And combine forces command. You can see the last few minutes at cspan. Org. Now urban Affairs Hearing on diplomatic actions as the u. S. Seeks to deter north Koreas Nuclear program. We have asked each of our witnesses to shorten their Opening Statements to a couple of minutes each so we can get to opening request wes. I will ask the senator to follow the fe minute allocation for their questioning. Lets proceed. Thank you. Distinguished members of the committee im honored to appear before you to discuss the Treasury Departments strategy the destabilizing and repressing actions of north korea. Today i will share with you aspects of our strategy which we are executing at a pace. We are foe cussing on key financial vulnerability. It can be used to support directly oirn directly its Weapons Development programs. So a key part of our strategy is by targeting the regimes most profitable including coal, labor and sale of weapons and other goods. We represented dunzs that support these lines of business and are foe cussed on the shipping networks that enable them. Second, the regime needs to move funds in order to aware foreign currency and pay for goods. We are in forwarding ongoing efforts through companies and other deceptive means. Last week the president issued a new executive order that gives us greater leverage to support the kim regime. On tuesday we took action and designated financial facilitators across the globe. In my first week we acted for the first time against a nonnorth korean bank for financial activity through the u. S. Financial system. Banks worldwide should take note. Of course we close collaboration is critical and we are working very actively with partners around the globe. Time is not on our side. We have an incredibly designated team working around the clock on this urgent problem. It is essential to a peaceful resolution. I look forward to other members of congress as we seek to fulfill our shared responsibility to keep america safe. Thank you. Today we face a north korea to achieve a ballistic delivering a Nuclear Payload to our homeland. In the face of this escalating threat we have the ability to defend ourselves and our allies from any attack as the president and secretary have made clear. We also have a clear and aggressive strategy to counter this threat and bring about a diplomatic resolution employing all available lovers of diplomatic pressures in order to change the strategic calculus. It is aimed at bringing it back to the negotiating table where we hope to achieve ton denuclearization. We are clear eyed that china has made on this front. Our task now is to hold china and others to binding obligation and to convince chinas leaders to convert their decisive leverage over north korea. We do not sk an accelerated rey reunificati reunification. What we seek is a peaceful denuclearization and in north korea that stops actions and does not threaten the United States and our allies. We look forward to your cooperation. Im pleased to answer any questions you you may have. Thank you. Ill begin with you. Executive authorities excuse mement i should probably ask both of you this question. Em po empowers treasury. Press reports suggest the United Nations was not able to pass stronger sanctions. In your opinion what must be done to put a hard stop on those who continue to enrich the kim regime with north korea are secondary trade sanctions the answer . You want to go ahead . Sure. We have the ability and we take that new authority very seriously we believe while they were the strongest measures that have ever been passed by the United Nations they represent the floor and not the ceiling. We have to take additional measures to make sure we are holding all countries accountable to cut off any revenue stream and we are doing that and well continue to do so. Thank you. You want to add anything to that . What we are doing now is work, hard that gives us much greater tool to go ahead and work on implementing and trying to get out these underground networks that north korea uses that have been much of the life blood. I think implementation is key. We are working with International Partners and i think continuing a fullcourt press with those partners on implementation will be the key to really upping the pressure on the kim regime. And quickly, how successful do you believe we can be in getting that International Cooperation . Well, what i would tell you is we have been raising this issue with every single International Partners. We have had them volunteering their own national measures. Some what i have seen and what i saw at the high level week last week, that all countries are seized and looking act everly at what more they can do to choke off elicit trade for labor presence in their country. I think we will keep up that pressure. We need to keep a unified coalition on this. Having our partners raising it with other countries have proven to be very effective. Thank you. When the president announced executive order he recommended a chinese Bank Directive that sounded like they instructed other banks and to wind down existing loans. There is less known what will happen to the future ability to deposit funds. Can you shed any light on this directed by the Chinese Central Bank . The question is is the policy of china truly changing . Thank you. I think china is sending very deliberate messages to its banks and to other companies in china. There was an announcement today that the Chinese Commerce department sent an announcement that all north korean firms and joint ventures had to be shut douchblt we are working very closely but well continue to monitor it. We tonight to share actions. The urgency will be key to any economic Pressure Campaign. Thank you. I thank you both for testifying and for your service to our country. You have said you use it to describe the ongoing but the essential elements havent changed to push for further and improved u. N. Sanctions enforcement globally and urging other nations to ket off normal trade. Are have we seen quantity fiebl outcomes at this point . Especially on the regimes ability to advance its Weapons Programs. Well start with you. I think we are taking maximum advantage with countries around the world. I believe we have instituted a number of designations. We have had a series of designations. In china and other countries all of these target proliferation. It has had an impact on the ease in which they were able to make transactions. It is having an effect of increasing pressure on the regime. Thank you. This is a question for both of you. Ill start with you. Many of us here in this body and all of our allies are concerned about the president s statements, about the jcpoa. They were on huk lar ability. Are you trned that it undermines our effort with north korea . No. I think they are two very different problem. North korea needs to understand we are very serious when it comes to using our maximum authorities to applying economic pressure. This is an area where we are coming together. We are seeing economies came steps. Thats surely good news but they back then too. Why would we have that credibility and why would the world think we have that credibility . Again, we are having i am personally involved in working very closely with our allies in europe, south korea, japan and elsewhere. The youre not but toept our allies we are not as trust think. I cant tell cant tell you. Youre telling we m we dont know what they think. I am very yun fied sending a joint to get them to chak their besave your. I know this heang is not about high, but do you agree with that . I would refer with irans compliance. Respond to that ands a, does it concern you that we are wo working and trying to get north korea to change its some question whether on something we already did on nuke weapons, a year natch. Im not the iran exspert, but i know we have jcpoa. I think on the connection between that and north korea the thing thats important to remember is we have been down this road with north korea several times already and they have continually disregarded the agreements we entered into. M hil have it roll back, probably illegally on Nuclear Programs. We are not going to go down the road again of being, you know, cheated or fooled and that we are going to enter into this agreement and expect they would live up to their side of the bargain. So it is to build that kind of pressure and leverage. Thank you both. Thank you. And i wanted to make an announcement and that the that thosh ton has to leave far meeting with secretary pillar ton. Thanks to our witnesses. I want to drew a par led d. I dont think anybody poses to fus a preacceleration in their missile delivery capabilities. This threat is growing. Despite the many sanctions we have on north korea, our allies have joined us. The south korean government em reports that north koreas committee grew at the fastest rate in subpoena years last year. Their gdp extended from a low level. They experiencing economic growth. Its hard to imagine they going to abandon these programs if they are discovering they have greater prosperity week in and week it. Ee fully with executive order to further pure sanctio. We are not at the maximum of possible sanctions against north korea. We are told at past hearings that there are Financial Institutions conducting transactions with north korean entities. Do you both aglee with that. I understand this but is it true there are Financial Institutions that are conducting financial probably aware in june we took action against listen, i am in favor of that. I am glad. My point is there are many other institutions conducting transactions. You have acknowledged today that there is one chinese bank thats had sanctions imposed directly. My point in all this is, we have also learned, i think, that the mandatory sanctions of the iran sanctions legislation probably played a big role in bringing iran to the table. And it is my belief, and i think its shared by my colleague, senator from maryland with whom i am working on legislation and weve been working with the treasury and want to continue to work with you on this. But the threat of mandatory sanctions immediately, once that legislation passes, sends a very, very powerful message to Financial Institutions, and i think thats the tool that we need, that is the tool that worked with iran. We have not adopted that yet, and its my hope that we will, and i welcome your thoughts on it. Senator, of course. We think that having the authority to go after Financial Institutions is incredibly important. Thats why we had the strongest executive order. The president has just signed the strongest executive order that we have ever had which gives us the authority on a goingforward basis to impose secondary sanctions. We think banks are taking note. Were carefully monitoring their behavior. The safety and security of the American People come first, and we wont hesitate to act where we think it is warranted. I understand that. Having the authority to do something is not the same thing as being required to do something, and the latter simply sends a stronger message. Now, i think there should be a way for an institution that ceases and desists, for instance, to no longer be subject to sanctions, right. We want a mechanism that does not permanently disqualify an institution from u. S. Markets if theyve ceased and desisted. But my own view is we havent taken the most aggressive steps possible, and this is as serious a threat as i can plausibly imagine. So i hope you will continue to work with us in this effort. I want to thank my colleague, senator van holland, for the great work he has done on this. I think i came in 30 seconds short, mr. Chairman. Thank you, senator toomey. Senator reed. Thank you very much. I am tempted to commend the chairman and Ranking Member for the best statements theyve ever given. Forgive me. Secretary thornton, in the past we have used the fiveparty mechanism with south korea, japan, russia, china and the United States, and at this point it seems that a lot of the diplomacy is one off. Youre going to china, talk to them. Someone presumably is talking to the russians, et cetera. Why dont we, if were really serious about this, convene the fiveparty talks and show not only strength but concerted effort. Yeah. Thank you. We are convening i mean, we dont have that specific mechanism invoked but we are doing a lot in the u. N. Security council, were doing a lot with various Multi Lateral partners. We h a very strong statement out of asean out of the recent ministerial in manila. We have gotten a lot of Different Actors to step up and help us with this effort. Certainly were doing a lot of consulting with the regional stakeholders especially our two strong allies, south korea and japan. The president met with them both in a trilateral format last week in new york. We have also been consulting very closely and had long meetings and had extended discussions with both russia and china. I think we are doing as much as we can with those regional stakeholders. But we dont want to be tied to one particular format. And we are certainly open to any formats or opportunities that would put pressure, more pressure, on north korea. And so i think we are open to it. We just havent found it necessary to do it in that format. Do you concur with Ambassador Haley that the United Nations has exhausted its usefulness . I think she was referring to the issue of things to be passed to increase the level of sanctions. I think we agree almost all of north koreas external hard currency earning trade has been captured in one way or another through u. N. Security Council Resolutions and i think there are probably some more that could be done there but mostly its already been incorporated. The main task i see Going Forward is on implementation. I concur. With that regard, secretary mandelker, you have lots of authorities, but do you have priority . Most important is to identify, go after this company, second important is this company, and shipping is the third, et cetera . Can you give us that kind of strategy, not just weve got lots of things we can do . Yes, senator. We are constantly thinking about how we can exercise our authorities to achieve maximum strategic impact. We are looking at the biggest revenue generators to north korea and taking action against those revenue generators. We are very focused on sanctions evasion. The reason part of the reason we are in the place that we are today is at northorhas been inc evading our sanctions,nd we want to cut that off at the pass. And so we are focusing on highrevenue generators, on going after the financial facilitators that they have planted all over the world. We Just Announced designations of 26 of those this week that were situated in different countries. Again, always focused on maximum strategic impact. Just as an example, in august we went after three Coal Companies that had generated a half a billion dollars worth of revenue to north korea. And we designated them to cut them off, again, at the pass so that they can no longer generate that sort of revenue. So yes. Focused on highest priority impacts always. Those three companies you have effectively shut them down or youve just indicated that were going after you . We have indicated to them that they cannot have access to the u. S. Financial system. We have sent a very strong message that its our view that no one should be dealing with any company that is continuing to trade with north korea. But companies are still dealing with those companies. I cant tell you in an open setting whether companies are still dealing with those companies. But the message is clear. We will go after any company that does trade with north korea. I think thats a good message, but, again, i thing i propose similar to my colleagues, specific evidence that its working. Senator toomey mentioned that the growth in their economy was not insubstantial last year and, you know, were messaging weve been messaging for two decades. I agree with you, senator. Look, that is why in this administration were taking the strongest measures we have ever taken. These are the strongest u. N. Security Council Resolutions we have ever had. The executive order that the president signed last week is the strongest across the board executive order that we have ever had. We are taking this with utmost seriousness and are pushing countries all over the world to do the same. Thank you. Senator corker. Thank you both for being here. Do we all agree that, in essence, north korea is a de facto Nuclear State . Sorry. Is that for me . We know what the threats are, senator. They have been able to proliferate at an unprecedented state. We do agree they are a de facto Nuclear State. Is that correct . I dont think thats the position of the state department. It involves a number of different technologies, and i dont think that we would be able to say with concrete certainty that thats the case. I am going to state that they are a de facto Nuclear State. That would be my position. I applaud the efforts that are under way. I really do. As you know, i work closely with secretary tillerson and others. I every one of our intelligence agencies tells us there is, publicly, even, that there is no amount of pressure that can be placed on the leader of north korea to get him to stop. He views this as his ticket to survival. And he is changing the balance in the peninsula. So, i applaud the efforts that are under way. I really do. Are there are there is there any course of action weve been doing this now for 25 years. This is the most robust effort that i applaud. But is there anything you see that is changing, possibly changing the dynamic th