September 13, 2017

Elizabeth Rosenberg Testifies before the House Financial Services Committee

A Legislative Proposal to Impede North Korea’s Access to Finance

By Elizabeth Rosenberg

North Korea’s alarming and dangerous recent expansion of provocations, including more ballistic missile launches and a sixth, powerful nuclear test, highlight the need for much stronger pressure on the regime. This pressure may serve to curb North Korea’s threatening activity and facilitate a diplomatic process to advance denuclearization. Financial sanctions should be a core part of such a pressure strategy, along with force posture and projection, and other coercive tools of statecraft, and complemented by serious diplomatic engagement. The United States is placed to lead this effort and must closely coordinate with international partners even as it urges them to do more with secondary sanctions and other gestures.

The Sanctions Framework for North Korea, Compliance, and Circumvention

The United States has in place a framework of sanctions to apply financial pressure on North Korea to limit its proliferation activities and the broader revenue streams available to regime leaders. These complement and expand on sanctions put in place by the United Nations Security Council, which instruct member states to cease dealings with North Korean proliferation entities and stop engaging in proscribed economic activities that enrich the regime.

I applaud the recent work of Congress this past summer to impose new sanctions authorities to tighten the financial pressure framework on North Korea, along with new sanctions from the United Nations. Collectively, these new authorities expanded pressure on North Korea with restrictions on economic sectors including energy, metals and mining, transportation, financial services, and seafood, as well as limitations on North Koreans working abroad. 

However, as your legislative discussion draft, the focus of today’s hearing, aptly points out, circumvention of sanctions and non-enforcement is a major problem and a key reason for North Korea’s continued proliferation activities. Tough sanctions authorities cannot, of themselves, create meaningful pressure on North Korea to change its policies. Rather, their enforcement, particularly by North Korea’s key financial partners, will determine the measures’ strength, which may contribute to an effective pressure strategy to facilitate North Korean policy change. In practical terms, effective sanctions enforcement comes down to China, which is responsible for over 90% of North Korea’s trade, adopting a strict enforcement posture.

The full testimony is available online.

Download PDF

  • Commentary
    • April 2, 2020
    Is U.S. Policy Towards Venezuela at a Turning Point?

    On March 31, the Trump administration announced a pivot in U.S. policy towards Venezuela. The United States has spent more than a year backing opposition leader Juan Guaido, w...

    By John Hughes & Peter Harrell

  • Reports
    • April 1, 2020
    Emerging Threats in Combating Proliferation Finance

    Executive Summary For decades, the United States, its allies, and partners have been policing the international financial system in an effort to deny the world’s most dangerou...

    By ​Neil Bhatiya

  • Commentary
    • The Hill
    • March 27, 2020
    How an ease of sanctions may combat the coronavirus crisis

    Pressure is increasing to ease sanctions on Iran and Venezuela in response to the coronavirus crisis. Prominent Democrats in Congress have called on the administration to lift...

    By Peter Harrell

  • Commentary
    • Lawfare
    • March 27, 2020
    Cryptocurrency Laundering Is a National Security Risk

    On March 2, the U.S. Department of Justice indicted two Chinese nationals for allegedly laundering cryptocurrency on behalf of North Korea. The laundering scheme ferreted away...

    By Yaya J. Fanusie

View All Reports View All Articles & Multimedia