Hours. And now for us to declare a recess of the committee at any time, and we will have five legislative days to submit extraneous materials to the chairman for inclusion into the record. This hearing is entitled a legislative proposal to impede north kr north koreas access to finance. I recognize myself for five minutes to give an opening statement. Todays hearing will examine draft legislation to impose secondary sanctions on foreign banks whose business supports the north korean regime whether directly or indirectly. By encompassing virtually all of north kr north koreas economic activity, these measures would are represent the toughest financial sanctions yet directed at pyongya pyongyang. This the means going after cole, petroleum, textiles and minerals as well as north korean laborers abroad. In addition, the bill would incentivize greater compliance with the u. N. Sanctions by leveraging the vote at the International Financial institutions where certain countries with the lax enforcement go to seek assistance. This bill puts those countries on notice. This proposed legislation has been informed by the committees ongoing work on north korea as well as the panels ongoing work of the sanctions effectiveness. Needless to say, north koreas sixth nuclear test on september 3rd, coupled with the repeated launching of the intermediate and long range Ballistic Missiles undermines that more must be done. As a result, the legislative draft we will be looking at lays out the choice. Foreign banks can either do business that benefits north korea or othey can do business with the United States, but they cannot do both. As many of us here today are aware, this is a similar approach to the one taken in 2010 gaiagainst iran which help to compel the ayatollahs help to negotiate over the nuclear progr program, and while there are differences of opinion of how successful the negotiations were, there is consensus that in the absence of the secondary sanctions affecting banks, teheran would have been far less incentivize ed incentivized to engage in the talks. The focus on the banks is especially important given how north korea has evaded the sanctions in the past. As dr. John park of Harvards Kennedy school testified before this subcommittee in july, the north koreans have moved much of the trading activity offshore using third kcountry brokers an Front Companies. The spector of financial sanctions may concentrate the mi mines of foreign banks so that the work of dr. Parker and others will create fewer option involvement. Having said this, this bill would expand the scope of our sanctions to encompass even actors engaged in conventional trade with the north. Given north koreas unchecked hostility, broadening our efforts in this way appears essential. Nevertheless, chinas response to stronger sanctions has been cited as a concern as the county accounts for an estimated 90 of north koreas trade. Some have therefore argued that harsher sanks now may damage cooperative efforts with chinese leaders to curb north koreas weapons program. But i would submit that those critics should be far more sensitive to a quarter century of failed multiological efforts to reign in pyongyang. There comes a time when caution or quote strategic patience as one administration phrased it, becomes a euphemism for self delusion. As this subcommittee learned from his hearing in july, if china is not part of the solution to north korea, it is part of the problem. Chinese officials have fallen short on enforcing u. N. Sanctions that beijing itself has signed on to. And as the u. N. Security Council Talks following the norths sixth nuclear test have demonstrated, it is still unclear if china is committed to meaningfully tackling the north korean threat. Finally, we should acknowledge that kim jonguns eagerness in forcing the withdrawal of u. S. Troops from the region may not be entirely inconsistent with chinese interests. For all of the breathless talk of china exerting influence around the globe as a rival to u. S. Power, were curiously asked to believe that its hands are tied when it comes to a small economically dependent state next door. Well, if chinese officials hands are tied, then we should proceed with secondary sanctions so that their banks can assist International Efforts to cut off north koreas access to finance. If on the other hand china could do more than it has, then secondary sanctions may finally inspire it to do so. I want to change the witnesses for appearing today and i look forward to their testimony. The chair now recognizes the rairnging member of the subcommittee, the gentle lady from wisconsin gwen moore for five minutes for an opening statement. Thank you so much. In the absence of our Ranking Member of the full committee, i would like to share some thoughts that shes committed to paper regarding todays hearing. I want to thank our witnesses for joining us to discuss the legislative proposal aimed at expanding the United States sanctions against north korea. And pressuring the International Community to enforce those restrictions as well. The situation in north korea is the most urgent and dangerous threat to peace and security that we face. And its one that grows more dangerous as north korea aggressively pursuing the capacity to extend its nuclear reach to the United States cities. In fact, there are no good options for dealing with north korea. Most experts agree that a preemptive strike at this point on north korea would be reckless beyond belief. Of the least bad options, i like the idea of pressing china to lean more heavily on north korea and i like the idea of tougher sanctions. But we should not confuse either of those things with a coherent strategy and we should be clear up front about our goals and objectives and what we expect sanction to accomplish. Any ratcheting up of sanctions must be coupled with aggressive diplomatic engagement of the United States and within a framework that would entail nuance. This would require unprecedented policy making capacity and coordination across the United States government as well as skilled policy coordination with our allies. It concerns me, therefore, that just as this crisis is accelerating, our diplomatic capabilities, which opens channels for crisis communication and reduce the risk of miscalculation are diminished. Not only are u. S. Ambassadorships to japan and south korea still vacant, the president has yet to nominate a permanent assistant secretary of state for east asia and pacific affairs. The legislative proposal before us today rightly recognizes the need to exert massive and immediate pressure on the north korean regime. And importantly enlist china and others in this effort. Such a powerful approach towards sanctions, however, that have the capacity to reverberate throughout the Global Economy and present potentially disaster rouse unintended consequences must also allow for careful calibration in its implementation. We look forward to the witnesses views on the proposal before it as well as your views on how the u. S. Can most effectively use its leverage to contain the alarming danger north korea presents. And i reserve my time. The chair now recognizes the gentleman from washington, mr. Heck, for an opening statement. Thank you, mr. Chairman, and Ranking Member moore for the time and thank you all for convening this important hearing. Responding effectively to north koreas provocations will require a variety of tools. Credible deterrent and Defendant Alliance management, skillful diplomacy and the careful design of nonmilitary sanctions. Here in the Financial Services committee we have jurisdiction over only one of those tools, sanctions. But i believe its important that we always keep the broader picture in mind as we work to perfect the discussions that have been put forward today. Even with perfect compliance i believe it is very difficult to stop any country from pursuing a course of action which it views as vital to its survival through ang sanctions alone. These challenges are greater when dealing with a regime like north korea. A regime which relies on force to stay in power, a regime which has demonstrated indifference to the incredible suffering of its own people, a regime which can easily make sure its Nuclear Program are the last to feel any pinch. Done right, however, sanctions can make further north korean advances slower and more costly, giving more time for policy tools to work. And i look forward to hearing from our distinguished witnesses about how this proposed draft fits into a larger strategy. My constituents in the south pew gentleman sound who include the Service Members at the base are counting on us to respond to this crisis in a responsible manner. So too are our allies, like south korea and japan and in Asian Pacific region which has enjoyed decades of peace and prosperity in large part because of the credibility of u. S. Security guarantees and a broader commitment to the region. We cannot afford to fail them. We have to get this right. And im hopeful that with steady American Leadership working in a bipartisan manner we will get this right. I yield back, mr. Chairman. The gentleman yields back and because of the significance of the issues under consideration in this hearing and the importance of the north korean threat to our homeland and to the interests of our country, a number of members from the, from the full committee have expressed interest in participation in todays subcommittee hearing. And so i ask for unanimous consent that members on the full committee but not on this subcommittee may join in this hearing. Without objection, that is ordered. Today we welcome the testimony of a distinguished panel of witnesses. First david albright, the founder and president of the institute of science and National Security. Hes written numerous papers on the se keet Nuclear Systems throughout the world. Published assessments in numerous technical and policy journals, including the bulletin of the atomic scientists, scientific american, science and Global Security, washington quarterly and arms control today. Mr. Albright has coauthored four books including the world inventory of plutonium and peddling peril. How the secret trade arms americas enemies. Mr. Albright worked as a seen jr. Staff scientist at the federation of american scientists and as a member of the Research Staff of Princeton University center for energy and environmental studies. Anthony ruggiero spent 17 years in the u. S. Government. Most recently he was a Foreign Policy fellow in the office of senator marco rubio and was the Senior Adviser on relations relating to the relations committee. Mr. Ruggiero as serveg as Deputy Director and office of Global Affairs in the office of financial crimes. Prior to joining treasury, he spent over 13 years in various capacities at the state department, including as chief of the defensive measures and wmd finance team. He was the no proliferation adviser to the Six Party Talks in beijing and participated in u. S. North korea meetings following the identification of a primary Money Laundering concern. Hes served as an Intelligence Analyst kofrl north korea missile programs. Bruce cling ner specializes in korean and Japanese Affairs as the Senior Research fellow for northeast asia at the Asian Studies center. Hes a freak commentator. Mr. Cling ners analysis and writing about north korea, south korea and japan are informed by his 20 years of service at the Central Intelligence agency and the Defense Intelligence agency. From 1996 to 2001 mr. Cling ner was cias Deputy Division chief responsible for the analysis of political, military, economic and leadership issues for the president of the eyes and other senior u. S. Policymakers. In 1993 and 1994 he was the chief of the cias korea branch which analyzed military developments during a Nuclear Crisis with north korea. Elizabeth rosenburg is a senior fellow and director of the Energy Economics and program at the center for a new american security. In the capacity she publishes and speaks on the National Security and Foreign Policy implications of Energy Market shifts and the use of sanctions and economic state craft. From may 2009 through september 2013 ms. Rosenberg served as a Senior Adviser to the assistant secretary for terrorist financing and financial crimes and to the undersecretary for terrorism and financial intelligence. In these roles she helped to develop and implement financial and energy sanctions. She also helped to formulate antiMoney Laundering and counterTerrorism Financing policy and oversee financial regulatory enforcement activities. Each of you will be recognized for five minutes to give an oral presentation of your testimony. Each of your written statement wills be made part of the record. Mr. Albright, you are now recognized for five minutes. Chairman barr, Ranking Member moore and other members of the committee, thank you for the opportunity to testify today. North koreas september 3rd nuclear test, its sixth overall and by far the largest in terms of explosive yield demonstrates its resolve and commitment to developing a Nuclear Arsenal able to strike its enemies. During the last few years north korea has embarked on an intensive Nuclear Weapons testing Production Campaign thats included the construction and operation of many nuclear facilities, three underground Nuclear Tests and tens of Ballistic Missile launches. Its apparent goal is to have tens of Nuclear War Heads of many varieties meated to Ballistic Missiles with ranges stretching to intercontinental distances. Few doubt that north korea can launch nuclear tipped Ballistic Missiles. There is rightly more skepticism that north korea is able to deliver a Nuclear War Head to an American City but it is making rapid progress toward that goal. I continue to believe that north korea can be peacefully denuclearized. However, substantive negotiations appear unlikely unless north korea changes its path. Given north koreas own willingness to enter denuclearization talks and its provocative actions, theres little more. The u. N. Passed on monday in an important step in that direction. A near term priority is to far more effectively isolate north korea from the regional and International Financial system. A central problem is that many countries are not enforcing sanctions effectively or in some cases willfully disregarding them. Punitive measures are needed to encourage come pliengs and deter violations. Additional u. S. Legislation that supports that goal is useful. North korea appears to target entities and persons and engage in activities in violation of u. N. Security Council Sanctions in tens of countries with weak and nonexistent trade systems, poor financing controls or higher than average corruption. Although a range of remedies are needed to fix the performance in general of many of these counties, the creation of punitive measures may be an effective means to accelerate more compliant behavior in the short term among a wide range of countries where entities and individuals see north korea as a quick way to make money or obtain military or other goods cheeply or unavailable elsewhere. Dealing with chinas trade of north korea is in a different category. North korea has depended on illegal procurements for decades for its Nuclear Programs. And as the sharm pointed out, theyve got offshore quite successfully to acquire those goods. And they dont just acquire them in the country such as china. Theyre able to get the goods from the United States, europe and japan by operating in china and exploiting chinas weak export control and sanctions legislati legislation. Although china is improving its export control laws with, beijing has not done an adequate job of enforcing those laws. And i provided several examples in my testimony. China remains north koreas central perhaps on witting supply conduit for its Nuclear Weapons program. And one of the priorities is to change that. The Trump Administrations efforts to sanction chinese and for that matter russianowned companiesance individuals that significantly support north koreas weapons programs are a positive step. But unless china and