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Subcommittee Considers Toughest Financial Sanctions Ever Directed at North Korea

Washington, Sep 13 -

The Subcommittee on Monetary Policy and Trade held a hearing today to review legislation to impose financial sanctions targeting North Korea to curb the rogue nation’s development of weapons of mass destruction and ballistic missiles. The hearing also addressed the adequacy of the existing sanctions regime, particularly provisions under the United Nations Security Council Resolutions, as well as methods to strengthen foreign countries’ ability and willingness to enforce trade restrictions aimed at North Korea.

“North Korea’s sixth nuclear test on September 3, coupled with its repeated launching of intermediate and long-range ballistic missiles, underlines that more must be done to stop this rogue regime’s aggression and threats,” said Subcommittee Chairman Andy Bar (R-KY).  “The legislative draft we are considering lays out a choice: foreign banks can either do business that benefits North Korea, or they can do business with the United States. They cannot do both.  By encompassing virtually all of North Korea’s economic activity, these measures would represent the toughest financial sanctions yet directed at Pyongyang.”

Key Takeaways from the Hearing

• Foreign banks must put an end to business that benefits North Korea. Tough secondary sanctions can help cut off Pyongyang’s ability to obtain hard currency and financing for its weapons development.

• Foreign banks that support North Korean exports and expatriate labor should face consequences, as these are Pyongyang’s primary means of obtaining hard currency.

Topline Quotes from Witnesses

“If pressure does not lead to successful negotiations, then it is better to have a further weakened North Korea and to make it more difficult for Pyongyang to create a functioning nuclear arsenal. In parallel, the United States needs to work with its allies in the region to build up defensive capabilities and increase deterrent postures. Today, the alliance among the United States, Japan, and South Korea is more critical and should be further strengthened. It remains imperative that those allies do not feel inclined to develop their own nuclear deterrent, further exacerbating regional security concerns and increasing the chance for nuclear war or miscalculation.” David Albright, President, Institute for Science and International Security

“A successful financial sanctions approach will focus on increasing the efforts of U.S. and foreign financial institutions to search for North Korea’s illicit financial activities. While Pyongyang is experienced in hiding its activities behind front companies, the linkage can be found. … Chinese financial institutions certainly could have found that same information if they wanted to ask the right questions. Facing significant fines or losing access to the U.S. dollar should heighten Chinese banks’ desire to start asking those questions.” Anthony Ruggiero, Senior Fellow, Foundation for Defense of Democracies

“Washington should lead a world-wide effort to inspect and interdict North Korean shipping, aggressively target all illicit activity, sanction entities including Chinese banks and businesses that are facilitating Pyongyang’s prohibited nuclear and missile programs, expand information operations against the regime, highlight and condemn Pyongyang’s crimes against humanity, and wean away even North Korea’s legitimate business partners.” Bruce Klingner, Senior Fellow for Northeast Asia, Heritage Foundation