Otto Warmbier North Korea Nuclear Sanctions Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 4084 To impose sanctions with respect to the Democratic People’s Republic of Korea, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JULY 26, 2019 Mr. BARR (for himself and Mr. STIVERS) introduced the following bill; which was referred to the Committee on Financial Services A BILL To impose sanctions with respect to the Democratic People’s Republic of Korea, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Otto Warmbier North 4 Korea Nuclear Sanctions Act of 2019’’. 5 SEC. 2. FINDINGS. 6 The Congress finds the following: 7 (1) On June 1, 2016, the Department of the 8 Treasury’s Financial Crimes Enforcement Network 9 announced a Notice of Finding that the Democratic 10 VerDate Sep 11 2014 22:14 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4084.IH H4084 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 4084 IH People’s Republic of Korea is a jurisdiction of pri- 1 mary money laundering concern due to its use of 2 state-controlled financial institutions and front com- 3 panies to support the proliferation and development 4 of weapons of mass destruction (WMD) and ballistic 5 missiles. 6 (2) The Financial Action Task Force (FATF) 7 has expressed serious concerns with the threat posed 8 by North Korea’s proliferation and financing of 9 WMD, and has called on FATF members to apply 10 effective counter-measures to protect their financial 11 sectors from North Korean money laundering, WMD 12 proliferation financing, and the financing of ter- 13 rorism. 14 (3) In its February 2017 report, the U.N. 15 Panel of Experts concluded that— 16 (A) North Korea continued to access the 17 international financial system in support of il- 18 licit activities despite sanctions imposed by 19 U.N. Security Council Resolutions 2270 (2016) 20 and 2321 (2016); 21 (B) during the reporting period, no mem- 22 ber state had reported taking actions to freeze 23 North Korean assets; and 24 VerDate Sep 11 2014 22:14 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4084.IH H4084 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 4084 IH (C) sanctions evasion by North Korea, 1 combined with inadequate compliance by mem- 2 ber states, had significantly negated the impact 3 of U.N. Security Council resolutions. 4 (4) In its September 2017 report, the U.N. 5 Panel of Experts found that— 6 (A) North Korea continued to violate fi- 7 nancial sanctions by using agents acting abroad 8 on the country’s behalf; 9 (B) foreign financial institutions provided 10 correspondent banking services to North Ko- 11 rean persons and front companies for illicit pur- 12 poses; 13 (C) foreign companies violated sanctions by 14 maintaining links with North Korean financial 15 institutions; and 16 (D) North Korea generated at least $270 17 million during the reporting period through the 18 violation of sectoral sanctions. 19 (5) North Korean entities engage in significant 20 financial transactions through foreign bank accounts 21 that are maintained by non-North Korean nationals, 22 thereby masking account users’ identity in order to 23 access financial services. 24 VerDate Sep 11 2014 22:14 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4084.IH H4084 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 4084 IH (6) North Korea’s sixth nuclear test on Sep- 1 tember 3, 2017, demonstrated an estimated explo- 2 sive power more than 100 times greater than that 3 generated by its first nuclear test in 2006. 4 (7) On February 23, 2018, the Department of 5 the Treasury announced its largest-ever set of North 6 Korea-related sanctions, with a particular focus on 7 shipping and trading companies, and issued a mari- 8 time advisory to highlight North Korea’s sanctions 9 evasion tactics. On May 9, 2019, the United States 10 seized a North Korean ship, the Wise Honest, which 11 had previously been detained by Indonesia for car- 12 rying coal in violation of United Nations sanctions. 13 (8) According to the March 2019 Final Report 14 of the U.N. Panel of Experts, ‘‘The nuclear and bal- 15 listic missile programmes of the Democratic People’s 16 Republic of Korea remain intact and the country 17 continues to defy Security Council resolutions 18 through a massive increase in illegal ship-to-ship 19 transfers of petroleum products and coal. These vio- 20 lations render the latest United Nations sanctions 21 ineffective by flouting the caps on the import of pe- 22 troleum products and crude oil by the Democratic 23 People’s Republic of Korea as well as the coal ban, 24 imposed in 2017 by the Security Council in response 25 VerDate Sep 11 2014 22:14 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4084.IH H4084 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 4084 IH to the country’s unprecedented nuclear and ballistic 1 missile testing.’’. 2 (9) The U.N. Panel of Experts further con- 3 cluded: ‘‘Financial sanctions remain some of the 4 most poorly implemented and actively evaded meas- 5 ures of the sanctions regime. Individuals empowered 6 to act as extensions of financial institutions of the 7 Democratic People’s Republic of Korea operate in at 8 least five countries with seeming impunity.’’. 9 (10) North Korea has successfully tested short- 10 range, submarine-launched, and intercontinental bal- 11 listic missiles, and is rapidly progressing in its devel- 12 opment of a nuclear-armed missile that is capable of 13 reaching United States territory. 14 SEC. 3. CONDITIONS WITH RESPECT TO CERTAIN AC- 15 COUNTS AND TRANSACTIONS AT UNITED 16 STATES FINANCIAL INSTITUTIONS. 17 (a) CORRESPONDENT AND PAYABLE-THROUGH AC- 18 COUNTS HELD BY FOREIGN FINANCIAL INSTITUTIONS.— 19 (1) IN GENERAL.—Not later than 180 days 20 after the date of the enactment of this Act, the Sec- 21 retary of the Treasury shall prescribe regulations to 22 prohibit, or impose strict conditions on, the opening 23 or maintaining in the United States of a cor- 24 respondent account or a payable-through account by 25 VerDate Sep 11 2014 22:14 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4084.IH H4084 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 4084 IH a foreign financial institution that the Secretary 1 finds knowingly facilitates a significant transaction 2 or provides significant financial services for a cov- 3 ered person. 4 (2) PENALTIES.— 5 (A) CIVIL PENALTY.—A person who vio- 6 lates, attempts to violate, conspires to violate, 7 or causes a violation of regulations prescribed 8 under this subsection shall be subject to a civil 9 penalty in an amount not to exceed the greater 10 of— 11 (i) $250,000; or 12 (ii) an amount that is twice the 13 amount of the transaction that is the basis 14 of the violation with respect to which the 15 penalty is imposed. 16 (B) CRIMINAL PENALTY.—A person who 17 willfully commits, willfully attempts to commit, 18 or willfully conspires to commit, or aids or 19 abets in the commission of, a violation of regu- 20 lations prescribed under this subsection shall, 21 upon conviction, be fined not more than 22 $1,000,000, or if a natural person, may be im- 23 prisoned for not more than 20 years, or both. 24 VerDate Sep 11 2014 22:14 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4084.IH H4084 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 4084 IH (b) RESTRICTIONS ON CERTAIN TRANSACTIONS BY 1 UNITED STATES FINANCIAL INSTITUTIONS.— 2 (1) IN GENERAL.—Not later than 180 days 3 after the date of the enactment of this Act, the Sec- 4 retary of the Treasury shall prescribe regulations to 5 prohibit a United States financial institution, and 6 any person owned or controlled by a United States 7 financial institution, from knowingly engaging in a 8 significant transaction with or benefitting any per- 9 son that the Secretary finds to be a covered person. 10 (2) CIVIL PENALTY.—A person who violates, at- 11 tempts to violate, conspires to violate, or causes a 12 violation of regulations prescribed under this sub- 13 section shall be subject to a civil penalty in an 14 amount not to exceed the greater of— 15 (A) $250,000; or 16 (B) an amount that is twice the amount of 17 the transaction that is the basis of the violation 18 with respect to which the penalty is imposed. 19 SEC. 4. OPPOSITION TO ASSISTANCE BY THE INTER- 20 NATIONAL FINANCIAL INSTITUTIONS AND 21 THE EXPORT-IMPORT BANK. 22 (a) INTERNATIONAL FINANCIAL INSTITUTIONS.— 23 The Bretton Woods Agreements Act (22 U.S.C. 286 et 24 seq.) is amended by adding at the end the following: 25 VerDate Sep 11 2014 22:14 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4084.IH H4084 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 4084 IH ‘‘SEC. 73. OPPOSITION TO ASSISTANCE FOR ANY GOVERN- 1 MENT THAT FAILS TO IMPLEMENT SANC- 2 TIONS ON NORTH KOREA. 3 ‘‘(a) IN GENERAL.—The Secretary of the Treasury 4 shall instruct the United States Executive Director at the 5 international financial institutions (as defined under sec- 6 tion 1701(c) of the International Financial Institutions 7 Act) to use the voice and vote of the United States to 8 oppose the provision of financial assistance to a foreign 9 government, other than assistance to support basic human 10 needs, if the President determines that, in the year pre- 11 ceding consideration of approval of such assistance, the 12 government has knowingly failed to prevent the provision 13 of financial services to, or freeze the funds, financial as- 14 sets, and economic resources of, a person described under 15 subparagraphs (A) through (E) of section 8(2) of the Otto 16 Warmbier North Korea Nuclear Sanctions Act of 2019. 17 ‘‘(b) WAIVER.—The President may waive subsection 18 (a) for up to 180 days at a time with respect to a foreign 19 government if the President reports to Congress that— 20 ‘‘(1) the foreign government’s failure described 21 under (a) is due exclusively to a lack of foreign gov- 22 ernment capacity; 23 ‘‘(2) the foreign government is taking effective 24 steps to prevent recurrence of such failure; or 25 VerDate Sep 11 2014 22:14 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4084.IH H4084 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 4084 IH ‘‘(3) such waiver is vital to the national security 1 interests of the United States.’’. 2 (b) EXPORT-IMPORT BANK.—Section 2(b) of the Ex- 3 port-Import Bank Act of 1945 (12 U.S.C. 635(b)) is 4 amended by adding at the end the following: 5 ‘‘(14) PROHIBITION ON SUPPORT INVOLVING 6 PERSONS CONNECTED WITH NORTH KOREA.—The 7 Bank may not guarantee, insure, or extend credit, or 8 participate in the extension of credit in connection 9 with the export of a good or service to a covered per- 10 son (as defined under section 8 of the Otto 11 Warmbier North Korea Nuclear Sanctions Act of 12 2019).’’. 13 SEC. 5. TREASURY REPORTS ON COMPLIANCE, PENALTIES, 14 AND TECHNICAL ASSISTANCE. 15 (a) SEMIANNUAL REPORT.— 16 (1) IN GENERAL.—Not later than 120 days fol- 17 lowing the date of the enactment of this Act, and 18 every 180 days thereafter, the Secretary of the 19 Treasury shall submit a report to the Committee on 20 Financial Services of the House of Representatives 21 and the Committee on Banking, Housing, and 22 Urban Affairs of the Senate that includes— 23 (A) a list of financial institutions that, in 24 the period since the preceding report, knowingly 25 VerDate Sep 11 2014 22:14 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4084.IH H4084 pamtmann on DSKBFK8HB2PROD with BILLS 10 •HR 4084 IH facilitated a significant transaction or trans- 1 actions or provided significant financial services 2 for a covered person; 3 (B) a list of any penalties imposed under 4 section 3 in the period since the preceding re- 5 port; and 6 (C) a description of efforts by the Depart- 7 ment of the Treasury in the period since the 8 preceding report, through consultations, tech- 9 nical assistance, or other appropriate activities, 10 to strengthen the capacity of financial institu- 11 tions and foreign governments to prevent the 12 provision of financial services benefitting any 13 covered person. 14 (2) FORM OF REPORT; PUBLIC AVAILABILITY.— 15 (A) FORM.—The report required under 16 paragraph (1) shall be submitted in unclassified 17 form but may contain a classified annex. 18 (B) PUBLIC AVAILABILITY.—The unclassi- 19 fied portion of such report shall be made avail- 20 able to the public and posted on the website of 21 the Department of the Treasury. 22 (3) SUNSET.—The report requirement under 23 this subsection shall terminate after the end of the 24 VerDate Sep 11 2014 22:14 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4084.IH H4084 pamtmann on DSKBFK8HB2PROD with BILLS 11 •HR 4084 IH 5-year period beginning on the date of enactment of 1 this Act. 2 (b) TESTIMONY REQUIRED.—Upon request of the 3 Committee on Financial Services of the House of Rep- 4 resentatives or the Committee on Banking, Housing, and 5 Urban Affairs of the Senate, the Under Secretary of the 6 Treasury for Terrorism and Financial Intelligence shall 7 testify to explain the effects of this Act, and the amend- 8 ments made by this Act, on North Korea’s access to illicit 9 finance channels. 10 (c) INTERNATIONAL MONETARY FUND.—Title XVI 11 of the International Financial Institutions Act (22 U.S.C. 12 262p et seq.) is amended by adding at the end the fol- 13 lowing: 14 ‘‘SEC. 1629. SUPPORT FOR CAPACITY OF THE INTER- 15 NATIONAL MONETARY FUND TO PREVENT 16 MONEY LAUNDERING AND FINANCING OF 17 TERRORISM. 18 ‘‘The Secretary of the Treasury shall instruct the 19 United States Executive Director at the International 20 Monetary Fund to support the increased use of the admin- 21 istrative budget of the Fund for technical assistance that 22 strengthens the capacity of Fund members to prevent 23 money laundering and the financing of terrorism.’’. 24 VerDate Sep 11 2014 22:14 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H4084.IH H4084 pamtmann on DSKBFK8HB2PROD with BILLS 12 •HR 4084 IH (d) NATIONAL ADVISORY COUNCIL REPORT TO CON- 1 GRESS.—The Chairman of the National Advisory Council 2 on International Monetary and Financial Policies shall in- 3 clude in the report required by section 1701 of the Inter- 4 national Financial Institutions Act (22 U.S.C. 262r) a de- 5 scription of— 6 (1) the activities of the International Monetary 7 Fund in the most recently completed fiscal year to 8 provide technical assistance that strengthens the ca- 9 pacity of Fund members to prevent money laun- 10 dering a [Text truncated for display. 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