Washington, D.C. – U.S. Senator Catherine Cortez Masto (D-Nev.) released the following statement on the passage of her amendment to the Otto Warmbier Banking Restrictions Involving North Korea Act of 2017, which will strengthen U.S. and international sanctions on North Korea, by enhancing financial institutions’ ability to detect North Korean attempts to evade sanctions. The amendment requires the Department of Treasury to articulate for the first time what a state-of-the-art methodology looks like to counter North Korean attempts to use the financial system to fuel its nuclear program, through what’s known as a risk-based approach. The amendment also requires the Department to update Congress on its oversight of U.S. banks and their foreign subsidiaries implementation of a risk-based approach, as well as U.S. assistance to institutions trying to implement such an approach.
Senator Cortez Masto’s amendment was included in bipartisan legislation led by Senate Banking Chairman Mike Crapo (R-Idaho), Ranking Member Sherrod Brown (D-Ohio), and U.S. Senators Pat Toomey (R-Pa.) and Chris Van Hollen (D-Md.). The amendment was adopted into legislation that builds on the existing U.S. sanctions regime against North Korea, by expanding mandatory sanctions on the North Korean economy and on banks that do business with them.
“Sanctions are only as strong as their enforcement efforts. Right now, our enforcement continues to face serious challenges. In a September 2017 report, the UN Panel of Experts commissioned to oversee North Korea sanctions found that the government continues to evade nearly every form of sanctions the UN has adopted. My amendment will ensure that the Treasury is doing all it can to enforce U.S. and UN sanctions on North Korea. We cannot exert true financial pressure on North Korea without a robust sanctions regime and rigorous enforcement of it,” said Cortez Masto.
“Our government must send a clear message to North Korea that we are united in increasing economic pressure and strict enforcement of sanctions to counter the North Korean regime’s mounting threats to the United States and our allies,” Cortez Masto continued. “We must adopt a comprehensive approach to stop North Korea from conducting illicit transactions, while going undetected by financial institutions. This lack of accountability and oversight has allowed North Korea to continue building their weapons program, but new methodology developed by many U.S. and European banks to effectively detect sources of finance for proliferation activities offers an important opportunity to rigorously enforce sanctions against North Korea. My amendment will ensure that the Treasury is doing all it can to enforce U.S. and UN sanctions on North Korea.”
A report commissioned by the United Nations Security Council Panel of Experts published in September 2017 found that the North Korean government continues to evade nearly every form of sanctions the UN has adopted. North Korea has been able to continue dangerous advances in nuclear technology and enhancing their weapons program by evading proliferation finance detection from many financial institutions around the world.
Requiring the Treasury Department to set forward the framework for a risk-based approach to proliferation finance would make it easier for the U.S. government and the Financial Action Task Force (FATF) to encourage U.S. and foreign financial institutions to develop more robust counter-proliferation finance regimes. Such efforts will strengthen international efforts to prevent rogue actors, from North Korea to Iran, from obtaining weapons of mass destruction.
The amendment will require the Department of Treasury to report to Senate Banking Committee on:
- FinCEN’s oversight of institutions’ adoption of a risk based approach;
- Whether financial institutions in high-risk jurisdictions for North Korean proliferation finance have adopted a risk-based approach;
- And the technical assistance the U.S. government is providing to foreign financial institutions, to ensure they are adopting the most rigorous methods possible to halt illicit North Korean transactions.