On February 18, 2016, President Obama signed the North Korea Sanctions and Policy Enhancement Act of 2016 into law. The wide-ranging law was enacted in response to North Korea’s nuclear weapons test on January 6, 2016, and it significantly expands the scope of the current US-North Korean sanctions regime.
The law provides for substantial secondary sanctions against those who trade with North Korea. These include mandatory sanctions on individuals or entities found to have knowingly:
- Sold, supplied, or transferred significant amounts of semi-finished metals, such as aluminum, steel, and coal, or software for use in industrial processes used for weapons proliferation activities, the Korean Workers’ Party, armed forces, internal security or intelligence activities
- Supported (including provision of training, advice, or significant financial transactions in support of) North Korea’s weapons of mass destruction program or arms trade
- Transferred luxury items to North Korea
- Engaged in acts undermining cybersecurity
- Engaged in money laundering, counterfeiting, or narcotics trafficking involving or supporting the North Korean government
- Been responsible or complicit in censorship or human rights abuses by the North Korean government.
The law makes the application of these sanctions mandatory, rather than discretionary.
Penalties for violations include civil and criminal penalties, asset blocking, loss of access to the US financial system, and visa denials. The US government also may not procure goods or services from any person or entity that has violated sanctions.
The law provides for the following additional measures:
- Enhanced inspection of ships and aircraft, and the law permits the seizure and forfeiture of any vessels used to facilitate sanctioned activities
- Authorization for the President to deny or revoke export licenses for any transaction lacking sufficient financial controls
- Requirement that the US Treasury Department determine whether North Korea is to be designated as a jurisdiction of primary money laundering concern. If such a designation is made, US banks could be required to implement additional due diligence measures to prevent improper access by North Korean financial institutions to US correspondent accounts.
Sanctions may be suspended for up to one year (renewable every 180 day period) if North Korea makes progress towards complying with certain conditions, including following UN Security Council resolutions and taking steps to end human rights abuses. Under the law, sanctions may be terminated if North Korea makes significant progress towards achieving additional milestones, including the reversal of its nuclear weapons programs, release of political prisoners, and cessation of censorship.
The law passed the House and Senate almost unanimously. This strong bipartisan support reflects a continued attempt on the part of the US to take direct action in response to North Korea’s continued defiance of international warnings.
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