
(A) United Nations Security Council Resolution 1695
(2006), 1718 (2006), 1874 (2009), 2087 (2013), or 2094
(2013); or
(B) any United Nations Security Council resolution
adopted on or after the date of the enactment of this
Act, to the extent that such resolution authorizes the
imposition of sanctions on persons for conduct, or
prohibits transactions or activities, involving the
Government of North Korea.
(3) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Foreign Affairs and the
Committee on Financial Services of the House of
Representatives; and
(B) the Committee on Foreign Relations and the
Committee on Banking, Housing, and Urban Affairs of the
Senate.
(4) Designated person.--The term ``designated person'' means
a person designated under subsection (a) or (b) of section 104
for purposes of applying one or more of the sanctions described
in title I or II of this Act with respect to the person.
(5) Government of north korea.--The term ``Government of
North Korea'' means--
(A) the Government of the Democratic People's
Republic of Korea or any political subdivision, agency,
or instrumentality thereof; and
(B) any person owned or controlled by, or acting for
or on behalf of, the Government of the Democratic
People's Republic of Korea.
(6) International terrorism.--The term ``international
terrorism'' has the meaning given such term in section 140(d)
of the Foreign Relations Authorization Act, Fiscal Years 1988
and 1989 (22 U.S.C. 2656f(d)).
(7) Luxury goods.--The term ``luxury goods'' has the meaning
given such term in subpart 746.4 of title 15, Code of Federal
Regulations, and includes the items listed in Supplement No. 1
to such regulation, and any similar items.
(8) Monetary instrument.--The term ``monetary instrument''
has the meaning given such term under section 5312 of title 31,
United States Code.
(9) North korean financial institution.--The term ``North
Korean financial institution'' means--
(A) a financial institution organized under the laws
of North Korea or any jurisdiction within North Korea
(including a foreign branch of such institution);
(B) any financial institution located in North Korea,
except as may be excluded from such definition by the
President in accordance with section 207(d);
(C) any financial institution, wherever located,
owned or controlled by the Government of North Korea;
and
(D) any financial institution, wherever located,
owned or controlled by a financial institution
described in subparagraph (A), (B), or (C).
(10) Other stores of value.--The term ``other stores of
value'' means--
(A) prepaid access devices, tangible or intangible
prepaid access devices, or other instruments or devices
for the storage or transmission of value, as defined in
part 1010 of title 31, Code of Federal Regulations; and
(B) any covered goods, as defined in section 1027.100
of title 31, Code of Federal Regulations, and any
instrument or tangible or intangible access device used
for the storage and transmission of a representation of
covered goods.
(11) Person.--The term ``person'' has the meaning given that
term in section 510.306 of title 31, Code of Federal
Regulations.
TITLE I--INVESTIGATIONS, PROHIBITED CONDUCT, AND PENALTIES
SEC. 101. STATEMENT OF POLICY.
In order to achieve the peaceful disarmament of North Korea, Congress
finds that it is necessary--
(1) to encourage all states to fully and promptly implement
United Nations Security Council Resolution 2094 (2013);
(2) to sanction the persons, including financial
institutions, that facilitate proliferation, illicit
activities, arms trafficking, imports of luxury goods, serious
human rights abuses, cash smuggling, and censorship by the
Government of North Korea;
(3) to authorize the President to sanction persons who fail
to exercise due diligence to ensure that such financial
institutions and jurisdictions do not facilitate proliferation,
arms trafficking, kleptocracy, and imports of luxury goods by
the Government of North Korea;
(4) to deny the Government of North Korea access to the funds
it uses to obtain nuclear weapons, ballistic missiles, and
luxury goods instead of providing for the needs of its people;
and
(5) to enforce sanctions in a manner that avoids any adverse
humanitarian impact on the people of North Korea.
SEC. 102. INVESTIGATIONS.
The President shall initiate an investigation into the possible
designation of a person under section 104(a) upon receipt by the
President of credible information indicating that such person has
engaged in conduct described in section 104(a).
SEC. 103. BRIEFING TO CONGRESS.
Not later than 180 days after the date of the enactment of this Act,
and periodically thereafter, the President shall provide to the
appropriate congressional committees a briefing on efforts to implement
this Act, to include the following, to the extent the information is
available:
(1) The principal foreign assets and sources of foreign
income of the Government of North Korea.
(2) A list of the persons designated under subsections (a)
and (b) of section 104.
(3) A list of the persons with respect to which sanctions
were waived or removed under section 207.
(4) A summary of any diplomatic efforts made in accordance
with section 202(b) and of the progress realized from such
efforts, including efforts to encourage the European Union and
other states and jurisdictions to sanction and block the assets
of the Foreign Trade Bank of North Korea and Daedong Credit
Bank.
SEC. 104. PROHIBITED CONDUCT AND MANDATORY AND DISCRETIONARY
DESIGNATION AND SANCTIONS AUTHORITIES.
(a) Prohibited Conduct and Mandatory Designation and Sanctions
Authority.--
(1) Conduct described.--Except as provided in section 207,
the President shall designate under this subsection any person
the President determines to--
(A) have knowingly engaged in significant activities
or transactions with the Government of North Korea that
have materially contributed to the proliferation of
weapons of mass destruction or their means of delivery
(including missiles capable of delivering such
weapons), including any efforts to manufacture,
acquire, possess, develop, transport, transfer or use
such items, by any person or foreign country;
(B) have knowingly imported, exported, or reexported
to, into, or from North Korea any arms or related
materiel, whether directly or indirectly;
(C) have knowingly provided significant training,
advice, or other services or assistance, or engaged in
transactions, related to the manufacture, maintenance,
or use of any arms or related materiel to be imported,
exported, or reexported to, into, or from North Korea,
or following their importation, exportation, or
reexportation to, into, or from North Korea, whether
directly or indirectly;
(D) have knowingly, directly or indirectly, imported,
exported, or reexported significant luxury goods to or
into North Korea;
(E) have knowingly engaged in or been responsible for
censorship by the Government of North Korea, including
prohibiting, limiting, or penalizing the exercise of
freedom of expression or assembly, limiting access to
print or broadcast media, or the facilitation or
support of intentional frequency manipulation that
would jam or restrict an international signal;
(F) have knowingly engaged in or been responsible for
serious human rights abuses by the Government of North
Korea, including torture or cruel, inhuman, or
degrading treatment or punishment, prolonged detention
without charges and trial, causing the disappearance of
persons by the abduction and clandestine detention of
those persons, and other denial of the right to life,
liberty, or the security of a person;
(G) have knowingly, directly or indirectly, engaged
in significant acts of money laundering, the
counterfeiting of goods or currency, bulk cash
smuggling, narcotics trafficking, or other illicit
activity that involves or supports the Government of
North Korea or any senior official thereof, whether
directly or indirectly; or
(H) have knowingly attempted to engage in any of the
conduct described in subparagraphs (A) through (G) of
this paragraph.
(2) Effect of designation.--With respect to any person
designated under this subsection, the President--
(A) shall exercise the authorities of the
International Emergency Economic Powers Act (50 U.S.C.
1705 et seq.) without regard to section 202 of such Act
to block all property and interests in property of any
person designated under this subsection that are in the
United States, that hereafter come within the United
States, or that are or hereafter come within the
possession or control of any United States person,
including any overseas branch; and
(B) may apply any of the sanctions described in
section 204.
(3) Penalties.--The penalties provided for in section 206 of
the International Emergency Economic Powers Act (50 U.S.C.
1705) shall apply to a person who violates, attempts to
violate, conspires to violate, or causes a violation of any
prohibition of this subsection, or of an order or regulation
prescribed under this Act, to the same extent that such
penalties apply to a person that commits an unlawful act
described in section 206(a) of that Act (50 U.S.C. 1705(a)).
(b) Discretionary Designation and Sanctions Authority.--
(1) Conduct described.--Except as provided in section 207,
the President may designate under this subsection any person
the President determines to--
(A) have knowingly engaged in, contributed to,
assisted, sponsored, or provided financial, material or
technological support for, or goods and services in
support of, any violation of, or evasion of, an
applicable United Nations Security Council resolution;
(B) have knowingly facilitated the transfer of any
funds, financial assets, or economic resources of, or
property or interests in property of a person
designated under an applicable Executive order, or by
the United Nations Security Council pursuant to an
applicable United Nations Security Council resolution;
(C) have knowingly facilitated the transfer of any
funds, financial assets, or economic resources, or any
property or interests in property derived from,
involved in, or that has materially contributed to
conduct prohibited by an applicable United Nations
Security Council resolution;
(D) have knowingly facilitated any transaction that
contributes materially to a violation of an applicable
United Nations Security Council resolution;
(E) have knowingly facilitated any transactions in
cash or monetary instruments or other stores of value,
including through cash couriers transiting to or from
North Korea, used to facilitate any conduct prohibited
by an applicable United Nations Security Council
resolution;
(F) have knowingly contributed to the bribery of an
official of the Government of North Korea, the
misappropriation, theft, or embezzlement of public
funds by, or for the benefit of, an official of the
Government of North Korea, or the use of any proceeds
of any such conduct; or
(G) have knowingly and materially assisted,
sponsored, or provided financial, material, or
technological support for, or goods or services to or
in support of, the conduct described in subparagraphs
(A) through (F) of this paragraph or the conduct
described in subparagraphs (A) through (G) of
subsection (a)(1).
(2) Effect of designation.--With respect to any person
designated under this subsection, the President--
(A) may apply the sanctions described in section 204;
(B) may apply any of the special measures described
in section 5318A of title 31, United States Code;
(C) may prohibit any transactions in foreign exchange
that are subject to the jurisdiction of the United
States and in which such person has any interest;
(D) may prohibit any transfers of credit or payments
between financial institutions or by, through, or to
any financial institution, to the extent that such
transfers or payments are subject to the jurisdiction
of the United States and involve any interest of the
person; and
(E) may exercise the authorities of the International
Emergency Economic Powers Act (50 U.S.C. 1705 et seq.)
without regard to section 202 of such Act to block any
property and interests in property of the person that
are in the United States, that hereafter come within
the United States, or that are or hereafter come within
the possession or control of any United States person,
including any overseas branch.
(c) Blocking of All Property and Interests in Property of the
Government of North Korea.--The President shall exercise the
authorities of the International Emergency Economic Powers Act (50
U.S.C. 1705 et seq.) without regard to section 202 of such Act to block
all property and interests in property of the Government of North Korea
that are in the United States, that hereafter come within the United
States, or that are or hereafter come within the possession or control
of any United States person, including any overseas branch.
(d) Application.--The designation of a person and the blocking of
property under subsection (a), (b), or (c) shall also apply with
respect to a person who is determined to be owned or controlled by, or
to have acted or purported to act for or on behalf of, directly or
indirectly, any person whose property and interests in property are
blocked pursuant to this section.
(e) Transaction Licensing.--The President shall deny or revoke any
license for any transaction that, in the determination of the
President, lacks sufficient financial controls to ensure that such
transaction will not facilitate any of the conduct described in
subsection (a) or subsection (b).
SEC. 105. FORFEITURE OF PROPERTY.
(a) Amendment to Property Subject to Forfeiture.--Section 981(a)(1)
of title 18, United States Code, is amended by adding at the end the
following new subparagraph:
``(I) Any property, real or personal, that is involved in a
violation or attempted violation, or which constitutes or is
derived from proceeds traceable to a violation, of section
104(a) of the North Korea Sanctions Enforcement Act of 2014.''.
(b) Amendment to Definition of Civil Forfeiture Statute.--Section
983(i)(2)(D) of title 18, United States Code, is amended--
(1) by striking ``or the International Emergency Economic
Powers Act'' and inserting ``, the International Emergency
Economic Powers Act''; and
(2) by adding at the end before the semicolon the following:
``, or the North Korea Sanctions Enforcement Act of 2014''.
(c) Amendment to Definition of Specified Unlawful Activity.--Section
1956(c)(7)(D) of title 18, United States Code, is amended--
(1) by striking ``or section 92 of the Atomic Energy Act of
1954'' and inserting ``section 92 of the Atomic Energy Act of
1954''; and
(2) by adding at the end the following: ``, or section 104(a)
of the North Korea Sanctions Enforcement Act of 2014''.
TITLE II--SANCTIONS AGAINST NORTH KOREAN PROLIFERATION, HUMAN RIGHTS
ABUSES, AND ILLICIT ACTIVITIES
SEC. 201. DETERMINATIONS WITH RESPECT TO NORTH KOREA AS A JURISDICTION
OF PRIMARY MONEY LAUNDERING CONCERN.
(a) Findings.--Congress makes the following findings:
(1) The Undersecretary of the Treasury for Terrorism and
Financial Intelligence, who is responsible for safeguarding the
financial system against illicit use, money laundering,
terrorist financing, and the proliferation of weapons of mass
destruction, has repeatedly expressed concern about North
Korea's misuse of the international financial system as
follows:
(A) In 2006, the Undersecretary stated that, given
North Korea's ``counterfeiting of U.S. currency,
narcotics trafficking and use of accounts worldwide to
conduct proliferation-related transactions, the line
between illicit and licit North Korean money is nearly
invisible'' and urged financial institutions worldwide
to ``think carefully about the risks of doing any North
Korea-related business.''.
(B) In 2011, the Undersecretary stated that ``North
Korea remains intent on engaging in proliferation,
selling arms as well as bringing in material,'' and was
``aggressively pursuing the effort to establish front
companies.''.
(C) In 2013, the Undersecretary stated, in reference
to North Korea's distribution of high-quality
counterfeit United States currency, that ``North Korea
is continuing to try to pass a supernote into the
international financial system,'' and that the
Department of the Treasury would soon introduce new
currency with improved security features to protect
against counterfeiting by the Government of North
Korea.
(2) The Financial Action Task Force, an intergovernmental
body whose purpose is to develop and promote national and
international policies to combat money laundering and terrorist
financing, has repeatedly--
(A) expressed concern at deficiencies in North
Korea's regimes to combat money laundering and
terrorist financing;
(B) urged North Korea to adopt a plan of action to
address significant deficiencies in these regimes and
the serious threat they pose to the integrity of the
international financial system;
(C) urged all jurisdictions to apply countermeasures
to protect the international financial system from
ongoing and substantial money laundering and terrorist
financing risks emanating from North Korea;
(D) urged all jurisdictions to advise their financial
institutions to give special attention to business
relationships and transactions with North Korea,
including North Korean companies and financial
institutions; and
(E) called on all jurisdictions to protect against
correspondent relationships being used to bypass or
evade countermeasures and risk mitigation practices,
and take into account money laundering and terrorist
financing risks when considering requests by North
Korean financial institutions to open branches and
subsidiaries in their jurisdiction.
(3) On March 7, 2013, the United Nations Security Council
unanimously adopted Resolution 2094, which--
(A) welcomed the Financial Action Task Force's
recommendation on financial sanctions related to
proliferation, and its guidance on the implementation
of sanctions;
(B) decided that Member States should apply enhanced
monitoring and other legal measures to prevent the
provision of financial services or the transfer of
property that could contribute to activities prohibited
by applicable United Nations Security Council
resolutions; and
(C) called on Member States to prohibit North Korean
banks from establishing or maintaining correspondent
relationships with banks in their jurisdictions, to
prevent the provision of financial services, if they
have information that provides reasonable grounds to
believe that these activities could contribute to
activities prohibited by an applicable United Nations
Security Council resolution, or to the evasion of such
prohibitions.
(b) Sense of Congress Regarding the Designation of North Korea as a
Jurisdiction of Primary Money Laundering Concern.--Congress--
(1) acknowledges the efforts of the United Nations Security
Council to impose limitations on, and require enhanced
monitoring of, transactions involving North Korean financial
institutions that could contribute to sanctioned activities;
(2) urges the President, in the strongest terms, to consider
immediately designating North Korea as a jurisdiction of
primary money laundering concern, and to adopt stringent
special measures to safeguard the financial system against the
risks posed by North Korea's willful evasion of sanctions and
its illicit activities; and
(3) urges the President to seek the prompt implementation by
other states of enhanced monitoring and due diligence to
prevent North Korea's misuse of the international financial
system, including by sharing information about activities,
transactions, and property that could contribute to activities
sanctioned by applicable United Nations Security Council
resolutions, or to the evasion of sanctions.
(c) Determinations Regarding North Korea.--
(1) In general.--The Secretary of the Treasury shall, not
later than 180 days after the date of the enactment of this
Act, determine, in consultation with the Secretary of State and
Attorney General, and in accordance with section 5318A of title
31, United States Code, whether reasonable grounds exist for
concluding that North Korea is a jurisdiction of primary money
laundering concern.
(2) Enhanced due diligence and reporting requirements.--
Except as provided in section 207, if the Secretary of the
Treasury determines under this subsection that reasonable
grounds exist for finding that North Korea is a jurisdiction of
primary money laundering concern, the Secretary of the
Treasury, in consultation with the Federal functional
regulators, shall impose one or more of the special measures
described in paragraphs (1) through (5) of section 5318A(b) of
title 31, United States Code, with respect to the jurisdiction
of North Korea.
(3) Report required.--
(A) In general.--The Secretary of the Treasury shall,
not later than 180 days after the enactment of this
Act, and for each of the 3 calendar years thereafter,
submit to the appropriate congressional committees a
report on the determination made under paragraph (1)
together with the reasons for that determination.
(B) Form.--A report or copy of any report submitted
under this paragraph shall be submitted in unclassified
form but may contain a classified annex.
SEC. 202. ENSURING THE CONSISTENT ENFORCEMENT OF UNITED NATIONS
SECURITY COUNCIL RESOLUTIONS AND FINANCIAL
RESTRICTIONS ON NORTH KOREA.
(a) Findings.--Congress finds that--
(1) all states and jurisdictions are obligated to implement
and enforce applicable United Nations Security Council
resolutions fully and promptly, including by--
(A) blocking the property of, and ensuring that any
property is prevented from being made available to,
persons designated by the Security Council under
applicable United Nations Security Council resolutions;
(B) blocking any property associated with an activity
prohibited by applicable United Nations Security
Council resolutions; and
(C) preventing any transfer of property and any
provision of financial services that could contribute
to an activity prohibited by applicable United Nations
Security Council resolutions, or to the evasion of
sanctions under such resolutions;
(2) all states and jurisdictions share a common interest in
protecting the international financial system from the risks of
money laundering and illicit transactions emanating from North
Korea;
(3) the United States Dollar and the Euro are the world's
principal reserve currencies, and the United States and the
European Union are primarily responsible for the protection of
the international financial system from these risks;
(4) the cooperation of the People's Republic of China, as
North Korea's principal trading partner, is essential to the
enforcement of applicable United Nations Security Council
resolutions and to the protection of the international
financial system;
(5) the report of the Panel of Experts established pursuant
to United Nations Security Council Resolution 1874, dated June
11, 2013, expressed concern about the ability of banks in
states with less effective regulators and those unable to
afford effective compliance to detect and prevent illicit
transfers involving North Korea;
(6) North Korea has historically exploited inconsistencies
between jurisdictions in the interpretation and enforcement of
financial regulations and applicable United Nations Security
Council resolutions to circumvent sanctions and launder the
proceeds of illicit activities;
(7) Amroggang Development Bank, Bank of East Land, and
Tanchon Commercial Bank have been designated by the Secretary
of the Treasury, the United Nations Security Council, and the
European Union;
(8) Korea Daesong Bank and Korea Kwangson Banking Corporation
have been designated by the Secretary of the Treasury and the
European Union;
(9) the Foreign Trade Bank of North Korea has been designated
by the Secretary of the Treasury for facilitating transactions
on behalf of persons linked to its proliferation network, and
for serving as ``a key financial node''; and
(10) Daedong Credit Bank has been designated by the Secretary
of the Treasury for activities prohibited by applicable United
Nations Security Council resolutions, including the use of
deceptive financial practices to facilitate transactions on
behalf of persons linked to North Korea's proliferation
network.
(b) Sense of Congress.--It is the sense of Congress that the
President should intensify diplomatic efforts, both in appropriate
international fora such as the United Nations and bilaterally, to
develop and implement a coordinated, consistent, multilateral strategy
for protecting the global financial system against risks emanating from
North Korea, including--
(1) the cessation of any financial services whose
continuation is inconsistent with applicable United Nations
Security Council resolutions;
(2) the cessation of any financial services to persons,
including financial institutions, that present unacceptable
risks of facilitating money laundering and illicit activity by
the Government of North Korea;
(3) the blocking by all states and jurisdictions, in
accordance with the legal process of the state or jurisdiction
in which the property is held, of any property required to be
blocked under applicable United Nations Security Council
resolutions; and
(4) the blocking of any property derived from illicit
activity, or from the misappropriation, theft, or embezzlement
of public funds by, or for the benefit of, officials of the
Government of North Korea.
SEC. 203. PROLIFERATION PREVENTION SANCTIONS.
(a) Export of Certain Goods or Technology.--
(1) In general.--Subject to section 207(a)(2)(C) of this Act,
a license shall be required for the export to North Korea of
any goods or technology subject to the Export Administration
Regulations (part 730 of title 15, Code of Federal Regulations)
without regard to whether the Secretary of State has designated
North Korea as a country the government of which has provided
support for acts of international terrorism, as determined by
the Secretary of State under section 6(j) of the Export
Administration Act of 1979 (50 U.S.C. App. 2045), as continued
in effect under the International Emergency Economic Powers
Act.
(2) Presumption of denial.--A license for the export to North
Korea of any goods or technology as described in paragraph (1)
shall be subject to a presumption of denial.
(b) Transactions With Countries Supporting Acts of International
Terrorism.--The prohibitions and restrictions described in section 40
of the Arms Export Control Act (22 U.S.C. 2780), and other provisions
in that Act, shall also apply to exporting or otherwise providing (by
sale, lease or loan, grant, or other means), directly or indirectly,
any munitions item to the Government of North Korea without regard to
whether or not North Korea is a country with respect to which
subsection (d) of such section (relating to designation of state
sponsors of terrorism) applies.
(c) Transactions in Lethal Military Equipment.--
(1) In general.--The President shall withhold assistance
under the Foreign Assistance Act of 1961 (22 U.S.C. 2151 et
seq.) to any country that provides lethal military equipment
to, or receives lethal military equipment from, the Government
of North Korea.
(2) Applicability.--The prohibition under this subsection
with respect to a country shall terminate on the date that is 1
year after the date on which such country ceases to provide
lethal military equipment to the Government of North Korea.
(3) Waiver.--The President may waive the prohibition under
this subsection with respect to a country if the President
determines that it is in the national interest of the United
States to do so.
SEC. 204. PROCUREMENT SANCTIONS.
(a) In General.--Except as provided in this section, the United
States Government may not procure, or enter into any contract for the
procurement of, any goods or services from any designated person.
(b) FAR.--The Federal Acquisition Regulation issued pursuant to
section 1303 of title 41, United States Code, shall be revised to
require a certification from each person that is a prospective
contractor that such person does not engage in any of the conduct
described in section 104(a). Such revision shall apply with respect to
contracts in an amount greater than the simple acquisition threshold
(as defined in section 134 of title 41, United States Code) for which
solicitations are issued on or after the date that is 90 days after the
date of the enactment of this Act.
(c) Termination of Contracts and Initiation of Suspension and
Debarment Proceeding.--
(1) Termination of contracts.--Except as provided in
paragraph (2), the head of an executive agency shall terminate
a contract with a person who has provided a false certification
under subsection (b).
(2) Waiver.--The head of an executive agency may waive the
requirement under paragraph (1) with respect to a person based
upon a written finding of urgent and compelling circumstances
significantly affecting the interests of the United States. If
the head of an executive agency waives the requirement under
paragraph (1) for a person, the head of the agency shall submit
to the appropriate congressional committees, within 30 days
after the waiver is made, a report containing the rationale for
the waiver and relevant information supporting the waiver
decision.
(3) Initiation of suspension and debarment proceeding.--The
head of an executive agency shall initiate a suspension and
debarment proceeding against a person who has provided a false
certification under subsection (b). Upon determination of
suspension, debarment, or proposed debarment, the agency shall
ensure that such person is entered into the Government-wide
database containing the list of all excluded parties ineligible
for Federal programs pursuant to Executive Order 12549 (31
U.S.C. 6101 note; relating to debarment and suspension) and
Executive Order 12689 (31 U.S.C. 6101 note; relating to
debarment and suspension).
(d) Clarification Regarding Certain Products.--The remedies specified
in subsections (a) through (c) shall not apply with respect to the
procurement of eligible products, as defined in section 308(4) of the
Trade Agreements Act of 1979 (19 U.S.C. 2518(4)), of any foreign
country or instrumentality designated under section 301(b) of such Act
(19 U.S.C. 2511(b)).
(e) Rule of Construction.--Nothing in this subsection may be
construed to limit the use of other remedies available to the head of
an executive agency or any other official of the Federal Government on
the basis of a determination of a false certification under subsection
(b).
(f) Executive Agency Defined.--In this section, the term ``executive
agency'' has the meaning given such term in section 133 of title 41,
United States Code.
SEC. 205. ENHANCED INSPECTIONS AUTHORITIES.
(a) Briefing Required.--Not later than 180 days after the date of the
enactment of this Act, and every 180 days thereafter, the President,
acting through the Secretary of Homeland Security, shall provide to the
appropriate congressional committees, the Committee on Homeland
Security of the House of Representatives, and the Committee on Homeland
Security and Governmental Affairs of the Senate, a briefing identifying
foreign sea ports and airports whose inspections of ships, aircraft,
and conveyances originating in North Korea, carrying North Korean
property, or operated by the Government of North Korea are deficient to
effectively prevent the facilitation of any of the activities described
in section 104(a).
(b) Enhanced Security Targeting Requirements.--Not later than 180
days after the identification of any sea port or airport pursuant to
subsection (a), the Secretary of Homeland Security shall promulgate
regulations imposing enhanced physical inspection requirements, as
identified by the Automated Targeting System operated by the National
Targeting Center in U.S. Customs and Border Protection, on any cargo
landed in the United States that has been transported through such sea
port or airport.
(c) Seizure and Forfeiture.--A vessel, aircraft, or conveyance used
to facilitate any of the activities described in section 104(a) that
comes within the jurisdiction of the United States may be seized and
forfeited under chapter 46 of title 18, United States Code, or under
the Tariff Act of 1930.
SEC. 206. TRAVEL SANCTIONS.
(a) Aliens Ineligible for Visas, Admission, or Parole.--
(1) Visas, admission, or parole.--An alien who the Secretary
of State or the Secretary of Homeland Security (or a designee
of one of such Secretaries) knows, or has reasonable grounds to
believe, is described in subsection (a)(1) or (b)(1) of section
104 is--
(A) inadmissible to the United States;
(B) ineligible to receive a visa or other
documentation to enter the United States; and
(C) otherwise ineligible to be admitted or paroled
into the United States or to receive any other benefit
under the Immigration and Nationality Act (8 U.S.C.
1101 et seq.).
(2) Current visas revoked.--
(A) In general.--The issuing consular officer, the
Secretary of State, or the Secretary of Homeland
Security (or a designee of one of such Secretaries)
shall revoke any visa or other entry documentation
issued to an alien who is described in subsection
(a)(1) or (b)(1) of section 104 regardless of when
issued.
(B) Effect of revocation.--A revocation under
subparagraph (A)--
(i) shall take effect immediately; and
(ii) shall automatically cancel any other
valid visa or entry documentation that is in
the alien's possession.
(b) Exception to Comply With United Nations Headquarters Agreement.--
Sanctions under subsection (a)(1)(B) shall not apply to an alien if
admitting the alien into the United States is necessary to permit the
United States to comply with the Agreement regarding the Headquarters
of the United Nations, signed at Lake Success June 26, 1947, and
entered into force November 21, 1947, between the United Nations and
the United States, or other applicable international obligations.
SEC. 207. EXEMPTIONS, WAIVERS, AND REMOVALS OF DESIGNATION.
(a) Exemptions.--
(1) Mandatory exemptions.--The following activities shall be
exempt from sanctions under section 104:
(A) Activities subject to the reporting requirements
of title V of the National Security Act of 1947 (50
U.S.C. 413 et seq.), or to any authorized intelligence
activities of the United States.
(B) Any transaction necessary to comply with United
States obligations under the Agreement between the
United Nations and the United States of America
regarding the Headquarters of the United Nations,
signed June 26, 1947, and entered into force on
November 21, 1947, or under the Vienna Convention on
Consular Relations, signed April 24, 1963, and entered
into force on March 19, 1967, or under other
international agreements.
(2) Discretionary exemptions.--The following activities may
be exempt from sanctions under section 104 as determined by the
President:
(A) Any financial transaction the exclusive purpose
for which is to provide humanitarian assistance to the
people of North Korea.
(B) Any financial transaction the exclusive purpose
for which is to import food products into North Korea,
if such food items are not defined as luxury goods.
(C) Any transaction the exclusive purpose for which
is to import agricultural products, medicine, or
medical devices into North Korea, provided that such
supplies or equipment are classified as designated
``EAR 99'' under the Export Administration Regulations
(part 730 of title 15, Code of Federal Regulations) and
not controlled under--
(i) the Export Administration Act of 1979 (50
U.S.C. App. 2401 et seq.), as continued in
effect under the International Emergency
Economic Powers Act (50 U.S.C. 1701 et seq.);
(ii) the Arms Export Control Act (22 U.S.C.
2751 et seq.);
(iii) part B of title VIII of the Nuclear
Proliferation Prevention Act of 1994 (22 U.S.C.
6301 et seq.); or
(iv) the Chemical and Biological Weapons
Control and Warfare Elimination Act of 1991 (22
U.S.C. 5601 et seq.).
(b) Waiver.--The President may waive, on a case-by-case basis, the
imposition of sanctions for a period of not more than one year, and may
renew that waiver for additional periods of not more than one year, any
sanction or other measure under section 104, 204, 205, 206, or 303 if
the President submits to the appropriate congressional committees a
written determination that the waiver meets one or more of the
following requirements:
(1) The waiver is important to the economic or national
security interests of the United States.
(2) The waiver will further the enforcement of this Act or is
for an important law enforcement purpose.
(3) The waiver is for an important humanitarian purpose,
including any of the purposes described in section 4 of the
North Korean Human Rights Act of 2004 (22 U.S.C. 7802).
(c) Removals of Sanctions.--The President may prescribe rules and
regulations for the removal of sanctions on a person that is designated
under subsection (a) or (b) of section 104 and the removal of
designations of a person with respect to such sanctions if the
President determines that the designated person has verifiably ceased
its participation in any of the conduct described in subsection (a) or
(b) of section 104, as the case may be, and has given assurances that
it will abide by the requirements of this Act.
(d) Financial Services for Certain Activities.--The President may
promulgate regulations, rules, and policies as may be necessary to
facilitate the provision of financial services by a foreign financial
institution that is not controlled by the Government of North Korea in
support of the activities subject to exemption under this section.
SEC. 208. SENSE OF CONGRESS ON ENFORCEMENT OF SANCTIONS ON NORTH KOREA.
(a) Findings.--Congress finds the following:
(1) On March 6, 2014, pursuant to United Nations Security
Council Resolution 1874, a Panel of Experts issued a report
assessing the enforcement of existing sanctions on North Korea.
The Panel reported that North Korea continues to ``trade in
arms and related materiel in violation of the resolutions'' and
that ``there is no question that it is one of the country's
most profitable revenue sources''.
(2) The Panel of Experts found that North Korea ``presents a
stiff challenge to Member States'' through ``multiple and
tiered circumvention techniques'' and ``is experienced in
actions it takes to evade sanctions''.
(b) Sense of Congress.--It is the sense of Congress that the United
States should work to increase the capacity of responsible nations to
implement United Nations Security Council Resolutions 1695, 1718, 1874,
2087, and 2094, including to strengthen the capacity of responsible
nations to monitor and interdict shipments to and from North Korea that
contribute to prohibited activities under such Resolutions.
TITLE III--PROMOTION OF HUMAN RIGHTS
SEC. 301. INFORMATION TECHNOLOGY.
Section 104 of the North Korean Human Rights Act of 2004 (22 U.S.C.
7814) is amended by inserting after subsection (c) the following new
subsection:
``(d) Information Technology Study.--Not later than 180 days after
the date of the enactment of this subsection, the President shall
submit to the appropriate congressional committees a classified report
setting forth a detailed plan for making unrestricted, unmonitored, and
inexpensive electronic mass communications available to the people of
North Korea.''.
SEC. 302. REPORT ON NORTH KOREAN PRISON CAMPS.
(a) In General.--The Secretary of State shall submit to the
appropriate congressional committees a report describing, with respect
to each political prison camp in North Korea to the extent information
is available--
(1) the camp's estimated prisoner population;
(2) the camp's geographical coordinates;
(3) the reasons for confinement of the prisoners;
(4) the camp's primary industries and products, and the end
users of any goods produced in such camp;
(5) the natural persons and agencies responsible for
conditions in the camp;
(6) the conditions under which prisoners are confined, with
respect to the adequacy of food, shelter, medical care, working
conditions, and reports of ill-treatment of prisoners; and
(7) imagery, to include satellite imagery of each such camp,
in a format that, if published, would not compromise the
sources and methods used by the intelligence agencies of the
United States to capture geospatial imagery.
(b) Form.--The report required under subsection (a) may be included
in the first report required to be submitted to Congress after the date
of the enactment of this Act under sections 116(d) and 502B(b) of the
Foreign Assistance Act of 1961 (22 U.S.C. 2151n(d) and 2304(b))
(relating to the annual human rights report).
SEC. 303. REPORT ON PERSONS WHO ARE RESPONSIBLE FOR SERIOUS HUMAN
RIGHTS ABUSES OR CENSORSHIP IN NORTH KOREA.
(a) In General.--The Secretary of State shall submit to the
appropriate congressional committees a report that contains an
identification of each person the Secretary determines to be
responsible for serious human rights abuses or censorship in North
Korea and a description of such abuses or censorship engaged in by such
person.
(b) Consideration.--In preparing the report required under subsection
(a), the Secretary of State shall give due consideration to the
findings of the United Nations Commission of Inquiry on Human Rights in
North Korea, and shall make specific findings with respect to the
responsibility of Kim Jong Un, and of each natural person who is a
member of the National Defense Commission of North Korea, for serious
human rights abuses and censorship.
(c) Designation of Persons.--The President shall designate under
section 104(a) any person listed in the report required under
subsection (a) as responsible for serious human rights abuses or
censorship in North Korea.
(d) Submission and Form.--
(1) Submission.--The report required under subsection (a)
shall be submitted not later than 90 days after the date of the
enactment of this Act, and every 180 days thereafter for a
period not to exceed 3 years, shall be included in each report
required under sections 116(d) and 502B(b) of the Foreign
Assistance Act of 1961 (22 U.S.C. 2151n(d) and 2304(b))
(relating to the annual human rights report).
(2) Form.--The report required under subsection (a) shall be
submitted in unclassified form, but may include a classified
annex. The Secretary of State shall also publish the
unclassified part of the report on the Department of State's
website.
TITLE IV--GENERAL AUTHORITIES
SEC. 401. SUSPENSION OF SANCTIONS AND OTHER MEASURES.
(a) In General.--Any sanction or other measure required by title I,
II, or III of this Act (or any amendment made by title I, II, or III of
this Act) may be suspended for up to 365 days upon certification by the
President to the appropriate congressional committees that the
Government of North Korea has--
(1) verifiably ceased its counterfeiting of United States
currency, including the surrender or destruction of specialized
materials and equipment used for or particularly suitable for
counterfeiting;
(2) taken significant steps toward financial transparency to
comply with generally accepted protocols to cease and prevent
the laundering of monetary instruments;
(3) taken significant steps toward verification of its
compliance with United Nations Security Council Resolutions
1695, 1718, 1874, 2087, and 2094;
(4) taken significant steps toward accounting for and
repatriating the citizens of other countries abducted or
unlawfully held captive by the Government of North Korea or
detained in violation of the 1953 Armistice Agreement;
(5) accepted and begun to abide by internationally recognized
standards for the distribution and monitoring of humanitarian
aid;
(6) provided credible assurances that it will not support
further acts of international terrorism;
(7) taken significant and verified steps to improve living
conditions in its political prison camps; and
(8) made significant progress in planning for unrestricted
family reunification meetings, including for those individuals
among the two million strong Korean-American community who
maintain family ties with relatives in North Korea.
(b) Renewal of Suspension.--The suspension described in subsection
(a) may be renewed for additional consecutive periods of 365 days upon
certification by the President to the appropriate congressional
committees that the Government of North Korea has continued to comply
with the conditions described in subsection (a) during the previous
year.
SEC. 402. TERMINATION OF SANCTIONS AND OTHER MEASURES.
Any sanction or other measure required by title I, II, or III of this
Act (or any amendment made by title I, II, or III of this Act) shall
terminate on the date on which the President determines and certifies
to the appropriate congressional committees that the Government of
North Korea has met the requirements of section 401, and has also--
(1) completely, verifiably, and irreversibly dismantled all
of its nuclear, chemical, biological, and radiological weapons
programs, including all programs for the development of systems
designed in whole or in part for the delivery of such weapons;
(2) released all political prisoners, including the citizens
of North Korea detained in North Korea's political prison
camps;
(3) ceased its censorship of peaceful political activity;
(4) taken significant steps toward the establishment of an
open, transparent, and representative society;
(5) fully accounted for and repatriated all citizens of all
nations abducted or unlawfully held captive by the Government
of North Korea or detained in violation of the 1953 Armistice
Agreement; and
(6) agreed with the Financial Action Task Force on a plan of
action to address deficiencies in its anti-money laundering
regime and begun to implement this plan of action.
SEC. 403. REGULATIONS.
(a) In General.--The President is authorized to promulgate such rules
and regulations as may be necessary to carry out the provisions of this
Act (which may include regulatory exceptions), including under section
205 of the International Emergency Economic Powers Act (50 U.S.C.
1704).
(b) Rule of Construction.--Nothing in this Act or any amendment made
by this Act shall be construed to limit the authority of the President
to designate or sanction persons pursuant to an applicable Executive
order or otherwise pursuant to the International Emergency Economic
Powers Act (50 U.S.C. 1701 et seq.).
SEC. 404. EFFECTIVE DATE.
Except as otherwise provided in this Act, this Act and the amendments
made by this Act shall take effect on the date of the enactment of this
Act.
Summary and Purpose
H.R. 1771, the North Korea Sanctions Enforcement Act
(NKSEA), is the first comprehensive sanctions legislation
directed at North Korea. It is intended to address North
Korea's nuclear, ballistic missile, and other WMD threats; its
counterfeiting of U.S. currency and other illicit activities;
its misuse of the financial system through money laundering;
its severe human rights abuses; and other activities that
violate applicable United Nations Security Council resolutions,
including conventional arms trafficking, WMD proliferation, and
luxury goods imports. As of 2014, no comprehensive sanctions
legislation exists to address these threats.
The purpose of this legislation is to compel the Government
of North Korea to verifiably suspend, and ultimately dismantle,
its nuclear weapons and ballistic missile programs, including,
but not limited to, the cessation of all uranium enrichment and
plutonium-related activities. Through the application of broad-
based sanctions, it is also intended to deprive North Korea of
the resources it requires to develop other unconventional
weapons and ballistic missiles, acquire destabilizing
convention weapons that threaten U.S. allies in the region,
support terrorism in the region and across the globe, and
engage in the systematic oppression of the people of North
Korea. Finally, it is intended to force the Government of North
Korea to accept a degree of transparency that will allow for
the verification of its commitments, peaceful coexistence with
its neighbors, including South Korea, and an end to the
repression of the North Korean people.
H.R. 1771 also reverses, in part, the relaxation of
sanctions by President Bush in 2008, in response to an abortive
2007 agreement by North Korea to verifiably dismantle its
nuclear weapons program. Since the relaxation of these
sanctions, North Korea has violated its commitments to
dismantle its nuclear program, and has carried out multiple
ballistic missile tests and two nuclear weapons tests.
In addition to advancing the aforementioned U.S. foreign
policy objectives, H.R. 1771 supports the interests of U.S.
treaty allies whose cooperation will be essential to achieving
objectives.
H.R. 1771 directly targets the foreign assets and income
sources of the North Korean government and its senior officials
by blocking those assets as they pass through the dollar-based
financial system. It also targets North Korea indirectly, by
sanctioning third-party entities that facilitate sanctioned
activities on behalf of the Government of North Korea.
Background and Need for the Legislation
North Korea's nuclear, ballistic missile, and chemical
weapons programs pose a significant and rapidly increasing
threat to the United States and its allies in Northeast Asia.
Its suspected proliferation of WMD technologies to Iran and
Syria, and its suspected supply of advanced weapons systems to
terrorist organizations, both pose a threat to the United
States, its allies in the Middle East, and other nations.
Halting and dismantling North Korea's nuclear, ballistic
missile, and other WMD programs, and ending its capacity to
proliferate weapons and WMD technology to terrorists and state
sponsors of terrorism, are vital U.S. national security
interests.
Legislative Background
The collapse of North Korea's industrial economy in the
early 1990s left it highly dependent on external sources of
hard currency to sustain a population of approximately 23
million, a mechanized military of 1 million men and women, the
military-industrial sector that supplies it, its WMD programs,
and luxury items imported for senior regime officials. Because
of the impracticality of transferring large sums of cash in
bulk, North Korea reportedly continues to rely on the
international financial system, and maintains large offshore
deposits in China and Europe.
In September 2005, the Treasury Department invoked the
authority of Section 311 of the USA PATRIOT Act of 2001, Pub.
L. No. 107-56, and blocked the correspondent accounts of Banco
Delta Asia. Banco Delta Asia is a small Macau-based bank that,
according to the Treasury Department, acted as ``a willing
pawn'' of North Korean agents laundering the proceeds of
illicit activity, including the counterfeiting of U.S.
currency. Treasury's designation disconnected Banco Delta Asia
from the international dollar-based financial system and caused
a run on the bank. The Government of Macau intervened and
blocked $25 million in North Korean deposits to prevent the
bank from collapse. Indirectly, the action caused other banks
to block other North Korean accounts, or to reject North Korean
transactions.
The effect on the regime's finances was devastating.
Seventeen months after the sanction was imposed on Banco Delta,
North Korea agreed to dismantle its nuclear weapons program,
but first insisted that the United States return the $25
million in blocked North Korean funds, effectively nullifying
the Section 311 sanction as it applied to North Korea.
In the intervening years, the Treasury Department has not
used Section 311 against North Korean entities or funds. It has
blocked the funds of North Korean individuals and trading
companies under Executive Order 13382 (June 25, 2005) and
Executive Order 13551 (Aug. 31, 2010), as authorized under the
International Emergency Economic Powers Act, Pub. L. No. 95-
223, title II, as amended. Only recently in March 2013, did it
block the property of two North Korean banks, the Foreign Trade
Bank and Daedong Credit Bank. It has not, however, applied
broader sanctions to the Government of North Korea, such as
designating it as a primary money laundering concern under
Section 311. The Secretary of the Treasury has previously
applied this designation to the governments such as Burma and
Iran.
No existing comprehensive sanctions legislation targets
North Korea's unique threats and vulnerabilities. The Iran,
North Korea, and Syria Nonproliferation Act, Pub. L. No. 109-
353, reinforces restrictions on exporting WMD and related
technologies to North Korea, but does not address North Korea's
acquisition of WMD technologies and components from third
countries, does not address other significant U.S. interests
with respect to North Korea, and does not exploit North Korea's
vulnerability to sanctions against its links to the global
financial system.
Since 2005, North Korea has diversified and concealed its
financial lifelines, but it remains dependent on its access to
the international financial system. The vast majority of
international transactions are denominated in dollars, the
world's reserve currency, and nearly all dollar-denominated
transactions are cleared through U.S.-based banks regulated by
the Treasury Department. North Korea continues to use the U.S.
dollar for many of its international and domestic business
transactions, and both legitimate and counterfeit U.S. dollars
circulate widely inside North Korea. Although North Korea hides
its dollar transactions within the dollar-based financial
system using false names, shell companies, and other deceptive
practices, determined financial investigators have defeated
similar tactics by other rogue states, terrorists, and drug-
trafficking organizations.
North Korea's reliance on the dollar allows U.S. sanctions
to reach North Korean assets in two ways. First, if North Korea
transfers or spends dollar-denominated assets, Treasury can
block them as they pass through dollar-clearing banks in New
York. Second, banks that clear North Korea's non-dollar
transactions or convert its dollars to bulk cash, and
businesses that facilitate barter transactions, still need
access to dollar-clearing banks for the majority of their non-
North Korea business. H.R. 1771 threatens the access of those
banks and businesses to the dollar system. Few banks or
businesses would be willing to take that risk to help North
Korea evade Treasury sanctions.
North Korea's Nuclear Program
North Korea's nuclear program dates back to the late 1950s,
when it signed a nuclear cooperation agreement with the Soviet
Union. It began to operate a small research reactor in 1967,
and completed a second, 5-megawatt reactor at Yongbyon in 1986,
which could produce approximately 6 kilograms of plutonium
annually. After this point, U.S. satellite imagery showed a
steady expansion of North Korea's nuclear program, including
the construction of a reprocessing plant, a 50-megawatt reactor
at Yongbyon, and a 200-megawatt reactor at Daecheon, although
neither of these larger reactors is believed to have been
completed.
U.S. satellites observed that these reactors were not
connected to North Korea's electrical grid, and that North
Korea was conducting tests to separate plutonium from the 5-
megawatt reactor's spent fuel. U.S. intelligence agencies
concluded that the reactors were part of a nuclear weapons
program.
The Soviet Union pressured North Korea to join the Nuclear
Non-Proliferation Treaty (NPT) in 1985, but North Korea did not
allow inspections of the reactor until 1992. North Korea has
only allowed intermittent inspections of its nuclear facilities
since then, and U.S. intelligence agencies are uncertain of how
much fissile plutonium North Korea has reprocessed.
In 2002, U.S. diplomats visited Pyongyang to confront the
Government of North Korea with evidence that it was pursuing a
parallel nuclear weapons program through the enrichment of
uranium, in violation of the 1994 Agreed Framework. North
Korean diplomats admitted the program's existence at the time,
but the Government of North Korea subsequently denied it. The
Bush administration halted deliveries of fuel oil under the
Agreed Framework. North Korea expelled IAEA inspectors and
restarted the reactor, and the 1994 Agreed Framework collapsed.
On October 9, 2006, North Korea conducted its first nuclear
test, in Kilju County, North Hamgyeong Province, in
northeastern North Korea. In response to the test, the U.N.
Security Council approved Resolution 1718, which prohibited
North Korea's nuclear, missile, chemical, and biological
weapons programs; prohibited North Korea from selling or
purchasing most arms and related material (except for imports
of light weapons); and prohibited North Korea from importing
luxury goods.
In September 2007, Israeli warplanes reportedly bombed a
nuclear reactor in Al Kibar, Syria. A video produced and
released by the Central Intelligence Agency cited evidence that
the design of the Al Kibar reactor was based on the design of
the Yongbyon reactor in North Korea, and that North Korean
nuclear scientists had assisted with the reactor's design and
construction.
On May 25, 2009, North Korea conducted a second nuclear
weapons test. The United Nations responded with Security
Council Resolution 1874, which tightened sanctions under
Resolution 1718 and imposed new shipping sanctions intended to
curb North Korean proliferation.
In November 2010, North Korea revealed the existence of an
advanced uranium enrichment program at an underground facility
at Yongbyon, which contained a cascade of 3,000 centrifuges
based on a Pakistani design obtained from the A.Q. Khan
network. The revelation confirmed longstanding suspicions that
North Korea was pursuing a parallel nuclear weapons program, a
program that likely dated back to the life span of the 1994
Agreed Framework.
In May of 2012, North Korea amended its constitution to
declare itself ``a nuclear state.''
On February 12, 2013, North Korea conducted a third nuclear
test. The New York Times quoted an unidentified Obama
administration official, who suggested that North Korea may
have cooperated with the Government of Iran in conducting the
nuclear test. The U.N. Security Council responded with
Resolution 2094, which tightened financial sanctions. It
imposed additional financial due diligence requirements on
governments and banks to block, or prevent the provision to
North Korea of, assets that could be used for North Korea's WMD
programs.
On March 30, 2014, North Korea threatened to conduct an
unspecified ``new form'' of nuclear test. As of 2014, North
Korea is believed to possess between four and eight plutonium-
based nuclear weapons, and an unknown number of uranium-based
weapons.
North Korea's Ballistic Missile Program
North Korea continues to develop multiple types of
ballistic missiles that could threaten the Republic of Korea,
Japan, and the United States. North Korea is also believed to
have supplied ballistic missile technology to Iran, Syria, and
Yemen. According to David Kay, the head of the Iraq Survey
Group, the Government of Iraq paid the Government of North
Korea $10 million to supply it with Nodong-1 missiles; however,
the 2003 U.S. invasion aborted the delivery of the missiles.
North Korea has carried out multiple tests of its short-
range ballistic missiles since the 1990s. Although the United
States has since deployed PAC-3 Patriot and Standard-3 missiles
to protect U.S. allies and U.S. forces in the region, North
Korea recently tested a 300-millimeter multiple-launch rocket
system that may be capable of carrying chemical warheads. North
Korea first tested its intermediate-range missile in 1998,
directly overflying Japan with its trajectory.
North Korea is also developing long-range missiles capable
of striking the United States. The Taepodong-2 missile, which
North Korea has tested five times between 2006 and 2012, may
have sufficient range to reach the West Coast of the United
States. The Unha-3, which was tested unsuccessfully in April
2012 and successfully in December 2012, has demonstrated a
capability to launch a satellite into space and hit targets
more than 6,000 miles away, including the West Coast of the
United States. Another possible intercontinental ballistic
missile system, the KN-08, is not known to have been tested.
North Korea's Chemical and Biological Weapons Programs
North Korea's chemical weapons program dates back to the
1950s, and was established with Soviet and Chinese assistance.
The North Korean military is believed to have produced blood,
blister, nerve, and choking agents. Former North Korean prison
camp guards have alleged that they witnessed chemical agents
being tested on prisoners, including an entire family
consisting of a father, mother, son, and daughter who were
gassed at Camp 22, near the city of Hoeryong, as part of an
experiment.
In 2012, a United Nations Panel of Experts published
photographs of chemical protective suits, gas masks, and
chemical indicator ampoules that were in transit from North
Korea to Syria. Open-source media reports alleged that in 2013,
North Korea continued to provide assistance to Syria's chemical
weapons program.
North Korea is also believed to possess biological weapons,
including anthrax. In 1998, U.S. military personnel in the
Republic of Korea were required to be vaccinated against
anthrax.
North Korea's Attacks and Threats Against South Korea
North Korea's foreign policy objective continues to be to
reunify the Korean Peninsula under the rule of the Government
of North Korea. It has repeatedly expressed its disapproval of
actions by the governments of South Korea, Japan, and the
United States by threatening to turn their capital cities into
a ``sea of fire,'' or similar threats. North Korea has also
used its official state media to threaten foreign newspapers,
government officials, and human rights activists.
On March 26, 2010, a Republic of Korea naval corvette, the
ROKS Cheonan, exploded and sank near Baekryeong Island in the
Yellow Sea, with the loss of 44 personnel. An international
Civilian-Military Investigation Group was convened, and
concluded that the ROKS Cheonan was destroyed by a torpedo
fired by a North Korean submarine. North Korea has denied
responsibility for the attack.
On November 23, 2010, North Korean artillery in South
Hwanghae Province shelled a village on Yeonpyeong Island, South
Korea, killing two civilians and two Republic of Korea Marines.
North Korea admitted responsibility for the attack, but blamed
it on South Korean live-fire exercises in the waters near
Yeonpyeong Island.
North Korea's Sponsorship of Terrorism
President Bush removed North Korea from the list of state
sponsors of terrorism on October 11, 2008. Since this date,
multiple North Korean agents--including two Korean Peoples'
Army officers attached to the Reconnaissance Bureau of the
Workers' Party of Korea--have been convicted in South Korean
courts of attempting to assassinate North Korean exiles,
planning to assassinate South Korean military officers, and
kidnapping one U.S. resident, who is believed to have died in
North Korea. North Korean agents are suspected of other
completed and attempted assassinations of human rights
activists in China.
North Korea has reportedly long harbored terrorists of the
Japanese Red Army, recently assisted Hezbollah in constructing
a network of tunnels and bunkers, and according to published
reports, supplied weapons to the Liberation Tigers of Tamil
Eelam.
In 2009, North Korean weapons shipments were intercepted in
Bangkok, Thailand, and Dubai, United Arab Emirates. The Foreign
Minister of Israel has publicly stated that the intended end
users of these weapons included Hamas and Hezbollah, both
designated terrorist organizations. The weapons intercepted in
Bangkok included advanced man-portable surface-to-air missiles.
According to a 2014 United Nations Panel of Experts, in
2009, the Israeli Navy intercepted a third shipment of similar
weapons in transit from Iran to Syria, although no further
information is available on the intended end user of the
weapons. The same 2014 U.N. report found that the fuses of 333-
millimeter rockets fired into Israel by Hamas were consistent
with similar rocket fuses of North Korean manufacture.
North Korea's Human Rights Abuses
In February of 2014, a Commission of Inquiry appointed by
the United Nations Human Rights Council found that the
Government of North Korea was responsible for crimes against
humanity. The United States and other nations have important
humanitarian interests in deterring, sanctioning, and ending
these abuses.
In its final report, the Commission of Inquiry recommended
targeted sanctions against persons responsible for these
abuses. Correspondence from the Commission Chairman Michael
Kirby to Kim Jong Un calls on Kim Jong Un to investigate the
individual responsibility of North Korean officials for these
abuses, ``to render accountable all those, including possibly
yourself, who may be responsible for crimes against humanity.''
These abuses documented by the Commission of Inquiry
include the operation of a system of political prison camps
that contain as many as 120,000 men, women, and children, and
in which an estimated 400,000 North Koreans have already died.
Witnesses reports that prisoners in the camps are provided
inadequate food and medical care, and that prisoners suffer
high mortality rates from disease and starvation. Working
conditions are severe and unsafe, and guards frequently kill or
torture prisoners.
The report finds evidence that North Korea targets the
children of refugee women repatriated from China with forced
abortions and infanticide, and cites the testimony of a woman
who was forced to drown her own baby in a bucket.
It finds that the Government of North Korea has deprived
many of its citizens of food, even as it expended large sums of
money on WMD programs, conventional weapons, luxury items, and
leisure facilities for senior regime officials. It further
finds that in the 1990s, the Government of North Korea impeded
the delivery of food aid to starving North Koreans during a
famine. Estimates for the death toll from the famine vary
between 600,000 and 2.5 million people.
North Korea is believed to have kidnapped 82,959 South
Koreans during the Korean War; an additional 3,721 South
Koreans since the Korean War; between 12 and 100 Japanese;
approximately 200 Chinese, most of them ethnic Koreans who
assisted North Korean refugees; and citizens of Lebanon,
Thailand, Romania, and possibly other countries.
Negotiations
Repeated diplomatic efforts by the United States and other
governments have failed to dismantle North Korea's nuclear
program. Under the Agreed Framework of 1994, North Korea
initially shut down the 5-megawatt reactor, allowed inspectors
to monitor NPT safeguards, and agreed to its eventual
dismantlement in exchange for aid, including heavy fuel oil and
the construction of two light-water reactors in Sinpo County,
South Hamgyeong Province, along North Korea's East Coast.
In 1997, the Board of Governors of the International Atomic
Energy Agency (IAEA) reported that its inspectors were still
unable to verify North Korea's initial declaration, and that
North Korea still had not complied with NPT safeguards. North
Korea also prevented IAEA inspectors from taking samples and
installing monitoring devices.
In 1998, North Korean tested a Taepodong-1 intermediate
range ballistic missile, whose trajectory passed over Japan.
Congress also became concerned about intelligence that North
Korea was pursuing a parallel uranium-enrichment program.
Diplomatic efforts resumed in 2003, when the first Six-
Party Talks were held. The nations represented were the United
States, China, South Korea, Japan, Russia, and North Korea.
Talks made little progress until September 2005, when the six
parties agreed to a Joint Statement affirming North Korea's
commitment to the complete, verifiable, and irreversible
dismantlement of its nuclear programs. Within a day of signing
the agreement, however, North Korea stated that its commitment
was contingent on the completion of the light-water reactors, a
term that was not mentioned in the Joint Statement and which
would take several years and a substantial financial investment
to fulfill.
On February 13, 2007, the Bush administration and North
Korea reached a Second Agreed Framework, under which North
Korean would shut down the Yongbyon reactor in exchange for a
delivery of 1 million tons of heavy fuel oil. Eventually, North
Korea would declare all of its nuclear weapons programs and
implement the Joint Statement, dismantling its nuclear weapons
programs permanently.
The agreement began to break down within months. North
Korea delayed the shut-down of its reactor until it received
$25 million in blocked funds from Banco Delta Asia. In
September, Israeli warplanes destroyed a nuclear reactor in
Syria that had been built with North Korean assistance. North
Korea failed to submit timely and accurate declarations of its
nuclear weapons programs, and continued to deny the existence
of its uranium-enrichment program, even after submitting
documents and samples of aluminum tubing that contained traces
of enriched uranium.
Although the Bush administration relaxed sanctions against
North Korea in 2008 and removed the Government of North Korea
from the list of state sponsors of terrorism, North Korea
refused to implement a verification protocol and declared that
it would never relinquish its nuclear weapons programs.
North Korea has not attended the Six-Party Talks since
April 2009, although the United States has held bilateral talks
with North Korea since then. The Obama administration has since
described its policy toward North Korea as one of ``strategic
patience,'' applying gradual and incremental economic and
financial pressure until the Government of North Korea is
prepared to negotiate its disarmament.
On February 29, 2012, the Obama administration reached an
agreement with North Korea to freeze North Korea's ballistic
missile programs in exchange for 500,000 tons of food aid. Two
weeks later, North Korea announced a new ``space launch
vehicle'' test.
On May 13, 2014, U.S. negotiator Glyn Davies announced that
the United States would accept ``reversible steps'' in the
early stages of an agreement to freeze, shut down, and
dismantle North Korea's nuclear programs. Davies did not
specify that the United States was willing to offer in exchange
for those steps, and North Korea has offered no public
statement suggesting that it is interested in such an
agreement.
Enforcement of U.N. Security Council Sanctions
Reports from the United Nations Panel of Experts cite
numerous examples of nations failing to enforce U.N. Security
Council Sanctions.
In particular, the People's Republic of China has
repeatedly hosted North Korean individuals and entities known
to be involved in the proliferation of WMD components. North
Korean shipments of arms and related materiel, WMD components,
and luxury items have repeatedly been shipped through the ports
of Dalian, Shanghai, and Hong Kong without inspection. China
has repeatedly allowed ballistic missile components bound for
North Korea, or bound from North Korea to Iran, to transit its
airspace, its ports, and its airports. One state-owned company,
Hubei Sanjiang Space Wanshan Special Vehicle Company sold North
Korea six ballistic missile transporter-erector-launcher
chassis, which it later claimed were ``lumber transporters.''
In one case, a U.N.-sanctioned North Korean machinery company
was openly marketing its products at a Chinese trade fair.
Targeted financial sanctions directed at banks, business,
and shipping companies that facilitate North Korea's violation
of U.N. Security Council Resolutions could be an effective way
to deter the violation of those resolutions. Ports that fail to
meet their inspection obligations under Resolution 1874 would
be targeted for additional inspections of cargo originating in
those ports.
Hearings
During the present Congress, the committee has continued
its active oversight regarding North Korea policy, including
three hearings related to the content of H.R. 1771:
March 5, 2013, full committee hearing on ``North Korea's
Criminal Activities: Financing the Regime'' (David Asher,
Ph.D., Non-Resident Senior Fellow, Center for a New American
Security, and Former Senior Adviser, East Asian and Pacific
Affairs, and Coordinator, North Korea Working Group, U.S.
Department of State; Sung-Yoon Lee, Ph.D., Assistant Professor
in Korean Studies, The Fletcher School of Law and Diplomacy,
Tufts University; The Honorable Joseph R. DeTrani, President,
Intelligence and National Security Alliance, and Former
Director, National Counter Proliferation Center, Office of the
Director of National Intelligence);
April 11, 2013, Joint hearing of the Subcommittee on Asia
and the Pacific; Subcommittee on Terrorism, Nonproliferation,
and Trade; and Subcommittee on the Middle East and North
Africa, on ``Breaking the Iran, North Korea, and Syria Nexus''
(The Honorable R. James Woolsey, Chairman, Foundation for
Defense of Democracies and Former Director of the Central
Intelligence Agency; Mr. Henry D. Sokolski, Executive Director,
Nonproliferation Policy Education Center, and Former Deputy for
Nonproliferation Policy, U.S. Department of Defense; Mr. David
Albright, Founder and President, Institute for Science and
International Security; and Ray Takeyh, Ph.D. Senior Fellow for
Middle Eastern Studies, Council on Foreign Relations);
March 26, 2014, Asia-Pacific Subcommittee hearing on ``The
Shocking Truth about North Korean Tyranny'' (Ms. Grace Jo,
Survivor of North Korean human rights abuses; Mr. Greg
Scarlatoiu, Executive Director, Committee for Human Rights in
North Korea; Mr. Bruce Klingner, Senior Research Fellow,
Northeast Asia, The Heritage Foundation);
Committee Consideration
On May 29, 2014, the House Foreign Affairs Committee marked
up the bill, H.R. 1771, pursuant to notice, in open session. An
amendment in the nature of a substitute, offered by the
chairman, and two other amendments (which were considered en
bloc) were agreed to in a voice vote. The bill, as amended, was
agreed to by voice vote.
Committee Oversight Findings
In compliance with clause 3(c)(1) of House Rule XIII, the
committee reports that the findings and recommendations of the
committee, based on oversight activities under clause 2(b)(1)
of House Rule X, are incorporated in the descriptive portions
of this report, particularly the ``Summary and Purpose,''
``Background and Need for Legislation,'' and ``Section-by-
Section Analysis'' sections.
New Budget Authority, Tax Expenditures, and Federal Mandates
In compliance with clause 3(c)(2) of House Rule XIII and
the Unfunded Mandates Reform Act (P.L. 104-4), the committee
adopts as its own the estimate of new budget authority,
entitlement authority, tax expenditure or revenues, and Federal
mandates contained in the cost estimate prepared by the
Director of the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974.
Congressional Budget Office Cost Estimate
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 26, 2014.
Hon. Edward R. Royce, Chairman,
Committee on Foreign Affairs,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1771, the North
Korea Sanctions Enforcement Act of 2014.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Sunita
D'Monte, who can be reached at 226-2840.
Sincerely,
Douglas W. Elmendorf.
Enclosure
cc:
Honorable Eliot L. Engel
Ranking Member
H.R. 1771--North Korea Sanctions Enforcement Act of 2014.
As ordered reported by the House Committee on Foreign
Affairs on May 29, 2014.
H.R. 1771 would expand existing sanctions against North
Korea. CBO estimates that implementing the bill would cost $10
million over the 2015-2019 period, assuming appropriation of
the estimated amounts. Pay-as-you-go procedures apply to this
legislation because it would affect direct spending and
revenues; however, CBO estimates that those effects would not
be significant.
Provisions of H.R. 1771 would increase administrative costs
of the Department of State and the Department of the Treasury.
Based on information from the Administration, CBO estimates
that the departments would hire 10 additional employees to
implement the bill and would require additional appropriations
averaging $2 million a year over the 2015-2019 period.
Sanctions required under the bill would probably increase
the number of people who would be denied a visa by the
Secretary of State. Most visa fees are retained by the
department and spent without further appropriation, but some
fees are deposited in the Treasury as revenues. CBO estimates
that implementing those sanction provisions would affect very
few people and, thus, have an insignificant budgetary effect.
Because the bill would expand the types of prohibited
activities involving North Korea that are subject to civil and
criminal penalties under current law, it could increase
revenues and direct spending from the collection of those
penalties; however, CBO estimates that the net budgetary effect
of any additional penalties would be negligible for each year.
H.R. 1771 would impose both intergovernmental and private-
sector mandates, as defined in the Unfunded Mandates Reform Act
(UMRA), on public and private entities that export goods or
services sent as foreign assistance. The bill would prohibit
public and private entities in the United States from exporting
defense-related items, data, and services that are sent as non-
humanitarian assistance to countries that provide military
equipment to North Korea. (For example, the prohibition could
affect public universities or other organizations that provide
research or technical assistance to such countries.) The bill
also would impose a mandate on private entities by requiring
the President to revoke licenses for transactions that lack
financial controls to ensure that such transactions will not
facilitate the proliferation of weapons or human rights abuses
by the North Korean government.
The cost of the mandates would be the forgone net revenues
from exports or transactions prohibited by the bill. Because of
the small number of entities that would be affected and the
broad scope of existing U.S. sanctions against North Korea, CBO
expects that the aggregate cost of the mandates on public and
private entities would fall below the annual thresholds
established in UMRA for intergovernmental and private-sector
mandates ($76 million and $152 million, respectively, in 2014,
adjusted annually for inflation).
The CBO staff contacts for this estimate are Sunita
D'Monte, Pamela Greene, and Matthew Pickford (for federal
costs), Jon Sperl (for the intergovernmental impact), and Marin
Burnett (for the private-sector impact). This estimate was
approved by Theresa Gullo, Deputy Assistant Director for Budget
Analysis.
Directed Rule Making
Pursuant to clause 3(c) of House Rule XIII, as modified by
section 3(k) of H. Res. 5 during the 113th Congress, the
committee notes that this bill contains no directed rule-making
provisions.
Non-Duplication of Federal Programs
Pursuant to clause 3(c) of House Rule XIII, as modified by
section 3(j)(2) of H. Res. 5 during the 113th Congress, the
committee states that no provision of this bill establishes or
reauthorizes a program of the Federal Government known to be
duplicative of another Federal program, a program that was
included in any report from the Government Accountability
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most
recent Catalog of Federal Domestic Assistance.
Performance Goals and Objectives
The Act is intended to deprive North Korea of the resources
it requires to further test, develop, produce and weaponize
nuclear weapons; develop and export other unconventional
weapons and ballistic missiles; engage in destabilizing
activities within the region and across the globe; and engage
in the systematic suppression of the people of North Korea.
Performance goals associated with these objectives include, but
are not limited to the following:
LA verifiable decrease in North Korea's
ability to fund its nuclear weapons program;
LA verifiable decrease in Iran's ability to
fund and export its unconventional weapons programs,
ballistic missiles and related technology programs,
destabilizing types and amounts of conventional
weapons, and support for regional destabilization.
Congressional Accountability Act
H.R. 1771 does not apply to terms and conditions of
employment or to access to public services or accommodations
within the Legislative Branch.
New Advisory Committees
H.R. 1771 does not establish or authorize any new advisory
committees.
Earmark Identification
H.R. 1771 contains no congressional earmarks, limited tax
benefits, or limited tariff benefits as described in clauses
9(e), 9(f), and 9(g) of House Rule XXI.
Section-by-Section Analysis
TITLE I--INVESTIGATIONS, PROHIBITED CONDUCT, AND PENALTIES
Section 101. This section states that it is the policy of
the United States to pursue vigorously sanctions against the
North Korean government in order to peacefully disarm
Pyongyang.
Section 102. This section mandates that the President
investigate sanctionable conduct involving North Korea upon the
receipt of credible information that a person or entity has
engaged in such activity. Among other things, this may include
proliferation of weapons of mass destruction, arms related
materials, luxury goods, and counterfeit goods. This provision
would prevent any administration from ignoring destructive
North Korean behavior.
Section 103. This section requires regular briefings to
Congress on North Korean assets and transactions, so that
Congress can oversee the enforcement of sanctions and ensure
that North Korea is cut off from its offshore assets and
income. It also requires the administration to be more
forthcoming with providing information to Congress.
Section 104. This section describes the conduct and
entities subject to sanctions. It mandates blocking sanctions
(the prohibition on any transfers in financial instruments or
other property) against persons that have materially
contributed towards North Korea's nuclear, ballistic missile
development and other unconventional programs. While this
prohibition is contained in existing Executive Orders, this
legislation makes such violations mandatory, rather than
discretionary. It sanctions persons that engage in other
destructive activities--from importing or exporting into North
Korea related WMD materiel, to producing training or advice to
their unconventional and conventional weapons programs. It also
levies mandatory sanctions on those who import luxury goods
into North Korea, or enable its censorship efforts or
continuing human rights abuses. Finally, it strikes at the
heart of their efforts to fund their illicit activities by
requiring sanctions against those who have engaged in money
laundering, counterfeit goods manufacture, or narcotics
trafficking.
This section also provides the administration the necessary
tools to sanction North Korea's third-party enablers
transferring or the facilitating the transfer of financial
assets and property of the North Korea regime.
Section 105. This section seizes assets forfeited for
violations of North Korea sanctions laws, and provides it to
the U.S. Treasury.
TITLE II--SANCTIONS AGAINST NORTH KOREAN PROLIFERATION, HUMAN RIGHTS
ABUSES, AND ILLICIT ACTIVITIES
Section 201. This section instructs the Secretary of the
Treasury to determine whether North Korea is a ``primary money
laundering concern.'' If such a determination was made, that
would block North Korean banks from direct or indirect access
to the U.S. financial system, and require ``special measures''
against designated persons, North Korean government entities,
and banks that provide financial services to entities found to
have engaged in sanctionable conduct. Such a designation could
have a debilitating effect on North Korea's ability to access
the international financial system.
Section 202. This section finds that all states and
jurisdictions are obligated to implement and enforce UN
Security Council resolutions and provides as a sense of
Congress that the President should intensify efforts to
implement a diplomatic strategy to protect the global financial
system from North Korean threats.
Section 203. This section re-imposes sanctions under the
Export Administration Act and the Arms Export Control Act that
applied to North Korea until it was removed from the list of
state sponsors of terrorism in 2008. The provision will
statutorily prohibit the export of munitions to North Korea and
severely restrict export licenses for the for controlled good
and technologies, and sanction those who send or receive lethal
military equipment from North Korea as if the regime were still
designated a state sponsor of terrorism.
Section 204. This section bars designated persons, their
officers, and their subsidiaries from receiving U.S. government
contracts. If a person is enabling or facilitating the regime's
destructive policies, they should not be eligible to receive
U.S. Government contracts.
Section 205. This section requires the administration to
provide briefings identifying foreign sea ports and airports
whose inspections of vessels originating from North Korea are
deficient. Cargo coming from ports that consistently fail to
inspect North Korean cargo, as required by U.N. resolutions,
may be subject to increased inspection requirements at U.S.
ports. It also allows for the seizure of ships or aircraft used
for smuggling. This provision is critical as that it protects
the U.S. homeland from ports that deliberately fail to
sufficiently inspect North Korean cargo.
Section 206. This section allows the President to deny the
entry into the U.S. of any alien who is a person that has been
sanctioned under this Act. If a person is an enabler of the
North Korean regime, you should not be granted a visa or access
to the United States.
Section 207. This section provides for exclusions and
waivers from sanctions for humanitarian aid, consular
activities, for cooperating witnesses and banks, and when vital
to the economic or national security interests of the United
States.
TITLE III--PROMOTION OF HUMAN RIGHTS
Section 301. This section requires the President to study
the feasibility of bringing unmonitored and inexpensive
cellular and internet communications to the people of North
Korea, to break the information blockade the regime has imposed
on its own population. This information has proven crucial in
changing the perception of the North Korean people about the
nature of the Kim regime and the outside world.
Section 302. This section requires a report by the State
Department on North Korea's political prison camps, which are
estimated to hold up to 200,000 men, women, and children. It is
meant to focus greater public attention on North Korea's grave
and pervasive crimes against humanity.
Section 303. This section requires a report by the State
Department that identifies severe human rights abusers in North
Korea, utilizing information collected in the recent U.N.
Commission of Inquiry Report on North Korean human rights
abuses, the most comprehensive such report to date. This will
bring needed attention to the North Korean human rights
disaster.
TITLE IV--GENERAL AUTHORITIES
Section 401. This provision provides for a one-year
suspension of sanctions, renewable for one consecutive year, if
North Korea takes significant steps toward disarmament and
reform, while preventing the premature relaxation of sanctions
for false North Korean promises.
Section 402. This section terminates these sanctions if
North Korea undergoes a fundamental change of governance toward
an open, free, and peaceful society.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
TITLE 18, UNITED STATES CODE
* * * * * * *
PART I--CRIMES
* * * * * * *
CHAPTER 46--FORFEITURE
* * * * * * *
Sec. 981. Civil forfeiture
(a)(1) The following property is subject to forfeiture to
the United States:
(A) * * *
* * * * * * *
(I) Any property, real or personal, that is
involved in a violation or attempted violation, or
which constitutes or is derived from proceeds traceable
to a violation, of section 104(a) of the North Korea
Sanctions Enforcement Act of 2014.
* * * * * * *
Sec. 983. General rules for civil forfeiture proceedings
(a) * * *
* * * * * * *
(i) Civil Forfeiture Statute Defined.--In this section, the
term ``civil forfeiture statute''--
(1) * * *
(2) does not include--
(A) * * *
* * * * * * *
(D) the Trading with the Enemy Act (50
U.S.C. App. 1 et seq.) [or the International
Emergency Economic Powers Act], the
International Emergency Economic Powers Act
(IEEPA) (50 U.S.C. 1701 et seq.), or the North
Korea Sanctions Enforcement Act of 2014; or
* * * * * * *
CHAPTER 95--RACKETEERING
* * * * * * *
Sec. 1956. Laundering of monetary instruments
(a) * * *
* * * * * * *
(c) As used in this section--
(1) * * *
* * * * * * *
(7) the term ``specified unlawful activity''
means--
(A) * * *
* * * * * * *
(D) an offense under section 32 (relating
to the destruction of aircraft), section 37
(relating to violence at international
airports), section 115 (relating to
influencing, impeding, or retaliating against a
Federal official by threatening or injuring a
family member), section 152 (relating to
concealment of assets; false oaths and claims;
bribery), section 175c (relating to the variola
virus), section 215 (relating to commissions or
gifts for procuring loans), section 351
(relating to congressional or Cabinet officer
assassination), any of sections 500 through 503
(relating to certain counterfeiting offenses),
section 513 (relating to securities of States
and private entities), section 541 (relating to
goods falsely classified), section 542 relating
to entry of goods by means of false
statements), section 545 (relating to smuggling
goods into the United States), section 549
(relating to removing goods from Customs
custody), section 554 (relating to smuggling
goods from the United States), section 555
(relating to border tunnels), section 641
(relating to public money, property, or
records), section 656 (relating to theft,
embezzlement, or misapplication by bank officer
or employee), section 657 (relating to lending,
credit, and insurance institutions), section
658 (relating to property mortgaged or pledged
to farm credit agencies), section 666 (relating
to theft or bribery concerning programs
receiving Federal funds), section 793, 794, or
798 (relating to espionage), section 831
(relating to prohibited transactions involving
nuclear materials), section 844 (f) or (i)
(relating to destruction by explosives or fire
of Government property or property affecting
interstate or foreign commerce), section 875
(relating to interstate communications),
section 922(1) (relating to the unlawful
importation of firearms), section 924(n)
(relating to firearms trafficking), section 956
(relating to conspiracy to kill, kidnap, maim,
or injure certain property in a foreign
country), section 1005 (relating to fraudulent
bank entries), 1006(relating to fraudulent
Federal credit institution entries),
1007(relating to Federal Deposit Insurance
transactions), 1014(relating to fraudulent loan
or credit applications), section 1030 (relating
to computer fraud and abuse), 1032(relating to
concealment of assets from conservator,
receiver, or liquidating agent of financial
institution), section 1111 (relating to
murder), section 1114 (relating to murder of
United States law enforcement officials),
section 1116 (relating to murder of foreign
officials, official guests, or internationally
protected persons), section 1201 (relating to
kidnaping), section 1203 (relating to hostage
taking), section 1361 (relating to willful
injury of Government property), section 1363
(relating to destruction of property within the
special maritime and territorial jurisdiction),
section 1708 (theft from the mail), section
1751 (relating to Presidential assassination),
section 2113 or 2114 (relating to bank and
postal robbery and theft), section 2252A
(relating to child pornography) where the child
pornography contains a visual depiction of an
actual minor engaging in sexually explicit
conduct, section 2260 (production of certain
child pornography for importation into the
United States), section 2280 (relating to
violence against maritime navigation), section
2281 (relating to violence against maritime
fixed platforms), section 2319 (relating to
copyright infringement), section 2320 (relating
to trafficking in counterfeit goods and
services), section 2332 (relating to terrorist
acts abroad against United States nationals),
section 2332a (relating to use of weapons of
mass destruction), section 2332b (relating to
international terrorist acts transcending
national boundaries), section 2332g (relating
to missile systems designed to destroy
aircraft), section 2332h (relating to
radiological dispersal devices), section 2339A
or 2339B (relating to providing material
support to terrorists), section 2339C (relating
to financing of terrorism), or section 2339D
(relating to receiving military-type training
from a foreign terrorist organization) of this
title, section 46502 of title 49, United States
Code, a felony violation of the Chemical
Diversion and Trafficking Act of 1988 (relating
to precursor and essential chemicals), section
590 of the Tariff Act of 1930 (19 U.S.C. 1590)
(relating to aviation smuggling), section 422
of the Controlled Substances Act (relating to
transportation of drug paraphernalia), section
38(c) (relating to criminal violations) of the
Arms Export Control Act, section 11 (relating
to violations) of the Export Administration Act
of 1979, section 206 (relating to penalties) of
the International Emergency Economic Powers
Act, section 16 (relating to offenses and
punishment) of the Trading with the Enemy Act,
any felony violation of section 15 of the Food
and Nutrition Act of 2008 (relating to
supplemental nutrition assistance program
benefits fraud) involving a quantity of
benefits having a value of not less than
$5,000, any violation of section 543(a)(1) of
the Housing Act of 1949 (relating to equity
skimming), any felony violation of the Foreign
Agents Registration Act of 1938, any felony
violation of the Foreign Corrupt Practices Act,
[or section 92 of the Atomic Energy Act of
1954] section 92 of the Atomic Energy Act of
1954 (42 U.S.C. 2122) (relating to prohibitions
governing atomic weapons), or section 104(a) of
the North Korea Sanctions Enforcement Act of
2014
* * * * * * *
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NORTH KOREAN HUMAN RIGHTS ACT OF 2004
* * * * * * *
TITLE I--PROMOTING THE HUMAN RIGHTS OF NORTH KOREANS
* * * * * * *
SEC. 104. ACTIONS TO PROMOTE FREEDOM OF INFORMATION.
(a) * * *
* * * * * * *
(d) Information Technology Study.--Not later than 180 days
after the date of the enactment of this subsection, the
President shall submit to the appropriate congressional
committees a classified report setting forth a detailed plan
for making unrestricted, unmonitored, and inexpensive
electronic mass communications available to the people of North
Korea.
* * * * * * *