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S. 667: Otto Warmbier Banking Restrictions Involving North Korea Act of 2019

The text of the bill below is as of Mar 5, 2019 (Introduced).


II

116th CONGRESS

1st Session

S. 667

IN THE SENATE OF THE UNITED STATES

March 5, 2019

(for himself and Mr. Toomey) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

A BILL

To impose sanctions with respect to the Democratic People's Republic of Korea, and for other purposes.

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the Otto Warmbier Banking Restrictions Involving North Korea Act of 2019.

(b)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—Sanctions with respect to North Korea

Sec. 101. Findings.

Sec. 102. Sense of Congress.

Sec. 103. Definitions.

Subtitle A—Expansion of sanctions and related matters

Sec. 111. Sanctions with respect to foreign financial institutions that provide financial services to certain sanctioned persons.

Sec. 112. Codification of Executive orders relating to sanctions with respect to North Korea.

Sec. 113. Expansion of mandatory designations under North Korea Sanctions and Policy Enhancement Act of 2016.

Sec. 114. Extension of applicability period of proliferation prevention sanctions.

Sec. 115. Sense of Congress on identification and blocking of property of North Korean officials.

Sec. 116. Modification of report on implementation of United Nations Security Council resolutions by other governments.

Sec. 117. Report on use by the Government of North Korea of beneficial ownership rules to access the international financial system.

Subtitle B—Congressional review and oversight

Sec. 121. Notification of termination or suspension of sanctions.

Sec. 122. Reports on certain licensing actions.

Sec. 123. Briefings on implementation and enforcement of sanctions.

Sec. 124. Report on financial networks and financial methods of the Government of North Korea.

Sec. 125. Report on countries of concern with respect to transshipment, reexportation, or diversion of certain items to North Korea.

Subtitle C—General matters

Sec. 131. Rulemaking.

Sec. 132. Authority to consolidate reports.

Sec. 133. Waivers, exemptions, and termination.

Sec. 134. Procedures for review of classified information.

Sec. 135. Briefing on proliferation financing.

TITLE II—Divestment from North Korea

Sec. 201. Authority of State and local governments to divest from companies that invest in North Korea.

Sec. 202. Safe harbor for changes of investment policies by asset managers.

Sec. 203. Sense of Congress regarding certain ERISA plan investments.

Sec. 204. Rule of construction.

TITLE III—Financial industry guidance to halt trafficking

Sec. 301. Short title.

Sec. 302. Findings.

Sec. 303. Sense of Congress.

Sec. 304. Coordination of human trafficking issues by the Office of Terrorism and Financial Intelligence.

Sec. 305. Strengthening the role of anti-money laundering and other financial tools in combating human trafficking.

Sec. 306. Sense of Congress on resources to combat human trafficking.

I

Sanctions with respect to North Korea

101.

Findings

Congress finds the following:

(1)

Since 2006, the United Nations Security Council has adopted 10 resolutions imposing sanctions against North Korea under chapter VII of the United Nations Charter, which—

(A)

prohibit the use, development, and proliferation of weapons of mass destruction by North Korea;

(B)

prohibit the supply, sale, or transfer of arms and related materiel to or from North Korea;

(C)

prohibit the transfer of luxury goods to North Korea;

(D)

restrict access by North Korea to financial services that could contribute to nuclear, missile, or other programs related to the development of weapons of mass destruction;

(E)

restrict North Korean shipping, including the registration, reflagging, or insuring of North Korean ships;

(F)

prohibit, with limited exceptions, North Korean exports of coal, precious metals, iron, vanadium, and rare earth minerals;

(G)

prohibit the transfer to North Korea of rocket, aviation, or jet fuel, as well as gasoline, condensates, and natural gas liquids;

(H)

prohibit new work authorization for North Korean laborers and require the repatriation of all North Korean laborers by December 2019;

(I)

prohibit exports of North Korean food and agricultural products, including seafood;

(J)

prohibit joint ventures or cooperative commercial entities or expanding joint ventures with North Korea;

(K)

prohibit exports of North Korean textiles;

(L)

require member countries of the United Nations to seize, inspect, and impound any ship in its jurisdiction that is suspected of violating Security Council resolutions with respect to North Korea and to interdict and inspect all cargo heading to or from North Korea by land, sea, or air;

(M)

limit the transfer to North Korea of refined petroleum products and crude oil;

(N)

ban the sale or transfer to North Korea of industrial machinery, transportation vehicles, electronics, iron, steel, and other metals;

(O)

reduce North Korean diplomatic staff numbers in member countries of the United Nations and expel any North Korean diplomats found to be working on behalf of a person subject to sanctions or assisting in sanctions evasion;

(P)

limit North Korean diplomatic missions abroad with respect to staff size and access to banking privileges and prohibit commerce from being conducted out of North Korean consular or diplomatic offices;

(Q)

require member states of the United Nations to close representative offices, subsidiaries, and bank accounts in North Korea;

(R)

prohibit countries from providing or receiving military training to or from North Korea or hosting North Koreans for specialized teaching or training that could contribute to the programs of North Korea related to the development of weapons of mass destruction;

(S)

ban countries from granting landing and flyover rights to North Korean aircraft; and

(T)

prohibit trade in statuary of North Korean origin.

(2)

The Government of North Korea has threatened to carry out nuclear attacks against the United States, South Korea, and Japan.

(3)

The Government of North Korea tested its sixth and largest nuclear device on September 3, 2017.

(4)

According to a report by the International Atomic Energy Agency released in August 2018, The continuation and further development of the DPRK’s nuclear programme and related statements by the DPRK are a cause for grave concern. The DPRK’s nuclear activities, including those in relation to the Yongbyon Experimental Nuclear Power Plant (5 MW(e)) reactor, the use of the building which houses the reported centrifuge enrichment facility and the construction at the light water reactor, as well as the DPRK’s sixth nuclear test, are clear violations of relevant UN Security Council resolutions, including resolution 2375 (2017) and are deeply regrettable..

(5)

In July 2018, Secretary of State Mike Pompeo testified to the Committee on Foreign Relations of the Senate that North Korea continue[s] to produce fissile material despite public pledges by North Korean leader Kim Jong-un to denuclearize.

(6)

The 2019 Missile Defense Review conducted by the Department of Defense states that North Korea continues to pose an extraordinary threat and the United States must remain vigilant. In the past, North Korea frequently issued explicit nuclear missile threats against the United States and allies, all the while working aggressively to field the capability to strike the U.S. homeland with nuclear-armed ballistic missiles. Over the past decade, it has invested considerable resources in its nuclear and ballistic missile programs, and undertaken extensive nuclear and missile testing in order to realize the capability to threaten the U.S. homeland with missile attack. As a result, North Korea has neared the time when it could credibly do so..

(7)

Financial transactions and investments that provide financial resources to the Government of North Korea, and that fail to incorporate adequate safeguards against the misuse of those financial resources, pose an undue risk of contributing to—

(A)

weapons of mass destruction programs of that Government; and

(B)

efforts to evade restrictions required by the United Nations Security Council on imports or exports of arms and related materiel, services, or technology by that Government.

(8)

The Federal Bureau of Investigation has determined that the Government of North Korea was responsible for cyberattacks against entities in the United States, South Korea, and around the world.

(9)

In November 2017, President Donald Trump designated the government of North Korea as a state sponsor of terrorism pursuant to authorities under the Export Administration Act of 1979 (50 U.S.C. App. 2401 et seq.), as continued in effect at the time under the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), the Foreign Assistance Act of 1961 (22 U.S.C. 2151 et seq.), and the Arms Export Control Act (22 U.S.C. 2751 et seq.);

(10)

On February 22, 2018, the Secretary of State determined that the Government of North Korea was responsible for the lethal nerve agent attack in 2017 on Kim Jong Nam, the half-brother of North Korean leader Kim Jong-un, in Malaysia, triggering sanctions required under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (22 U.S.C. 5601 et seq.).

(11)

The strict enforcement of sanctions is essential to the efforts of the international community to achieve the peaceful, complete, verifiable, and irreversible dismantlement of weapons of mass destruction programs of the Government of North Korea.

102.

Sense of Congress

It is the sense of Congress that—

(1)

the United States is committed to working with its allies and partners to halt the nuclear and ballistic missile programs of North Korea through a policy of maximum pressure and diplomatic engagement;

(2)

the imposition of sanctions, including those under this Act, should not be construed to limit the authority of the President to fully engage in diplomatic negotiations to further the policy objective described in paragraph (1);

(3)

the successful use of sanctions to halt the nuclear and ballistic missile programs of North Korea is part of a broader diplomatic and economic strategy that relies on effective coordination among relevant Federal agencies and officials, as well as with international partners of the United States; and

(4)

the coordination described in paragraph (3) should include proper vetting of external messaging and communications from all parts of the Executive branch to ensure that those communications are an intentional component of and aligned with the strategy of the United States with respect to North Korea.

103.

Definitions

(a)

In general

In this title, the terms applicable Executive order, applicable United Nations Security Council resolution, appropriate congressional committees, Government of North Korea, North Korea, and North Korean financial institution have the meanings given those terms in section 3 of the North Korea Sanctions and Policy Enhancement Act of 2016 (22 U.S.C. 9202), as amended by subsection (b).

(b)

Amendments to definitions in North Korea Sanctions and Policy Enhancement Act of 2016

Section 3 of the North Korea Sanctions and Policy Enhancement Act of 2016 (22 U.S.C. 9202) is amended—

(1)

in paragraph (1)(A), in the matter preceding clause (i), by striking Executive Order No. 13694 and all that follows through to the extent that and inserting the following: Executive Order 13694 (50 U.S.C. 1701 note; relating to blocking the property of certain persons engaging in significant malicious cyber-enabled activities), Executive Order 13722 (50 U.S.C. 1701 note; relating to blocking the property of the Government of North Korea and the Workers’ Party of Korea, and prohibiting certain transactions with respect to North Korea), or Executive Order 13810 (82 Fed. Reg. 44705; relating to imposing additional sanctions with respect to North Korea), to the extent that; and

(2)

in paragraph (2)(A), by striking or 2321 (2016) and inserting 2321 (2016), 2356 (2017), 2371 (2017), 2375 (2017), or 2397 (2017).

A

Expansion of sanctions and related matters

111.

Sanctions with respect to foreign financial institutions that provide financial services to certain sanctioned persons

(a)

In general

Title II of the North Korea Sanctions and Policy Enhancement Act of 2016 (22 U.S.C. 9221 et seq.) is amended by inserting after the item relating to section 201A the following:

201B.

Sanctions with respect to foreign financial institutions that provide financial services to certain sanctioned persons

(a)

In general

The Secretary of the Treasury shall impose one or more of the sanctions described in subsection (b) with respect to a foreign financial institution that the Secretary determines, on or after the date that is 90 days after the date of the enactment of the Otto Warmbier Banking Restrictions Involving North Korea Act of 2019, knowingly provides significant financial services to any person designated for the imposition of sanctions under—

(1)

subsection (a) or (b) of section 104;

(2)

an applicable Executive order; or

(3)

an applicable United Nations Security Council resolution.

(b)

Sanctions described

The sanctions that may be imposed with respect to a foreign financial institution subject to subsection (a) are the following:

(1)

Asset blocking

The Secretary may block and prohibit, pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), all transactions in all property and interests in property of the foreign financial institution if such property and interests in property are in the United States, come within the United States, or are or come within the possession or control of a United States person.

(2)

Restrictions on correspondent and payable-through accounts

The Secretary may prohibit, or impose strict conditions on, the opening or maintaining in the United States of a correspondent account or a payable-through account by the foreign financial institution.

(c)

Implementation; penalties

(1)

Implementation

The President may exercise all authorities provided under sections 203 and 205 of the International Emergency Economic Powers Act (50 U.S.C. 1702 and 1704) to carry out this section.

(2)

Penalties

A person that violates, attempts to violate, conspires to violate, or causes a violation of this section or any regulation, license, or order issued to carry out this section shall be subject to the penalties set forth in subsections (b) and (c) of section 206 of the International Emergency Economic Powers Act (50 U.S.C. 1705) to the same extent as a person that commits an unlawful act described in subsection (a) of that section.

(d)

Regulations

Not later than 120 days after the date of the enactment of the Otto Warmbier Banking Restrictions Involving North Korea Act of 2019, the President shall, as appropriate, prescribe regulations to carry out this section.

(e)

Definitions

In this section:

(1)

Account; correspondent account; payable-through account

The terms account, correspondent account, and payable-through account have the meanings given those terms in section 5318A of title 31, United States Code.

(2)

Financial institution

The term financial institution means a financial institution specified in subparagraph (A), (B), (C), (D), (E), (F), (G), (H), (I), (J), (M), or (Y) of section 5312(a)(2) of title 31, United States Code.

(3)

Foreign financial institution

The term foreign financial institution shall have the meaning of that term as determined by the Secretary of the Treasury.

(4)

Knowingly

The term knowingly, with respect to conduct, a circumstance, or a result, means that a person has actual knowledge, or should have known, of the conduct, the circumstance, or the result.

.

(b)

Clerical amendment

The table of contents for the North Korea Sanctions and Policy Enhancement Act of 2016 is amended by inserting after the item relating to section 201A the following:

201B. Sanctions with respect to foreign financial institutions that provide financial services to certain sanctioned persons.

.

112.

Codification of Executive orders relating to sanctions with respect to North Korea

(a)

In general

Section 210 of the North Korea Sanctions and Policy Enhancement Act of 2016 (22 U.S.C. 9230) is amended—

(1)

by striking United States sanctions and all that follows through the date of the enactment of this Act and inserting United States sanctions provided for in Executive Order 13687 (50 U.S.C. 1701 note; relating to imposing additional sanctions with respect to North Korea), Executive Order 13694 (50 U.S.C. 1701 note; relating to blocking the property of certain persons engaging in significant malicious cyber-enabled activities), Executive Order 13722 (50 U.S.C. 1701 note; relating to blocking the property of the Government of North Korea and the Workers' Party of Korea, and prohibiting certain transactions with respect to North Korea), or Executive Order 13810 (82 Fed. Reg. 44705; relating to imposing additional sanctions with respect to North Korea), as such Executive Orders are in effect on the day before the date of the enactment of the Otto Warmbier Banking Restrictions Involving North Korea Act of 2019;

(2)

by striking the Government of North Korea, persons acting for or on behalf of that Government, and persons owned or controlled, directly or indirectly, by that Government or persons acting for or on behalf of that Government, and inserting persons subject to such sanctions; and

(3)

by striking and 2094 (2013) and inserting 2094 (2013), 2270 (2016), 2321 (2016), 2356 (2017), 2371 (2017), 2375 (2017), and 2397 (2017).

(b)

Conforming amendment

Section 210 of the North Korea Sanctions and Policy Enhancement Act of 2016 (22 U.S.C. 9230) is amended in the section heading by striking sanctions with respect to North Korean activities undermining cybersecurity and inserting Executive orders relating to sanctions with respect to North Korea.

(c)

Clerical amendment

The table of contents for the North Korea Sanctions and Policy Enhancement Act of 2016 is amended by striking the item relating to section 210 and inserting the following:

Sec. 210. Codification of Executive orders relating to sanctions with respect to North Korea.

.

113.

Expansion of mandatory designations under North Korea Sanctions and Policy Enhancement Act of 2016

(a)

In general

Section 104(a) of the North Korea Sanctions and Policy Enhancement Act of 2016 (22 U.S.C. 9214(a)) is amended—

(1)

in paragraph (14), by striking or at the end;

(2)

by redesignating paragraph (15) as paragraph (24);

(3)

by inserting after paragraph (14) the following:

(15)

knowingly, directly or indirectly, purchases or otherwise acquires from North Korea significant quantities of coal, iron, or iron ore;

(16)

knowingly, directly or indirectly, provides to North Korea coal, iron, or iron ore;

(17)

knowingly, directly or indirectly, purchases or otherwise acquires textiles from North Korea;

(18)

knowingly facilitates a significant transfer of funds or property from North Korea that materially contributes to any violation of an applicable United Nations Security Council resolution;

(19)

knowingly, directly or indirectly, purchases or otherwise acquires significant types or amounts of seafood from North Korea;

(20)

knowingly, directly or indirectly, engages in, facilitates, or is responsible for the exportation of workers from North Korea;

(21)

knowingly, directly or indirectly, sells or transfers vessels to North Korea, except as specifically approved by the United Nations Security Council;

(22)

knowingly, directly or indirectly, supplies, sells, or transfers to North Korea crude oil or refined petroleum products in excess of the aggregate amounts established in applicable United Nations Security Council resolutions;

(23)

knowingly contributes to—

(A)

the bribery of an official of the Government of North Korea or any person acting for or on behalf of that official;

(B)

the misappropriation, theft, or embezzlement of public funds by, or for the benefit of, an official of the Government of North Korea or any person acting for or on behalf of that official; or

(C)

the use of any proceeds of any activity described in subparagraph (A) or (B); or

; and

(4)

in paragraph (24), as redesignated by paragraph (2), by striking through (14) and inserting through (23).

(b)

Conforming amendments

The North Korea Sanctions and Policy Enhancement Act of 2016 is amended—

(1)

in section 104(b)(1) (22 U.S.C. 9214(b)(1))—

(A)

by striking subparagraphs (B), (D), (E), (F), and (L); and

(B)

by redesignating subparagraphs (C), (G), (H), (I), (J), (K), (M), and (N) as subparagraphs (B), (C), (D), (E), (F), (G), (H), and (I), respectively; and

(2)

in section 302(b)(3) (22 U.S.C. 9241(b)(3)), by striking section 104(b)(1)(M) and inserting section 104(a)(20).

114.

Extension of applicability period of proliferation prevention sanctions

Section 203(b)(2) of the North Korea Sanctions and Policy Enhancement Act of 2016 (22 U.S.C. 9223(b)(2)) is amended by striking 2 years and inserting 5 years.

115.

Sense of Congress on identification and blocking of property of North Korean officials

It is the sense of Congress that the President should—

(1)

encourage international collaboration through the Financial Action Task Force and its network of Financial Action Task Force-style regional bodies to apply best practices in disrupting money laundering related to kleptocracy and corruption, especially as it relates to North Korea; and

(2)

prioritize multilateral efforts to identify and block—

(A)

any property owned or controlled by a North Korean official; and

(B)

any significant proceeds of kleptocracy by the Government of North Korea or a North Korean official.

116.

Modification of report on implementation of United Nations Security Council resolutions by other governments

Section 317 of the Korean Interdiction and Modernization of Sanctions Act (title III of Public Law 115–44; 131 Stat. 950) is amended—

(1)

in subsection (a)—

(A)

in the matter preceding paragraph (1), by striking Not later than 180 days after the date of the enactment of this Act, and annually thereafter for 5 years, and inserting Not later than 180 days after the date of the enactment of the Otto Warmbier Banking Restrictions Involving North Korea Act of 2019, and annually thereafter for 5 years,;

(B)

in paragraph (3), by striking ; or and inserting a semicolon;

(C)

by redesignating paragraph (4) as paragraph (8); and

(D)

by inserting after paragraph (3) the following:

(4)

prohibit, in the territories of such countries or by persons subject to the jurisdiction of such governments, the opening of new joint ventures or cooperative entities with North Korean persons or the expansion of existing joint ventures through additional investments, whether or not for or on behalf of the Government of North Korea, unless such joint ventures or cooperative entities have been approved by the Committee of the United Nations Security Council established by United Nations Security Council Resolution 1718 (2006);

(5)

prohibit the unauthorized clearing of funds by North Korean financial institutions through financial institutions subject to the jurisdiction of such governments;

(6)

prohibit the unauthorized conduct of commercial trade with North Korea that is prohibited under applicable United Nations Security Council resolutions;

(7)

prevent the provision of financial services to North Korean persons or the transfer of financial services to North Korean persons to, through, or from the territories of such countries or by persons subject to the jurisdiction of such governments; or

; and

(2)

by amending subsection (c) to read as follows:

(c)

Definitions

In this section:

(1)

Appropriate congressional committees and leadership

The term appropriate congressional committees and leadership means—

(A)

the Committee on Foreign Relations, the Committee on Banking, Housing, and Urban Affairs, and the majority and minority leaders of the Senate; and

(B)

the Committee on Foreign Affairs, the Committee on Financial Services, the Committee on Ways and Means, and the Speaker, the majority leader, and the minority leader of the House of Representatives.

(2)

Applicable United Nations Security Council resolution; North Korean financial institution; North Korean person

The terms applicable United Nations Security Council resolution, North Korean financial institution, and North Korean person have the meanings given those terms in section 3 of the North Korea Sanctions and Policy Enhancement Act of 2016 (22 U.S.C. 9202).

.

117.

Report on use by the Government of North Korea of beneficial ownership rules to access the international financial system

(a)

In general

Not later than 180 days after the date of the enactment of this Act, the Secretary of the Treasury shall submit to the appropriate congressional committees a report setting forth the findings of the Secretary regarding how the Government of North Korea is exploiting laws with respect to the beneficial owner of an entity in order to access the international financial system.

(b)

Elements

The Secretary shall include in the report required under subsection (a) proposals for such legislative and administrative action as the Secretary considers appropriate to combat the abuse by the Government of North Korea of shell companies and other similar entities to avoid or evade sanctions.

(c)

Form

The report required by subsection (a) shall be submitted in unclassified form but may include a classified annex.

(d)

Beneficial owner defined

(1)

In general

In this section, the term beneficial owner

(A)

means, with respect to an entity, each natural person who, directly or indirectly—

(i)

exercises control over the entity through ownership interests, voting rights, agreements, or otherwise; or

(ii)

has an interest in or receives substantial economic benefits from the assets of the entity; and

(B)

does not include, with respect to an entity—

(i)

a minor child;

(ii)

a person acting as a nominee, intermediary, custodian, or agent on behalf of another person;

(iii)

a person acting solely as an employee of the entity and whose control over or economic benefits from the entity derives solely from the employment status of the person;

(iv)

a person whose only interest in the entity is through a right of inheritance, unless the person otherwise meets the definition of a beneficial owner under this subsection; and

(v)

a creditor of the entity, unless the creditor otherwise meets the definition of a beneficial owner under this subsection.

(2)

Anti-abuse rule

The exceptions under paragraph (1)(B) shall not apply if used for the purpose of evading, circumventing, or abusing laws described in subsection (a).

B

Congressional review and oversight

121.

Notification of termination or suspension of sanctions

Not less than 15 days before taking any action to terminate or suspend the application of sanctions under this title or an amendment made by this title, the President shall notify the appropriate congressional committees of the President’s intent to take the action and the reasons for the action.

122.

Reports on certain licensing actions

(a)

In general

Not later than 180 days after the date of the enactment of this Act, and every 180 days thereafter, the President shall submit to the appropriate congressional committees a report on the operation of the system for issuing licenses for transactions under covered regulatory provisions during the preceding 180-day period that includes—

(1)

the number and types of such licenses applied for during that period;

(2)

the number and types of such licenses issued during that period; and

(3)

a summary of all general and specific licenses issued with respect to North Korea.

(b)

Covered regulatory provision defined

In this section, the term covered regulatory provision means any of the following provisions, as in effect on the day before the date of the enactment of this Act and as such provisions relate to North Korea:

(1)

Part 743, 744, or 746 of title 15, Code of Federal Regulations.

(2)

Part 510 of title 31, Code of Federal Regulations.

(3)

Any other provision of title 31, Code of Federal Regulations.

(c)

Form

Each report required by subsection (a) shall be submitted in unclassified form but may include a classified annex.

123.

Briefings on implementation and enforcement of sanctions

Not later than 90 days after the date of the enactment of this Act, and every 180 days thereafter, the Secretary of the Treasury shall provide to the appropriate congressional committees a briefing on efforts relating to the implementation and enforcement of United States sanctions with respect to North Korea, including appropriate updates on the efforts of the Department of the Treasury to address compliance with such sanctions by foreign financial institutions.

124.

Report on financial networks and financial methods of the Government of North Korea

(a)

Report required

(1)

In general

Not later than 180 days after the date of the enactment of this Act, and annually thereafter through 2025, the President shall submit to the appropriate congressional committees a report on sources of external support for the Government of North Korea that includes—

(A)

a description of the methods used by the Government of North Korea to deal in, transact in, or conceal the ownership, control, or origin of goods and services exported by North Korea;

(B)

an assessment of the relationship between the proliferation of weapons of mass destruction by the Government of North Korea and the financial industry or financial institutions;

(C)

an assessment of the relationship between the acquisition by the Government of North Korea of military expertise, equipment, and technology and the financial industry or financial institutions;

(D)

a description of the export by any person to the United States of goods, services, or technology that are made with significant amounts of North Korean labor, material, or goods, including minerals, manufacturing, seafood, overseas labor, or other exports from North Korea;

(E)

an assessment of the involvement of any person in human trafficking involving citizens or nationals of North Korea;

(F)

a description of how the President plans to address the flow of funds generated by activities described in subparagraphs (A) through (E), including through the use of sanctions or other means;

(G)

an assessment of the extent to which the Government of North Korea engages in criminal activities, including money laundering, to support that Government;

(H)

information relating to the identification, blocking, and release of property described in section 201B(b)(1) of the North Korea Sanctions and Policy Enhancement Act of 2016, as added by section 111;

(I)

a description of the metrics used to measure the effectiveness of law enforcement and diplomatic initiatives of Federal, State, and foreign governments to comply with the provisions of applicable United Nations Security Council resolutions; and

(J)

an assessment of the effectiveness of programs within the financial industry to ensure compliance with United States sanctions, applicable United Nations Security Council resolutions, and applicable Executive orders.

(2)

Form

Each report required by paragraph (1) shall be submitted in unclassified form but may include a classified annex.

(b)

Interagency coordination

The President shall ensure that any information collected pursuant to subsection (a) is shared among the Federal departments and agencies involved in investigations described in section 102(b) of the North Korea Sanctions and Policy Enhancement Act of 2016 (22 U.S.C. 9212(b)).

125.

Report on countries of concern with respect to transshipment, reexportation, or diversion of certain items to North Korea

(a)

In general

Not later than 180 days after the date of the enactment of this Act, and annually thereafter through 2023, the Director of National Intelligence shall submit to the President, the Secretary of Defense, the Secretary of Commerce, the Secretary of State, the Secretary of the Treasury, and the appropriate congressional committees a report that identifies all countries that the Director determines are of concern with respect to transshipment, reexportation, or diversion of items subject to the provisions of the Export Administration Regulations under subchapter C of chapter VII of title 15, Code of Federal Regulations, to an entity owned or controlled by the Government of North Korea.

(b)

Form

Each report required by subsection (a) shall be submitted in unclassified form but may include a classified annex.

C

General matters

131.

Rulemaking

The President shall prescribe such rules and regulations as may be necessary to carry out this title and amendments made by this title.

132.

Authority to consolidate reports

(a)

In general

Any and all reports required to be submitted to the appropriate congressional committees under this title or an amendment made by this title that are subject to a deadline for submission consisting of the same unit of time may be consolidated into a single report that is submitted pursuant to that deadline.

(b)

Contents

Any reports consolidated under subsection (a) shall contain all information required under this title or an amendment made by this title and any other elements that may be required by existing law.

133.

Waivers, exemptions, and termination

(a)

Application and modification of exemptions and waivers from North Korea Sanctions and Policy Enhancement Act of 2016

Section 208 of the North Korea Sanctions and Policy Enhancement Act of 2016 (22 U.S.C. 9228) is amended—

(1)

by inserting 201B, after 201A, each place it appears; and

(2)

in subsection (c), by inserting , not less than 15 days before the waiver takes effect, after if the President.

(b)

Exception relating to importation of goods

(1)

In general

No provision affecting sanctions under this title or an amendment made by this title shall apply to sanctions on the importation of goods.

(2)

Good defined

In this subsection, the term good means any article, natural or man-made substance, material, supply or manufactured product, including inspection and test equipment, and excluding technical data.

(c)

Suspension

(1)

In general

Subject to section 121, any requirement to impose sanctions under this title or the amendments made by this title, and any sanctions imposed pursuant to this title or any such amendment, may be suspended for up to one year if the President makes the certification described in section 401 of the North Korea Sanctions and Policy Enhancement Act of 2016 (22 U.S.C. 9251) to the appropriate congressional committees.

(2)

Renewal

A suspension under paragraph (1) may be renewed in accordance with section 401(b) of the North Korea Sanctions and Policy Enhancement Act of 2016 (22 U.S.C. 9251(b)).

(d)

Termination

Subject to section 121, any requirement to impose sanctions under this title or the amendments made by this title, and any sanctions imposed pursuant to this title or any such amendment, shall terminate on the date on which the President makes the certification described in section 402 of the North Korea Sanctions and Policy Enhancement Act of 2016 (22 U.S.C. 9252).

134.

Procedures for review of classified information

(a)

In general

If a finding under this title or an amendment made by this title, a prohibition, condition, or penalty imposed as a result of any such finding, or a penalty imposed under this title or an amendment made by this title, is based on classified information (as defined in section 1(a) of the Classified Information Procedures Act (18 U.S.C. App.)) and a court reviews the finding or the imposition of the prohibition, condition, or penalty, the Secretary of the Treasury may submit such information to the court ex parte and in camera.

(b)

Rule of construction

Nothing in this section shall be construed to confer or imply any right to judicial review of any finding under this title or an amendment made by this title, any prohibition, condition, or penalty imposed as a result of any such finding, or any penalty imposed under this title or an amendment made by this title.

135.

Briefing on proliferation financing

(a)

In general

Not later than 60 days after the date of the enactment of this Act, the Secretary of the Treasury shall provide to the appropriate congressional committees a briefing on addressing proliferation finance.

(b)

Elements

The briefing required by subsection (a) shall include the following:

(1)

The Department of the Treasury’s definition and description of an appropriate risk-based approach to combating financing of the proliferation of weapons of mass destruction.

(2)

An assessment of—

(A)

Federal financial regulatory agency oversight, including by the Financial Crimes Enforcement Network, of United States financial institutions and the adoption by their foreign subsidiaries, branches, and correspondent institutions of a risk-based approach to proliferation financing; and

(B)

whether financial institutions in foreign jurisdictions known by the United States intelligence and law enforcement communities to be jurisdictions through which North Korea moves substantial sums of licit and illicit finance are applying a risk-based approach to proliferation financing, and if that approach is comparable to the approach required by United States financial institution supervisors.

(3)

A survey of the technical assistance the Office of Technical Assistance of the Department of the Treasury, and other appropriate Executive branch offices, currently provide foreign institutions on implementing counter-proliferation financing best practices.

(4)

An assessment of the ability of foreign subsidiaries, branches, and correspondent institutions of United States financial institutions to implement a risk-based approach to proliferation financing.

II

Divestment from North Korea

201.

Authority of State and local governments to divest from companies that invest in North Korea

(a)

Sense of Congress

It is the sense of Congress that the United States should support the decision of any State or local government made for moral, prudential, or reputational reasons, to divest from, or prohibit the investment of assets of the State or local government in, a person that engages in investment activities described in subsection (c) if North Korea is subject to economic sanctions imposed by the United States or the United Nations Security Council.

(b)

Authority To Divest

Notwithstanding any other provision of law, a State or local government may adopt and enforce measures that meet the requirements of subsection (d) to divest the assets of the State or local government from, or prohibit investment of the assets of the State or local government in, any person that the State or local government determines, using credible information available to the public, engages in investment activities described in subsection (c).

(c)

Investment activities described

Investment activities described in this subsection are activities of a value of more than $10,000 relating to an investment in North Korea or in goods or services originating in North Korea that are not conducted pursuant to a license issued by the Department of the Treasury.

(d)

Requirements

Any measure taken by a State or local government under subsection (b) shall meet the following requirements:

(1)

Notice

The State or local government shall provide written notice to each person with respect to which a measure under this section is to be applied.

(2)

Timing

The measure applied under this section shall apply to a person not earlier than the date that is 90 days after the date on which written notice under paragraph (1) is provided to the person.

(3)

Opportunity to demonstrate compliance

(A)

In general

The State or local government shall provide to each person with respect to which a measure is to be applied under this section an opportunity to demonstrate to the State or local government that the person does not engage in investment activities described in subsection (c).

(B)

Nonapplication

If a person with respect to which a measure is to be applied under this section demonstrates to the State or local government under subparagraph (A) that the person does not engage in investment activities described in subsection (c), the measure shall not apply to that person.

(4)

Sense of Congress on avoiding erroneous targeting

It is the sense of Congress that a State or local government should not adopt a measure under subsection (b) with respect to a person unless the State or local government has—

(A)

made every effort to avoid erroneously targeting the person; and

(B)

verified that the person engages in investment activities described in subsection (c).

(e)

Notice to Department of Justice

Not later than 30 days before a State or local government applies a measure under this section, the State or local government shall notify the Attorney General of that measure.

(f)

Authorization for prior applied measures

(1)

In general

Notwithstanding any other provision of this section or any other provision of law, a State or local government may enforce a measure (without regard to the requirements of subsection (d), except as provided in paragraph (2)) applied by the State or local government before the date of the enactment of this Act that provides for the divestment of assets of the State or local government from, or prohibits the investment of the assets of the State or local government in, any person that the State or local government determines, using credible information available to the public, engages in investment activities described in subsection (c) that are identified in that measure.

(2)

Application of notice requirements

A measure described in paragraph (1) shall be subject to the requirements of paragraphs (1), (2), and (3)(A) of subsection (d) on and after the date that is 2 years after the date of the enactment of this Act.

(g)

No preemption

A measure applied by a State or local government that is consistent with subsection (b) or (f) is not preempted by any Federal law.

(h)

Definitions

In this section:

(1)

Asset

(A)

In general

Except as provided in subparagraph (B), the term asset means public monies, and includes any pension, retirement, annuity, endowment fund, or similar instrument, that is controlled by a State or local government.

(B)

Exception

The term asset does not include employee benefit plans covered by title I of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.).

(2)

Investment

The term investment includes—

(A)

a commitment or contribution of funds or property;

(B)

a loan or other extension of credit; and

(C)

the entry into or renewal of a contract for goods or services.

(i)

Effective date

(1)

In general

Except as provided in paragraph (2) and subsection (f), this section applies to measures applied by a State or local government before, on, or after the date of the enactment of this Act.

(2)

Notice requirements

Except as provided in subsection (f), subsections (d) and (e) apply to measures applied by a State or local government on or after the date of the enactment of this Act.

202.

Safe harbor for changes of investment policies by asset managers

Section 13(c)(1) of the Investment Company Act of 1940 (15 U.S.C. 80a–13(c)(1)) is amended—

(1)

in subparagraph (A), by striking or at the end;

(2)

in subparagraph (B), by striking the period and inserting ; or; and

(3)

by adding at the end the following:

(C)

engage in investment activities described in section 201(c) of the Otto Warmbier Banking Restrictions Involving North Korea Act of 2019.

.

203.

Sense of Congress regarding certain ERISA plan investments

It is the sense of Congress that—

(1)

a fiduciary of an employee benefit plan, as defined in section 3(3) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(3)), may divest plan assets from, or avoid investing plan assets in, any person the fiduciary determines engages in investment activities described in section 201(c), if—

(A)

the fiduciary makes that determination using credible information that is available to the public; and

(B)

the fiduciary prudently determines that the result of that divestment or avoidance of investment would not be expected to provide the employee benefit plan with—

(i)

a lower rate of return than alternative investments with commensurate degrees of risk; or

(ii)

a higher degree of risk than alternative investments with commensurate rates of return; and

(2)

by divesting assets or avoiding the investment of assets as described in paragraph (1), the fiduciary is not breaching the responsibilities, obligations, or duties imposed upon the fiduciary by subparagraph (A) or (B) of section 404(a)(1) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1104(a)(1)).

204.

Rule of construction

Nothing in this title, an amendment made by this title, or any other provision of law authorizing sanctions with respect to North Korea shall be construed to affect or displace—

(1)

the authority of a State or local government to issue and enforce rules governing the safety, soundness, and solvency of a financial institution subject to its jurisdiction; or

(2)

the regulation and taxation by the several States of the business of insurance, pursuant to the Act of March 9, 1945 (59 Stat. 33, chapter 20; 15 U.S.C. 1011 et seq.) (commonly known as the McCarran-Ferguson Act).

III

Financial industry guidance to halt trafficking

301.

Short title

This title may be cited as the Financial Industry Guidance to Halt Trafficking Act or the FIGHT Act.

302.

Findings

Congress finds the following:

(1)

The terms human trafficking and trafficking in persons are used interchangeably to describe crimes involving the exploitation of a person for the purposes of compelled labor or commercial sex through the use of force, fraud, or coercion.

(2)

According to the International Labour Organization, there are an estimated 24,900,000 people worldwide who are victims of forced labor, including human trafficking victims in the United States.

(3)

Human trafficking is perpetrated for financial gain.

(4)

According to the International Labour Organization, of the estimated $150,000,000,000 or more in global profits generated annually from human trafficking—

(A)

approximately 2/3 are generated by commercial sexual exploitation, exacted by fraud or by force; and

(B)

approximately 1/3 are generated by forced labor.

(5)

Most purchases of commercial sex acts are paid for with cash, making trafficking proceeds difficult to identify in the financial system. Nonetheless, traffickers rely heavily on access to financial institutions as destinations for trafficking proceeds and as conduits to finance every step of the trafficking process.

(6)

Under section 1956 of title 18, United States Code (relating to money laundering), human trafficking is a specified unlawful activity and transactions conducted with proceeds earned from trafficking people, or used to further trafficking operations, can be prosecuted as money laundering offenses.

303.

Sense of Congress

It is the sense of Congress that—

(1)

the President should aggressively apply, as appropriate, existing sanctions for human trafficking authorized under section 111 of the Trafficking Victims Protection Act of 2000 (22 U.S.C. 7108);

(2)

the Financial Crimes Enforcement Network of the Department of the Treasury should continue—

(A)

to monitor reporting required under subchapter II of chapter 53 of title 31, United States Code (commonly known as the Bank Secrecy Act) and to update advisories, as warranted;

(B)

to periodically review its advisories to provide covered financial institutions, as appropriate, with a list of new red flags for identifying activities of concern, particularly human trafficking;

(C)

to encourage entities covered by the advisories described in subparagraph (B) to incorporate relevant elements provided in the advisories into their current transaction and account monitoring systems or in policies, procedures, and training on human trafficking to enable financial institutions to maintain ongoing efforts to examine transactions and accounts;

(D)

to use geographic targeting orders, as appropriate, to impose additional reporting and recordkeeping requirements under section 5326(a) of title 31, United States Code, to carry out the purposes of, and prevent evasions of the Bank Secrecy Act; and

(E)

to utilize the Bank Secrecy Act Advisory Group and other relevant entities to identify opportunities for nongovernmental organizations to share relevant actionable information on human traffickers’ use of the financial sector for nefarious purposes;

(3)

Federal banking regulators, the Department of the Treasury, relevant law enforcement agencies, and the Human Smuggling and Trafficking Center, in partnership with representatives from the United States financial community, should adopt regular forms of sharing information to disrupt human trafficking, including developing protocols and procedures to share actionable information between and amongst covered institutions, law enforcement, and the United States intelligence community;

(4)

training front line bank and money service business employees, school teachers, law enforcement officers, foreign service officers, counselors, and the general public is an important factor in identifying trafficking victims;

(5)

the Department of Homeland Security’s Blue Campaign, training by the BEST Employers Alliance, and similar efforts by industry, human rights, and nongovernmental organizations focused on human trafficking provide good examples of current efforts to educate employees of critical sectors to save victims and disrupt trafficking networks;

(6)

the President should intensify diplomatic efforts, bilaterally and in appropriate international fora, such as the United Nations, to develop and implement a coordinated, consistent, multilateral strategy for addressing the international financial networks supporting human trafficking; and

(7)

in deliberations between the United States Government and any foreign country, including through participation in the Egmont Group of Financial Intelligence Units, regarding money laundering, corruption, and transnational crimes, the United States Government should—

(A)

encourage cooperation by foreign governments and relevant international fora in identifying the extent to which the proceeds from human trafficking are being used to facilitate terrorist financing, corruption, or other illicit financial crimes;

(B)

encourage cooperation by foreign governments and relevant international fora in identifying the nexus between human trafficking and money laundering;

(C)

advance policies that promote the cooperation of foreign governments, through information sharing, training, or other measures, in the enforcement of this title;

(D)

encourage the Financial Action Task Force to update its July 2011 typology reports entitled, Laundering the Proceeds of Corruption and Money Laundering Risks Arising from Trafficking in Human Beings and Smuggling of Migrants, to identify the money laundering risk arising from the trafficking of human beings; and

(E)

encourage the Egmont Group of Financial Intelligence Units to study the extent to which human trafficking operations are being used for money laundering, terrorist financing, or other illicit financial purposes.

304.

Coordination of human trafficking issues by the Office of Terrorism and Financial Intelligence

(a)

Functions

Section 312(a)(4) of title 31, United States Code, is amended—

(1)

by redesignating subparagraphs (E), (F), and (G) as subparagraphs (F), (G), and (H), respectively; and

(2)

by inserting after subparagraph (D) the following:

(E)

combating illicit financing relating to human trafficking;

.

(b)

Interagency coordination

Section 312(a) of such title is amended by adding at the end the following:

(8)

Interagency coordination

The Secretary of the Treasury, after consultation with the Undersecretary for Terrorism and Financial Crimes, shall designate an office within the OTFI that shall coordinate efforts to combat the illicit financing of human trafficking with—

(A)

other offices of the Department of the Treasury;

(B)

other Federal agencies, including—

(i)

the Office to Monitor and Combat Trafficking in Persons of the Department of State; and

(ii)

the Interagency Task Force to Monitor and Combat Trafficking;

(C)

State and local law enforcement agencies; and

(D)

foreign governments.

.

305.

Strengthening the role of anti-money laundering and other financial tools in combating human trafficking

(a)

Interagency task force recommendations targeting money laundering related to human trafficking

(1)

In general

Not later than 270 days after the date of the enactment of this Act, the Interagency Task Force to Monitor and Combat Trafficking shall submit to the Committee on Banking, Housing, and Urban Affairs, the Committee on Foreign Relations, and the Committee on the Judiciary of the Senate, the Committee on Financial Services, the Committee on Foreign Affairs, and the Committee on the Judiciary of the House of Representatives, the Secretary of the Treasury, and each appropriate Federal banking agency—

(A)

an analysis of anti-money laundering efforts of the United States Government, United States financial institutions, and multilateral development banks related to human trafficking; and

(B)

appropriate legislative, administrative, and other recommendations to strengthen efforts against money laundering relating to human trafficking.

(2)

Required recommendations

The recommendations under paragraph (1) shall include—

(A)

best practices based on successful anti-human trafficking programs currently in place at domestic and international financial institutions that are suitable for broader adoption;

(B)

feedback from stakeholders, including victims of severe trafficking in persons, advocates of persons at risk of becoming victims of severe forms of trafficking in persons, the United States Advisory Council on Human Trafficking, civil society organizations, and financial institutions on policy proposals derived from the analysis conducted by the task force referred to in paragraph (1) that would enhance the efforts and programs of financial institutions to detect and deter money laundering related to human trafficking, including any recommended changes to internal policies, procedures, and controls related to human trafficking;

(C)

any recommended changes to training programs at financial institutions to better equip employees to deter and detect money laundering related to human trafficking; and

(D)

any recommended changes to expand human trafficking-related information sharing among financial institutions and between such financial institutions, appropriate law enforcement agencies, and appropriate Federal agencies.

(b)

Additional reporting requirement

Section 105(d)(7) of the Trafficking Victims Protection Act of 2000 (22 U.S.C. 7103(d)(7)) is amended—

(1)

in the matter preceding subparagraph (A)—

(A)

by inserting the Committee on Financial Services, after the Committee on Foreign Affairs; and

(B)

by inserting the Committee on Banking, Housing, and Urban Affairs, after the Committee on Foreign Relations,;

(2)

in subparagraph (Q)(vii), by striking ; and and inserting a semicolon;

(3)

in subparagraph (R), by striking the period at the end and inserting ; and; and

(4)

by adding at the end the following:

(S)

the efforts of the United States to eliminate money laundering related to human trafficking and the number of investigations, arrests, indictments, and convictions in money laundering cases with a nexus to human trafficking.

.

(c)

Required review of procedures

Not later than 180 days after the date of the enactment of this Act, the Federal Financial Institutions Examination Council, in consultation with the Secretary of the Treasury, victims of severe forms of trafficking in persons, advocates of persons at risk of becoming victims of severe forms of trafficking in persons, the United States Advisory Council on Trafficking, civil society organizations, the private sector, and appropriate law enforcement agencies, shall—

(1)

review and enhance training and examinations procedures to improve the surveillance capabilities of anti-money laundering and countering the financing of terrorism programs to detect human trafficking-related financial transactions;

(2)

review and enhance procedures for referring potential human trafficking cases to the appropriate law enforcement agency; and

(3)

determine, as appropriate, whether requirements for financial institutions and covered financial institutions are sufficient to detect and deter money laundering related to human trafficking.

(d)

Limitations

Nothing in this section shall be construed to—

(1)

grant rulemaking authority to the Interagency Task Force to Monitor and Combat Trafficking; or

(2)

authorize financial institutions to deny services to or violate the privacy of victims of trafficking, victims of severe forms of trafficking, or individuals not responsible for promoting severe forms of trafficking in persons.

306.

Sense of Congress on resources to combat human trafficking

It is the sense of Congress that—

(1)

adequate funding should be provided for critical Federal efforts to combat human trafficking;

(2)

the Department of the Treasury should have the appropriate resources to vigorously investigate human trafficking networks under section 111 of the Trafficking Victims Protection Act of 2000 (22 U.S.C. 7108) and other relevant statutes and Executive orders;

(3)

the Department of the Treasury and the Department of Justice should each have the capacity and appropriate resources to support technical assistance to develop foreign partners’ ability to combat human trafficking through strong national anti-money laundering and countering the financing of terrorism programs;

(4)

each United States Attorney’s Office should be provided appropriate funding to increase the number of personnel for community education and outreach and investigative support and forensic analysis related to human trafficking; and

(5)

the Department of State should be provided additional resources, as necessary, to carry out the Survivors of Human Trafficking Empowerment Act (section 115 of Public Law 114–22; 129 Stat. 243).