Report text available as:

(PDF provides a complete and accurate display of this text.) Tip?



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

           *       *       *       *       *       *       *

                              ----------                              


                 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.

           *       *       *       *       *       *       *