79–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 115–361 

IMPEDING NORTH KOREA’S ACCESS TO FINANCE ACT OF 

2017 

OCTOBER 23, 2017.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

together with 

ADDITIONAL VIEWS 

[To accompany H.R. 3898] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 3898) to require the Secretary of the Treasury to place 

conditions on certain accounts at United States financial institutions with respect to North Korea, and for other purposes, having 

considered the same, reports favorably thereon with amendments 

and recommends that the bill as amended do pass. 

The amendments are as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Impeding North Korea’s Access to Finance Act of 

2017’’. 

SEC. 2. FINDINGS. 

The Congress finds the following: 

(1) On June 1, 2016, the Department of the Treasury’s Financial Crimes Enforcement Network announced a Notice of Finding that the Democratic People’s 

Republic of Korea is a jurisdiction of primary money laundering concern due to 

its use of state-controlled financial institutions and front companies to support 

the proliferation and development of weapons of mass destruction (WMD) and 

ballistic missiles. 

(2) The Financial Action Task Force (FATF) has expressed serious concerns 

with the threat posed by North Korea’s proliferation and financing of WMD, 

and has called on FATF members to apply effective counter-measures to protect 

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their financial sectors from North Korean money laundering, WMD proliferation 

financing, and the financing of terrorism. 

(3) In its February 2017 report, the U.N. Panel of Experts concluded that— 

(A) North Korea continued to access the international financial system in 

support of illicit activities despite sanctions imposed by U.N. Security Council Resolutions 2270 (2016) and 2321 (2016); 

(B) during the reporting period, no member state had reported taking actions to freeze North Korean assets; and 

(C) sanctions evasion by North Korea, combined with inadequate compliance by member states, had significantly negated the impact of U.N. Security Council resolutions. 

(4) In its September 2017 report, the U.N. Panel of Experts found that— 

(A) North Korea continued to violate financial sanctions by using agents 

acting abroad on the country’s behalf; 

(B) foreign financial institutions provided correspondent banking services 

to North Korean persons and front companies for illicit purposes; 

(C) foreign companies violated sanctions by maintaining links with North 

Korean financial institutions; and 

(D) North Korea generated at least $270 million during the reporting period through the violation of sectoral sanctions. 

(5) North Korean entities engage in significant financial transactions through 

foreign bank accounts that are maintained by non-North Korean nationals, 

thereby masking account users’ identity in order to access financial services. 

(6) North Korea’s sixth nuclear test on September 3, 2017, demonstrated an 

estimated explosive power more than 100 times greater than that generated by 

its first nuclear test in 2006. 

(7) North Korea has successfully tested submarine-launched and intercontinental ballistic missiles, and is rapidly progressing in its development of a nuclear-armed missile that is capable of reaching United States territory. 

SEC. 3. CONDITIONS WITH RESPECT TO CERTAIN ACCOUNTS AND TRANSACTIONS AT UNITED 

STATES FINANCIAL INSTITUTIONS. 

(a) CORRESPONDENT AND PAYABLE-THROUGH ACCOUNTS HELD BY FOREIGN FINANCIAL INSTITUTIONS.— 

(1) IN GENERAL.—Not later than 45 days after the date of the enactment of 

this Act, the Secretary of the Treasury shall prescribe regulations to prohibit, 

or impose strict conditions on, the opening or maintaining in the United States 

of a correspondent account or a payable-through account by a foreign financial 

institution that the Secretary finds knowingly facilitates a significant transaction or transactions or provides significant financial services for a covered 

person. 

(2) PENALTIES.— 

(A) CIVIL PENALTY.—A person who violates, attempts to violate, conspires 

to violate, or causes a violation of regulations prescribed under this subsection shall be subject to a civil penalty in an amount not to exceed the 

greater of— 

(i) $250,000; or 

(ii) an amount that is twice the amount of the transaction that is the 

basis of the violation with respect to which the penalty is imposed. 

(B) CRIMINAL PENALTY.—A person who willfully commits, willfully attempts to commit, or willfully conspires to commit, or aids or abets in the 

commission of, a violation of regulations prescribed under this subsection 

shall, upon conviction, be fined not more than $1,000,000, or if a natural 

person, may be imprisoned for not more than 20 years, or both. 

(b) RESTRICTIONS ON CERTAIN TRANSACTIONS BY UNITED STATES FINANCIAL INSTITUTIONS.— 

(1) IN GENERAL.—Not later than 45 days after the date of the enactment of 

this Act, the Secretary of the Treasury shall prescribe regulations to prohibit 

a United States financial institution, and any person owned or controlled by a 

United States financial institution, from knowingly engaging in a significant 

transaction or transactions with or benefitting any person that the Secretary 

finds to be a covered person. 

(2) CIVIL PENALTY.—A person who violates, attempts to violate, conspires to 

violate, or causes a violation of regulations prescribed under this subsection 

shall be subject to a civil penalty in an amount not to exceed the greater of— 

(A) $250,000; or 

(B) an amount that is twice the amount of the transaction that is the 

basis of the violation with respect to which the penalty is imposed. 

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SEC. 4. OPPOSITION TO ASSISTANCE BY THE INTERNATIONAL FINANCIAL INSTITUTIONS AND 

THE EXPORT-IMPORT BANK. 

(a) INTERNATIONAL FINANCIAL INSTITUTIONS.—The Bretton Woods Agreements Act 

(22 U.S.C. 286 et seq.) is amended by adding at the end the following: 

‘‘SEC. 73. OPPOSITION TO ASSISTANCE FOR ANY GOVERNMENT THAT FAILS TO IMPLEMENT 

SANCTIONS ON NORTH KOREA. 

‘‘(a) IN GENERAL.—The Secretary of the Treasury shall instruct the United States 

Executive Director at the international financial institutions (as defined under section 1701(c) of the International Financial Institutions Act) to use the voice and vote 

of the United States to oppose the provision of financial assistance to a foreign government, other than assistance to support basic human needs, if the President determines that, in the year preceding consideration of approval of such assistance, 

the government has knowingly failed to prevent the provision of financial services 

to, or freeze the funds, financial assets, and economic resources of, a person described under subparagraphs (A) through (E) of section 7(2) of the Impeding North 

Korea’s Access to Finance Act of 2017. 

‘‘(b) WAIVER.—The President may waive subsection (a) for up to 180 days at a 

time with respect to a foreign government if the President reports to Congress 

that— 

‘‘(1) the foreign government’s failure described under (a) is due exclusively to 

a lack of foreign government capacity; 

‘‘(2) the foreign government is taking effective steps to prevent recurrence of 

such failure; or 

‘‘(3) such waiver is vital to the national security interests of the United 

States.’’. 

(b) EXPORT-IMPORT BANK.—Section 2(b) of the Export-Import Bank Act of 1945 (12 

U.S.C. 635(b)) is amended by adding at the end the following: 

‘‘(14) PROHIBITION ON SUPPORT INVOLVING PERSONS CONNECTED WITH NORTH

KOREA.—The Bank may not guarantee, insure, or extend credit, or participate 

in the extension of credit in connection with the export of a good or service to 

a covered person (as defined under section 7 of the Impeding North Korea’s Access to Finance Act of 2017).’’. 

SEC. 5. TREASURY REPORTS ON COMPLIANCE, PENALTIES, AND TECHNICAL ASSISTANCE. 

(a) QUARTERLY REPORT.— (1) IN GENERAL.—Not later than 120 days following the date of the enactment 

of this Act, and every 90 days thereafter, the Secretary of the Treasury shall 

submit a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the 

Senate that includes— 

(A) a list of financial institutions that, in the period since the preceding 

report, knowingly facilitated a significant transaction or transactions or 

provided significant financial services for a covered person, or failed to 

apply appropriate due diligence to prevent such activities; 

(B) a list of any penalties imposed under section 3 in the period since the 

preceding report; and 

(C) a description of efforts by the Department of the Treasury in the period since the preceding report, through consultations, technical assistance, 

or other appropriate activities, to strengthen the capacity of financial institutions and foreign governments to prevent the provision of financial services benefitting any covered person. 

(2) FORM OF REPORT; PUBLIC AVAILABILITY.— (A) FORM.—The report required under paragraph (1) shall be submitted 

in unclassified form but may contain a classified annex. 

(B) PUBLIC AVAILABILITY.—The unclassified portion of such report shall be 

made available to the public and posted on the website of the Department 

of the Treasury. 

(b) TESTIMONY REQUIRED.—Upon request of the Committee on Financial Services 

of the House of Representatives or the Committee on Banking, Housing, and Urban 

Affairs of the Senate, the Under Secretary of the Treasury for Terrorism and Financial Intelligence shall testify to explain the effects of this Act, and the amendments 

made by this Act, on North Korea’s access to finance. 

(c) INTERNATIONAL MONETARY FUND.—Title XVI of the International Financial Institutions Act (22 U.S.C. 262p et seq.) is amended by adding at the end the following: 

‘‘SEC. 1629. SUPPORT FOR CAPACITY OF THE INTERNATIONAL MONETARY FUND TO PREVENT 

MONEY LAUNDERING AND FINANCING OF TERRORISM. 

‘‘The Secretary of the Treasury shall instruct the United States Executive Director 

at the International Monetary Fund to support the use of the administrative budget 

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of the Fund for technical assistance that strengthens the capacity of Fund members 

to prevent money laundering and the financing of terrorism.’’. 

(d) NATIONAL ADVISORY COUNCIL REPORT TO CONGRESS.—The Chairman of the 

National Advisory Council on International Monetary and Financial Policies shall 

include in the report required by section 1701 of the International Financial Institutions Act (22 U.S.C. 262r) for the fiscal year following the date of the enactment 

of this Act a description of— 

(1) the activities of the International Monetary Fund in the most recently 

completed fiscal year to provide technical assistance that strengthens the capacity of Fund members to prevent money laundering and the financing of terrorism, and the effectiveness of the assistance; and 

(2) the efficacy of efforts by the United States to support such technical assistance through the use of the Fund’s administrative budget. 

SEC. 6. SUSPENSION AND TERMINATION OF PROHIBITIONS AND PENALTIES. 

(a) SUSPENSION.—The President may suspend, on a case-by-case basis, the application of any provision of this Act, or provision in an amendment made by this Act, 

for a period of not more than 180 days at a time if the President certifies to Congress that— 

(1) the Government of North Korea has— 

(A) committed to the verifiable suspension of North Korea’s proliferation 

and testing of WMD, including systems designed in whole or in part for the 

delivery of such weapons; and 

(B) has agreed to multilateral talks including the Government of the 

United States, with the goal of permanently and verifiably limiting North 

Korea’s WMD and ballistic missile programs; or 

(2) such suspension is vital to the national security interests of the United 

States, with an explanation of the reasons therefor. 

(b) TERMINATION.— 

(1) IN GENERAL.—On the date that is 30 days after the date on which the 

President makes the certification described under paragraph (2)— 

(A) section 3, subsections (a) and (b) of section 5, and section 6(a) of this 

Act shall cease to have any force or effect; 

(B) section 73 of the Bretton Woods Agreements Act, as added by section 

4(a), shall be repealed; and 

(C) section 2(b)(14) of the Export-Import Bank Act of 1945, as added by 

section 4(b), shall be repealed. 

(2) CERTIFICATION.—The certification described under this paragraph is a certification by the President to the Congress that— 

(A) the Government of North Korea— 

(i) has ceased to pose a significant threat to national security, with 

an explanation of the reasons therefor; or 

(ii) is committed to, and is taking effective steps to achieving, the 

goal of permanently and verifiably limiting North Korea’s WMD and 

ballistic missile programs; or 

(B) such termination is vital to the national security interests of the 

United States, with an explanation of the reasons therefor. 

SEC. 7. DEFINITIONS. 

For purposes of this Act: 

(1) TERMS RELATED TO NORTH KOREA.—The terms ‘‘applicable Executive 

order’’, ‘‘Government of North Korea’’, ‘‘North Korea’’, ‘‘North Korean person’’, 

and ‘‘significant activities undermining cybersecurity’’ have the meanings given 

those terms, respectively, in section 3 of the North Korea Sanctions and Policy 

Enhancement Act of 2016 (22 U.S.C. 9202). 

(2) COVERED PERSON.—The term ‘‘covered person’’ means the following: 

(A) Any designated person under an applicable Executive order. 

(B) Any North Korean person that facilitates the transfer of bulk cash or 

covered goods (as defined under section 1027.100 of title 31, Code of Federal 

Regulations). 

(C) Any North Korean financial institution. 

(D) Any North Korean person employed outside of North Korea, except 

that the Secretary of the Treasury may waive the application of this subparagraph for a North Korean person that is not otherwise a covered person 

and— 

(i) has been granted asylum or refugee status by the country of employment; or 

(ii) is employed as essential diplomatic personnel for the Government 

of North Korea. 

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(E) Any person acting on behalf of, or at the direction of, a person described under subparagraphs (A) through (D). 

(F) Any person that knowingly employs a person described under subparagraph (D). 

(G) Any person that facilitates the import of goods, services, technology, 

or natural resources, including energy imports and minerals, or their derivatives, from North Korea. 

(H) Any person that facilitates the export of goods, services, technology, 

or natural resources, including energy exports and minerals, or their derivatives, to North Korea, except for food, medicine, or medical supplies required for civilian humanitarian needs. 

(I) Any person that invests in, or participates in a joint venture with, an 

entity in which the Government of North Korea participates or an entity 

that is created or organized under North Korean law. 

(J) Any person that provides financial services, including through a subsidiary or joint venture, in North Korea. 

(K) Any person that insures, registers, facilitates the registration of, or 

maintains insurance or a registration for, a vessel owned, controlled, commanded, or operated by a North Korean person. 

(L) Any person providing specialized teaching, training, or information or 

providing material or technological support to a North Korean person 

that— 

(i) may contribute to North Korea’s development and proliferation of 

WMD, including systems designed in whole or in part for the delivery 

of such weapons; or 

(ii) may contribute to significant activities undermining cybersecurity. 

(3) FINANCIAL INSTITUTION DEFINITIONS.— 

(A) FINANCIAL INSTITUTION.—The term ‘‘financial institution’’ means a 

United States financial institution or a foreign financial institution. 

(B) FOREIGN FINANCIAL INSTITUTION.—The term ‘‘foreign financial institution’’ has the meaning given that term under section 1010.605 of title 31, 

Code of Federal Regulations. 

(C) NORTH KOREAN FINANCIAL INSTITUTION.—The term ‘‘North Korean financial institution’’ includes— 

(i) any North Korean financial institution, as defined in section 3 of 

the North Korea Sanctions and Policy Enhancement Act of 2016 (22 

U.S.C. 9202); 

(ii) any financial agency, as defined in section 5312 of title 31, United 

States Code, that is owned or controlled by the Government of North 

Korea; 

(iii) any money transmitting business, as defined in section 5330(d) 

of title 31, United States Code, that is owned or controlled by the Government of North Korea; 

(iv) any financial institution that is a joint venture between any person and the Government of North Korea; and 

(v) any joint venture involving a North Korean financial institution. 

(D) UNITED STATES FINANCIAL INSTITUTION.—The term ‘‘United States financial institution’’ has the meaning given the term ‘‘U.S. financial institution’’ under section 510.310 of title 31, Code of Federal Regulations. 

(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. 

Amend the title so as to read: 

A bill to impose secondary sanctions with respect to North Korea, 

strengthen international efforts to improve sanctions enforcement, 

and for other purposes. 

PURPOSE AND SUMMARY

On October 2, 2017, Representative Andy Barr introduced H.R. 

3898 the ‘‘Impeding North Korea’s Access to Finance Act of 2017.’’ 

This legislation would impose secondary sanctions with respect to 

North Korea and require the Secretary of the Treasury to place 

conditions on the correspondent and payable-through accounts of 

foreign financial institutions that knowingly do business with ‘‘covVerDate Sep 11 2014 05:24 Oct 24, 2017 Jkt 079006 PO 00000 Frm 00005 Fmt 6659 Sfmt 6602 E:\HR\OC\HR361.XXX HR361
6 

ered persons,’’ a category that encompasses virtually anyone that 

facilitates North Korean trade and investment, acquires hard currency for the Kim Jong-Un regime, or provides other support for 

North Korea’s weapons and cyber-hacking programs. In addition, 

the bill would require the U.S. to oppose assistance by the international financial institutions for countries that knowingly fail to 

stop providing financial services for enablers of North Korea’s illicit 

activities. 

H.R. 3898 includes waiver authorities that incentivize North Korean behavioral change, particularly the suspension of its testing 

and proliferation of weapons of mass destruction (WMD), and a 

commitment to permanently limit its WMD and ballistic missile 

programs. Waiver provisions further incentivize third countries to 

strictly enforce North Korean sanctions, and to take corrective action in cases where sanctions enforcement has fallen short. Finally, 

reporting requirements in this legislation call for quarterly implementation updates from the Secretary of the Treasury, enhancing 

congressional oversight over the Treasury Department’s efforts to 

cut off North Korea’s access to finance. 

BACKGROUND AND NEED FOR LEGISLATION

The Democratic People’s Republic of Korea (DPRK) has conducted six nuclear tests since 2006, and successfully tested an 

intercontinental ballistic missile (ICBM) on July 4 and July 28, 

2017. This missile—dubbed the ‘‘Hwasong-14’’—had an estimated 

range sufficient to reach Alaska, and potentially the East Coast of 

the United States. Moreover, the Defense Intelligence Agency has 

reportedly concluded that North Korea could miniaturize a nuclear 

device to fit inside its missiles, and may be able to design a reentry 

vehicle to support a nuclear warhead by late 2018. Developing an 

effective reentry vehicle would cross a significant threshold for 

Pyongyang, as it would represent the ability to wage a nuclear attack on the continental United States. 

North Korea’s nuclear ambitions may be traced to as early as 

1959, when the DPRK signed an agreement with the Soviet Union, 

and later China, to cooperate on nuclear research. Under Kim IlSung, the North Koreans went on to pursue nuclear weapons in the 

1970s, yet these plans were discouraged by both the USSR and 

China. The Soviets eventually convinced North Korea to join the 

Nuclear Non-Proliferation Treaty (NPT) in 1985, which bound 

Pyongyang to refrain from developing nuclear weapons of its own. 

Despite signing on to the NPT, North Korea blocked international inspections required under the treaty, and threatened to 

withdraw from the NPT in the 1990s. This crisis led to the Agreed 

Framework of 1994, where the U.S. committed to providing energy 

assistance and, in collaboration with Japan and South Korea, constructing two proliferation-resistant nuclear power reactors in exchange for Pyongyang suspending its plutonium production under 

international monitoring. Although the North froze its production 

facilities, the Agreed Framework began to break down in the ensuing years, especially following the DPRK’s 1998 launch of the 

Taepodong-1 long-range missile over Japan. In 2002, the George W. 

Bush Administration accused North Korea of violating the Agreed 

Framework by producing highly enriched uranium, a violation that 

the North Koreans reportedly admitted to. Reactor construction 

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and energy assistance were subsequently put on hold, after which 

North Korea expelled international inspectors, and ultimately withdrew from the NPT in January 2003. 

As a result, 2003 saw the Agreed Framework give way to the establishment of the Six Party Talks, a series of negotiations involving the U.S., China, Japan, Russia, and North and South Korea. 

Although the Talks may have served as a useful forum for the U.S. 

to discuss policy with regional actors, they also led to several false 

dawns. In 2005, North Korea implemented a freeze on plutonium 

production, only to test its first nuclear device in 2006. Another 

tentative plan to verifiably denuclearize in 2007 led to the easing 

of U.S. sanctions the following year, including the removal of North 

Korea from the state sponsors of terrorism list. In the end, however, Pyongyang restarted its nuclear program as President Bush 

prepared to leave office. 

Bad-faith commitments by the DPRK continued under the 

Obama Administration, with North Korea agreeing in 2012 to suspend nuclear and long-range missile testing and open its Yongbyon 

reactor to inspections from the International Atomic Energy Agency (IAEA), only to launch a long-range rocket a few weeks later and 

proceed with its third nuclear test the next year—the most powerful yet—in February 2013. This test led to a unanimous United Nations Security Council vote for new sanctions targeting North Korean trade and financial services. 

Two additional nuclear tests were held in January and September 2016, with the latter registering an explosion 10 times 

greater than North Korea’s initial test a decade earlier. The January test prompted the UN to call for members to inspect all cargo 

originating from or destined for North Korea. The September test 

was followed by UN Security Council Resolution 2321, which 

banned most coal, iron, and other mineral exports from the DPRK 

to UN member states. Resolution 2321 also called on member countries to close their representative offices, subsidiaries, and bank accounts in North Korea unless they were required to deliver humanitarian assistance. In addition, UN members were called upon to 

de-register North Korean vessels, and to prohibit public and private financial support for trade with the country. 

Following the two test launches of the Hwasong-14 in July 2017, 

the UN Security Council passed Resolution 2371 on August 5, a set 

of sanctions that completely banned North Korean coal, mineral, 

and seafood exports, and prohibited additional laborers from employment abroad. Within weeks, Pyongyang launched a ballistic 

missile over Japan, and followed this with its sixth nuclear test on 

September 3, 2017. 

North Korea’s sixth nuclear test demonstrated an estimated explosive power in excess of 100 kilotons, which would make it over 

100 times more powerful than the DPRK’s first nuclear test from 

2006, and far more devastating than the 15 kiloton bomb that was 

dropped on Hiroshima. 

A week following the September 2017 nuclear test, the UN Security Council approved Resolution 2375, which, among other provisions, banned North Korean textile exports and capped foreign 

countries’ petroleum exports to the DPRK. The impact of this latest 

sanctions round quickly appeared uncertain, however: shortly after 

passage of the Resolution, North Korean Foreign Minister Ri Yong 

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Ho threatened that the North might test a hydrogen bomb over the 

Pacific Ocean and shoot down U.S. strategic bombers. In early October, a Russian lawmaker who had returned from a visit to 

Pyongyang revealed that the North was preparing to test another 

ICBM that could reach the United States. 

It is clear that North Korea sanctions have thus far been unable 

to thwart the country’s nuclear ambitions. There are several reasons for this failure: 

Limited Reach of Primary Sanctions—Previous sanctions have 

targeted North Korean relationships with the outside world that 

may not be essential for Pyongyang. This includes sanctions prohibiting trade and investment between the U.S. and DPRK (i.e. 

‘‘primary sanctions’’). Since the end of the Korean War in 1953, economic relations between the two countries have been nearly nonexistent, with the temporary exception of aid provided to address 

the North Korean famine in the 1990s, and to reward Pyongyang 

intermittently for suspending its nuclear program. Therefore, while 

primary sanctions are extensive, their impact may be limited. 

Deficient Sanctions Enforcement—Although UN members are 

bound to implement sanctions imposed by UN Security Council 

Resolutions, such implementation has been uneven, either because 

sanctions may not be written into national laws, or because enforcement of those laws is deficient. As the UN Panel of Experts 

noted in a February 2017 report: 

‘‘Despite expanded financial sanctions adopted by the Security Council in resolutions 2270 (2016) and 2321 (2016), 

the Democratic People’s Republic of Korea has continued 

to access the international financial system to support its 

activities. Financial networks of the Democratic People’s 

Republic of Korea have adapted to these sanctions, using 

evasive methods to maintain access to formal banking 

channels and bulk cash transfers to facilitate prohibited 

activities. At the time of writing, Democratic People’s Republic of Korea circumvention techniques and inadequate 

compliance by Member States are combining to significantly negate the impact of the resolutions.’’ 

In a July 2017 hearing before the Financial Services Committee, 

William Newcomb, a former member of the UN Panel of Experts, 

testified: 

‘‘Over the past decade, the record of implementation by 

Member States is a poor one. It was not unusual to find 

that even several members of the Security Council had not 

implemented sanctions. Typically it took many years following adoption of a resolution before reports of its implementation rose to the fifty percent mark.’’ 

According to Newcomb, UN members cannot plausibly claim ignorance of the Resolutions’ requirements; although continued efforts to educate countries on their provisions are important, compelling those countries to take action may be necessary. As Newcomb stated in his testimony: 

‘‘While outreach will remain essential, particularly to explain the growing complexity of sanctions as new ResoluVerDate Sep 11 2014 05:24 Oct 24, 2017 Jkt 079006 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\HR361.XXX HR361
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tions are adopted, positive and negative incentives are 

needed to encourage more Member States to act.’’ 

North Korean Use of Foreign Nationals—The DPRK has sought 

to evade sanctions through the use of brokers and front companies 

abroad, notably in China and Southeast Asia, which act on behalf 

of North Korean persons. At a hearing before the Committee on 

September 13, 2017, David Albright, President of the Institute for 

Science and International Security, outlined how non-North Korean 

nationals have been crucial for the DPRK’s procurement activities: 

When [North Korea] could no longer base its operations 

in Europe in the early 2000s, it shifted its operations to 

China, where many procurement operations for its nuclear 

program have been centered since then. Operating in 

China and Hong Kong, it has acquired a wide range of 

goods from Chinese companies and middlemen, as well as 

from U.S., Japanese, and European subsidiaries, which 

have been deceived into thinking they were selling to Chinese end users. North Korean entities often contract with 

private Chinese and Hong Kong trading companies and 

sometimes manufacturing companies to acquire these 

goods, either from Chinese suppliers or subsidiaries of 

Western or Japanese suppliers in China. Although China 

is improving its export control laws, Beijing has not done 

an adequate job of enforcing its laws and sanctions against 

illegal exports and retransfers to North Korea. 

The challenge posed by front companies was echoed in a September 2017 report by the UN Panel of Experts, which noted: 

‘‘Financial institutions in numerous Member States 

wittingly and unwittingly have provided correspondent 

banking services to front companies and individual of the 

Democratic People’s Republic of Korea engaged in prohibited activities. Moreover, foreign companies maintain links 

with financial institutions of the country established as 

subsidiaries or joint ventures in violation of the resolutions.’’ 

Despite the DPRK’s use of non-North Korean persons, its trading 

activities should nonetheless be detectable. As C4ADS, a nonprofit 

research organization, concluded in its 2017 report, Risky Business: 

A System-Level Analysis of the North Korean Proliferation Financing System: ‘‘By being centralized, limited, and ultimately vulnerable, North Korean overseas networks are, by their nature, ripe for 

disruption.’’ Drawing on open-source data, C4ADS mapped such 

networks, and concluded that targeting key non-North Korean nationals, particularly in China, could significantly undermine the 

DPRK’s procurement and financing efforts. According to the 

C4ADS report: 

‘‘Although to date economic coercion has been ineffective 

in persuading North Korea to abandon its pursuit of nuclear weapons, this does not mean it cannot work. On the 

contrary, targeted enforcement actions against key nodes 

within the system can have the effect of impacting multiple networks across multiple countries simultaneously, 

removing key functions, such as individuals or entities speVerDate Sep 11 2014 05:24 Oct 24, 2017 Jkt 079006 PO 00000 Frm 00009 Fmt 6659 Sfmt 6602 E:\HR\OC\HR361.XXX HR361
10 

cialized in illicit finance and procurement, who cannot be 

easily replaced. Each action can individually increase the 

cost and complexity of sanctions evasion for North Korea 

but if applied against a number of these key nodes simultaneously, they could, in theory, cause the entire overseas 

system to collapse.’’ 

In the absence of sufficient enforcement measures taken against 

these trading entities by their home countries, H.R. 3898 would 

punish foreign financial institutions that conduct business with 

them, and help foreign governments ensure that their financial sectors cannot be exploited by North Korean efforts to evade sanctions. 

At the same time, H.R. 3898 reflects the principle that secondary 

sanctions should include significant flexibility for the President to 

advance U.S. foreign policy goals. As Adam Szubin, Director of the 

Treasury Department’s Office of Foreign Assets Control under the 

George W. Bush administration, and Acting Under Secretary for 

Terrorism and Financial Intelligence under the Obama administration, testified on September 7, 2017 before the Senate Committee 

on Banking, Housing, and Urban Affairs: 

‘‘[Sanctions] are meant to incentivize behavioral change. 

For that inducement to work, the targets of sanctions must 

see that the President has the ability to lighten or remove 

the pressure. That is, those that conduct our nation’s foreign affairs must have discretion over how and when sanctions are eased or removed.’’ 

Consequently, this legislation’s waiver authorities are designed 

to provide sanctions relief in response to realistic behavioral 

change on the part of North Korea and other affected countries. In 

addition, the application of any provision may be suspended if the 

President reports to Congress that a waiver is vital to national security interests. 

In summary, the DPRK’s rapid development of both nuclear 

weapons and vehicles for their delivery calls for forceful secondary 

sanctions premised on a limited number of clear and achievable 

goals, incentives for foreign countries to eliminate business benefitting North Korea, and appropriate discretion for the President to 

maximize the effectiveness of these tools. 

HEARINGS

On July 19, 2017, the Monetary Policy and Trade Subcommittee 

held a hearing on matters relating to H.R. 3898 entitled, ‘‘Restricting North Korea’s Access to Finance.’’ On September 13, 2017, the 

Monetary Policy and Trade Subcommittee held an additional hearing on a discussion draft of H.R. 3898 entitled, ‘‘A Legislative Proposal to Impede North Korea’s Access to Finance.’’ 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on October 11, 2017, and ordered H.R. 3898 to be reported favorably to 

the House as amended by a recorded vote of 56 yeas to 0 nays (Recorded vote no. FC–73), a quorum being present. Before the motion 

11 

to report was offered, the Committee adopted an amendment in the 

nature of a substitute offered by Mr. Barr by voice vote. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. The sole recorded 

vote was on a motion by Chairman Hensarling to report the bill favorably to the House as amended. The motion was agreed to by a 

recorded vote of 56 yeas to 0 nays (Record vote no. FC–73), a 

quorum being present. 

12 


Insert offset folio 14 here HR361.001

Representative 

Mr. Hensarling ____ _ 

Mr. McHenry ______ _ 

Mr. King ____________________ _ 

Mr. Royce (CA) ______________ _ 

Mr. Lucas ___________________ _ 

Mr. Pearce 

Mr. Posey-------------·-····· 

Mr. Luetkemeyer._ 

Mr. Huizenga ............... . 

Mr. Duffy .................... . 

Mr. Stivers 

Mr. Hultgren 

Mr. Ross 

Mr. Pittenger 

Mrs. Wagner ................ . 

Mr. Barr ..................... . 

Mr. Rothfus ................. . 

Mr. Messer_ 

Mr. Tipton ................... . 

Mr. Williams. 

Mr. Poliquin 

Mrs. Love 

Mr. Hill ...................... . 

Mr. Emmer 

Mr. Zeldin .. 

Mr. Trott 

Mr. Loudermilk .............. . 

Mr. Mooney (WV) ............. . 

Mr. MacArthur ............... . 

Mr. Davidson ................ . 

Mr. Budd ............ . 

Mr. Kustoff (TNl.. ........... . 

Ms. Tenney 

Mr. Hollingsworth ............ . 

Yea 

X 

X 

X 

X 

X 

X 

)\ 

)\ 

)\ 

X 

X 

X 

X 

X 

X 

X 

X 

X 

)( 

X 

X 

X 

X 

X 

)\ 

)\ 

X 

X 

X 

X 

X 

X 

X 

Record vote no. FC-73 

Nay Present Representative 

Ms. Maxine Waters (CAl . 

Mrs. Carolyn B. Maloney (NY) __ 

Ms. Velazquez ............... . 

Mr. Sherman ................ . 

Mr. Meeks __ 

Mr. Capuano·--·-·---···· 

Mr. ClaY ........ . 

Mr. Lynch .......... . 

Mr. David Scott (GA) ......... . 

Mr. AI Green (TX) ............ . 

Mr. Cleaver 

Ms. Moore ........... _ ....... . 

Mr. Ellison 

Mr. Perlmutter .. 

Mr. Himes ................... . 

Mr. Foster ................... . 

Mr. Kildee .. . 

Mr. Delaney·---------·-------

Ms. Sinema ______________ _ 

Mrs. Beatty _________________ _ 

Mr. Heck ____________________ _ 

Mr. Vargas __________________ _ 

Mr. Gottheimer ·-------------· 

Mr. Gonzalez (TX) 

Mr. Crist .................. . 

Mr. Kihuen __________________ _ 

Yea Nay Present 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

)\ 

)\ 

)\ 

X 

)\ 

X 

)\ 

)\ 

)( 

)( 
13 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the findings and recommendations of the Committee based on oversight activities under clause 2(b)(1) of rule X 

of the Rules of the House of Representatives, are incorporated in 

the descriptive portions of this report. 

PERFORMANCE GOALS AND OBJECTIVES

With respect to clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the bill contains no measure that authorizes funding, so no statement of general performance goals and objectives for which any measure authorizes funding is required. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, October 20, 2017. 

Hon. JEB HENSARLING, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3898, the Impeding North 

Korea’s Access to Finance Act of 2017. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Jacob Fabian. 

Sincerely, 

KEITH HALL, Director. 

Enclosure. 

H.R. 3898—Impeding North Korea’s Access to Finance Act of 2017 

H.R. 3898 would expand federal sanctions and reporting requirements related to commercial transactions and interactions with 

North Korea. The bill would require the Secretary of the Treasury 

to issue regulations that prohibit or strictly limit correspondent accounts maintained in the United States by certain foreign financial 

institutions. (Correspondent accounts allow banks to send money to 

each other internationally and are essential for banks to access forVerDate Sep 11 2014 05:24 Oct 24, 2017 Jkt 079006 PO 00000 Frm 00013 Fmt 6659 Sfmt 6602 E:\HR\OC\HR361.XXX HR361
14 

eign financial systems and for customer payments.) The affected institutions would include any institution that knowingly facilitates 

transactions or provides significant financial services for individuals or entities in the world that transact with persons in North 

Korea. 

Additionally, the bill would instruct the U.S. executive directors 

of international financial institutions (for example, the International Monetary Fund, the Asian Development Bank, or similar 

institutions) to support the denial of financial assistance to foreign 

governments that do not comply with the bill and, in the case of 

the International Monetary Fund, to support the use of administrative funds to prevent money laundering and the financing of terrorism. The bill also would require the Secretary of the Treasury 

to regularly report on the sanctions and other activities covered by 

the bill. 

On the basis of information about the costs of similar activities, 

CBO estimates that administering the sanctions and implementing 

the reporting requirements under H.R. 3898 would cost the Department of the Treasury less than $500,000 over the 2018–2022 period; such spending would be subject to the availability of appropriated funds. 

Enacting H.R. 3898 would increase the number of people and entities that would be subject to civil or criminal penalties. Penalties 

are recorded in the budget as revenues and a portion of those penalties can be spent without further appropriation. Pay-as-you-go 

procedures apply to this bill because enacting H.R. 3898 would affect direct spending and revenues. However, CBO estimates that 

implementing the additional sanctions in H.R. 3898 would affect 

very few people or entities because of the broad scope of restrictions that exist under current law and executive orders that address financial and other interactions with North Korea. Thus enacting the bill would have insignificant effects on both revenues 

and direct spending, CBO estimates. 

CBO estimates that enacting H.R. 3898 would not significantly 

increase net direct spending or on-budget deficits in any of the four 

consecutive 10-year periods beginning in 2028. 

H.R. 3898 contains no intergovernmental or private sector mandates as defined in the Unfunded Mandates Reform Act. 

The CBO staff contact for this estimate is Jacob Fabian. The estimate was approved by H. Samuel Papenfuss, Deputy Assistant Director for Budget Analysis, and John McClelland, Assistant Director for Tax Analysis. 

FEDERAL MANDATES STATEMENT

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995. 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

15 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of the section 102(b)(3) of the 

Congressional Accountability Act. 

EARMARK IDENTIFICATION

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 

DUPLICATION OF FEDERAL PROGRAMS

In compliance with clause 3(c)(5) of rule XIII of the Rules of the 

House of Representatives, the Committee states that no provision 

of the bill establishes or reauthorizes: (1) a program of the Federal 

Government known to be duplicative of another Federal program; 

(2) a program included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public 

Law 111–139; or (3) a program related to a program identified in 

the most recent Catalog of Federal Domestic Assistance, published 

pursuant to the Federal Program Information Act (Pub. L. No. 95– 

220, as amended by Pub. L. No. 98–169). 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, (115th Congress), the following statement is made concerning directed rulemakings: H.R. 

3898 requires the Secretary of the Treasury to prescribe regulations to implement the conditions and prohibitions described in 

Section 3(a) and (b) of the Act. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Sec. 1: Short title 

This Act may be cited as the Impeding North Korea’s Access to 

Finance Act of 2017. 

Sec. 2: Findings 

Congressional findings make note of the following: 

• The Treasury Department has found North Korea to be a ‘‘jurisdiction of primary money laundering concern,’’ due to its use of 

state-controlled banks and front companies to support the development of weapons of mass destruction (WMD) and ballistic missiles. 

• The Financial Action Task Force (FATF) has called on its 

members to apply effective counter-measures to protect their financial sectors from North Korean money laundering, WMD proliferation financing, and the financing of terrorism. 

• The UN Panel of Experts’ report from February 2017 concluded that North Korea continued to access the international financial system in spite of UN sanctions. In addition, the report 

found that no UN member state had reported taking actions to 

freeze North Korean assets; and a combination of sanctions evasion 

16 

by the country as well as inadequate enforcement by foreign countries had undermined the effectiveness of UN sanctions. 

• A September 2017 report from the UN Panel again determined 

that North Korea continued to violate financial sanctions through 

the use of agents abroad; foreign financial institutions provided correspondent banking services to North Korean persons and front 

companies for illicit purposes; foreign companies maintained 

sanctionable links with North Korean financial institutions; and 

North Korea generated at least $270 million through the violation 

of UN sectoral sanctions since the February 2017 report. 

• North Korea maintains access to financial services through 

non-North Korean nationals who help mask the identity of bank 

accounts’ end users. 

• North Korea’s sixth nuclear test on September 3, 2017 had an 

estimated explosive power more than 100 times greater than that 

generated by its first test in 2006. 

• North Korea has successfully tested submarine-launched and 

intercontinental ballistic missiles, and is rapidly progressing in its 

development of a nuclear-armed missile that can reach U.S. territory. 

Sec. 3: Conditions with respect to certain accounts and transactions 

at United States financial institutions 

Correspondent and Payable-Through Accounts 

Within 45 days of enactment, the Secretary of the Treasury shall 

issue regulations to prohibit, or impose strict conditions on, the 

opening or maintaining of a foreign financial institution’s correspondent or payable-through account(s) at a U.S. financial institution if the foreign financial institution knowingly facilitates a significant transaction or provides significant financial services for a 

covered person. 

A person that violates or attempts to violate these sanctions 

would be subject to civil penalties not to exceed $250,000, or twice 

the amount of the transaction that is the basis of the violation, 

whichever is greater. In addition, criminal penalties of not more 

than $1 million in fines, or imprisonment of up to 20 years, would 

be imposed on persons who willfully commit or attempt to commit 

a violation. 

Transactions by U.S. financial institutions 

Within 45 days of enactment, Treasury would also be required to 

prohibit any U.S. financial institution, or a person owned or controlled by it, from engaging in a significant transaction with or benefitting any person that the Secretary finds to be a covered person. 

Violators of this subsection would be subject to civil penalties not 

to exceed $250,000, or twice the amount of the transaction that is 

the basis of the violation, whichever is greater. 

A covered person, as defined further under Sec. 7, denotes the 

following: 

A. Any person designated by an applicable Executive order 

with respect to North Korea; 

B. Any North Korean person that facilitates the transfer of 

bulk cash or covered goods (jewels, precious metals, and precious stones); 

17 

C. Any North Korean financial institution; 

D. Any North Korean person employed outside of North 

Korea (with discretion for the Secretary to exempt defectors 

granted asylum or refugee status, or essential North Korean 

diplomatic personnel, provided they do not otherwise qualify as 

a covered person); 

E. Any person acting on behalf of, or at the direction of, a 

person described under A through D; 

F. Any person that knowingly employs a person described 

under D; 

G. Any person that facilitates the import of goods, services, 

technology, or natural resources, including energy imports and 

minerals, or their derivatives, from North Korea; 

H. Any person that facilitates the export of goods, services, 

technology, or natural resources, including energy exports and 

minerals, or derivatives, to North Korea, except for food, medicine, or medical supplies required for civilian humanitarian 

needs; 

I. Any person that invests in, or participates in a joint venture with, an entity in which the Government of North Korea 

participates, or an entity that is created or organized under 

North Korean law; 

J. Any person that provides financial services, including 

through a subsidiary or joint venture, in North Korea; 

K. Any person that insures, registers, facilitates the registration of, or maintains insurance or a registration for, a vessel 

owned, controlled, commanded or operated by a North Korean 

person; or 

L. Any person providing specialized teaching, training, or information to a North Korean person that 1) may contribute to 

North Korea’s development and proliferation of WMD, including systems designed in whole or in part for the delivery of 

such weapons; or 2) may contribute to significant activities undermining cybersecurity. 

Sec. 4: Opposition to assistance by the international financial institutions and the Export-Import Bank 

This section would require the U.S. Executive Director at the 

international financial institutions to oppose assistance to a foreign 

government if the President determines that, in the year prior to 

considering approval of the assistance, the government knowingly 

failed to prevent the provision of financial services to, or failed to 

freeze the funds, financial assets, and economic resources of, a covered person described under subparagraphs (A) through (E) of Section 7(2). 

The President may waive this provision for up to 180 days upon 

reporting to Congress that the foreign government’s failure is due 

solely to a lack of capacity, or that the government is taking effective steps to prevent the failure’s recurrence. The President may 

also issue a waiver upon determining that it is vital to U.S. national security interests. 

In addition, this section would require the Export-Import Bank 

to deny assistance for the export of goods or services to a covered 

person. 

18 

Sec. 5: Treasury reports on compliance, penalties, and technical assistance 

No later than 120 days after enactment, and every 90 days thereafter, the Secretary of the Treasury would be required to submit 

a report to the Financial Services Committee and Senate Committee on Banking, Housing, and Urban Affairs that includes: 

• A list of financial institutions that knowingly facilitated a 

transaction, or provided significant financial services to, a covered person; or that failed to exercise appropriate due diligence 

to prevent such activities; 

• A list of any penalties imposed in the reporting period; and 

• A description of Treasury’s efforts–through consultations, 

technical assistance, or other appropriate activities–to 

strengthen financial institutions and foreign countries’ capacity 

to prevent the provision of financial services benefitting a covered person. 

This report shall be made public on the Treasury Department’s 

website. 

Upon request by the Financial Services Committee or Senate 

Committee on Banking, Housing, and Urban Affairs, the Under 

Secretary of the Treasury for Terrorism and Financial Intelligence 

would be required to provide testimony on the effects of H.R. 3898 

with respect to North Korea’s access to finance. 

This section would also require the U.S. Executive Director at 

the IMF to support the Fund’s use of its administrative budget for 

technical assistance on anti-money laundering and combatting the 

financing of terrorism. 

Sec. 6: Suspension and termination of prohibitions and penalties 

The President may suspend any provision, on a case-by-case 

basis, for up to 180 days at a time upon certifying to Congress that 

the Government of North Korea has: 

• Committed to the verifiable suspension of North Korea’s 

proliferation and testing of WMD, including delivery systems 

for such weapons; and 

• Has agreed to multilateral talks including the U.S. government, with the goal of permanently and verifiably limiting 

North Korea’s WMD and ballistic missile programs. 

The President may also suspend any provision upon certifying to 

Congress that the waiver is vital to U.S. national security interests, 

with an explanation of the reasons therefor. 

Sunset 

H.R. 3898’s provisions would expire 30 days after the President 

certifies to Congress that the Government of North Korea: 

• Has ceased to pose a significant threat to national security, with an explanation of the reasons therefor; or 

• Is committed to, and is taking effective steps to achieving, 

the goal of permanently and verifiably limiting its WMD and 

ballistic missile programs. 

The President may also sunset the Act by certifying to Congress 

that its termination is vital to U.S. national security interests, with 

an explanation of the reasons therefor. 

19 

Sec. 7: Definitions 

This section defines terms consistent with appropriate statutes 

and regulations, and includes a definition of covered persons. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (new matter is printed in italic 

and existing law in which no change is proposed is shown in 

roman): 

BRETTON WOODS AGREEMENTS ACT 

* * * * * * * 

SEC. 73. OPPOSITION TO ASSISTANCE FOR ANY GOVERNMENT THAT 

FAILS TO IMPLEMENT SANCTIONS ON NORTH KOREA. 

(a) IN GENERAL.—The Secretary of the Treasury shall instruct the 

United States Executive Director at the international financial institutions (as defined under section 1701(c) of the International Financial Institutions Act) to use the voice and vote of the United States 

to oppose the provision of financial assistance to a foreign government, other than assistance to support basic human needs, if the 

President determines that, in the year preceding consideration of approval of such assistance, the government has knowingly failed to 

prevent the provision of financial services to, or freeze the funds, financial assets, and economic resources of, a person described under 

subparagraphs (A) through (E) of section 7(2) of the Impeding North 

Korea’s Access to Finance Act of 2017. 

(b) WAIVER.—The President may waive subsection (a) for up to 

180 days at a time with respect to a foreign government if the President reports to Congress that— 

(1) the foreign government’s failure described under (a) is due 

exclusively to a lack of foreign government capacity; 

(2) the foreign government is taking effective steps to prevent 

recurrence of such failure; or 

(3) such waiver is vital to the national security interests of the 

United States. 

EXPORT-IMPORT BANK ACT OF 1945 

* * * * * * * 

SEC. 2. (a)(1) There is hereby created a corporation with the 

name Export-Import Bank of the United States which shall be an 

agency of the United States of America. The objects and purposes 

of the Bank shall be to aid in financing and to facilitate exports of 

goods and services, imports, and the exchange of commodities and 

20 

services between the United States or any of its territories or insular possessions and any foreign country or the agencies or nationals 

of any such country, and in so doing to contribute to the employment of United States workers. The Bank’s objective in authorizing 

loans, guarantees, insurance, and credits shall be to contribute to 

maintaining or increasing employment of United States workers. In 

connection with and in furtherance of its objects and purposes, the 

Bank is authorized and empowered to do a general banking business except that of circulation; to receive deposits; to purchase, discount, rediscount, sell, and negotiate, with or without its endorsement or guaranty, and to guarantee notes, drafts, checks, bills of 

exchange, acceptances, including bankers’ acceptances, cable transfers, and other evidences of indebtedness; to guarantee, insure, coinsure, reinsure against political and credit risks of loss; to purchase, sell, and guarantee securities but not to purchase with its 

funds any stock in any other corporation except that it may acquire 

any such stock, through the enforcement of any lien or pledge or 

otherwise to satisfy a previously contracted indebtedness to it; to 

accept bills and drafts drawn upon it; to issue letters of credit; to 

purchase and sell coin, bullion, and exchange; to borrow and to 

lend money; to perform any act herein authorized in participation 

with any other person, including any individual, partnership, corporation, or association; to adopt, alter, and use a corporate seal, 

which shall be judicially noticed; to sue and to be sued, to complain 

and to defend in any court of competent jurisdiction; to represent 

itself or to contract for representation in all legal and arbitral proceedings outside the United States; and the enumeration of the 

foregoing powers shall not be deemed to exclude other powers necessary to the achievement of the objects and purposes of the Bank. 

The Bank shall be entitled to the use of the United States mails 

in the same manner and upon the same conditions as the executive 

departments of the Government. The Bank is authorized to publish 

or arrange for the publications of any documents, reports, contracts, or other material necessary in connection with or in furtherance of its objects and purposes without regard to the provisions 

of section 501 of title 44, United States Code, whenever the Bank 

determines that publication in accordance with the provisions of 

such section would not be practicable. Subject to regulations which 

the Bank shall issue pursuant to section 553 of title 5, United 

States Code, the Bank may impose and collect reasonable fees to 

cover the costs of conferences and seminars sponsored by, and publications provided by, the Bank, and may accept reimbursement for 

travel and subsistence expenses incurred by a director, officer, or 

employee of the Bank, in accordance with subchapter I of chapter 

57 of title 5, United States Code. Amounts received under the preceding sentence shall be credited to the fund which initially paid 

for such activities and shall be offset against the expenses of the 

Bank for such activities. The Bank is hereby authorized to use all 

of its assets and all moneys which have been or may thereafter be 

allocated to or borrowed by it in the exercise of its functions. Net 

earnings of the Bank after reasonable provision for possible losses 

shall be used for payment of dividends on capital stock. Any such 

dividends shall be deposited into the Treasury as miscellaneous receipts. 

21 

(2) In order for the Bank to be competitive in all of its financing 

programs with countries whose exports compete with United States 

exports, the Bank shall establish a program that— 

(A) provides medium-term financing where necessary to be 

fully competitive— 

(i) at rates of interest to the customer which are equal 

to rates established in international agreements; 

(ii) in amounts up to 85 percent of the total cost of the 

exports involved; and 

(iii) with principal amounts of not more than $25,000,000; and 

(B) enables the Bank to cooperate fully with the Secretary of 

Commerce and the Administrator of the Small Business Administration to develop a program for purposes of disseminating information (using existing private institutions) to small 

business concerns regarding the medium-term financing provided under this paragraph. 

(3) ENHANCEMENT OF MEDIUM-TERM PROGRAM.—To enhance the 

medium-term financing program established pursuant to paragraph (2), the Bank shall establish measures to— 

(A) improve the competitiveness of the Bank’s medium-term 

financing and ensure that its medium-term financing is fully 

competitive with that of other major official export credit agencies; 

(B) ease the administrative burdens and procedural and documentary requirements imposed on the users of medium-term 

financing; 

(C) attract the widest possible participation of private financial institutions and other sources of private capital in the medium-term financing of United States exports; and 

(D) render the Bank’s medium-term financing as supportive 

of United States exports as is its Direct Loan Program. 

(b)(1)(A) It is the policy of the United States to foster expansion 

of exports of manufactured goods, agricultural products, and other 

goods and services, thereby contributing to the promotion and 

maintenance of high levels of employment and real income, a commitment to reinvestment and job creation, and the increased development of the productive resources of the United States. To meet 

this objective in all its programs, the Export-Import Bank is directed, in the exercise of its functions, to provide guarantees, insurance, and extensions of credit at rates and on terms and other conditions which are fully competitive with the Government-supported 

rates and terms and other conditions available for the financing of 

exports of goods and services from the principal countries whose 

exporters compete with United States exporters, including countries the governments of which are not members of the Arrangement (as defined in section 10(h)(3)). The Bank shall, in cooperation with the export financing instrumentalities of other governments, seek to minimize competition in Government-supported export financing and shall, in cooperation with other appropriate 

United States Government agencies, seek to reach international 

agreements to reduce government subsidized export financing. 

(B) It is further the policy of the United States that loans made 

by the Bank in all its programs shall bear interest at rates determined by the Board of Directors, consistent with the Bank’s manVerDate Sep 11 2014 05:24 Oct 24, 2017 Jkt 079006 PO 00000 Frm 00021 Fmt 6659 Sfmt 6602 E:\HR\OC\HR361.XXX HR361
22 

date to support United States exports at rates and on terms and 

conditions which are fully competitive with exports of other countries, and consistent with international agreements. For the purpose of the preceding sentence, rates and terms and conditions 

need not be identical in all respects to those offered by foreign 

countries, but should be established so that the effect of such rates, 

terms, and conditions for all the Bank’s programs, including those 

for small businesses and for medium-term financing, will be to neutralize the effect of such foreign credit on international sales competition. The Bank shall consider its average cost of money as one 

factor in its determination of interest rates, where such consideration does not impair the Bank’s primary function of expanding 

United States exports through fully competitive financing. The 

Bank may not impose a credit application fee unless (i) the fee is 

competitive with the average fee charged by the Bank’s primary 

foreign competitors, and (ii) the borrower or the exporter is given 

the option of paying the fee at the outset of the loan or over the 

life of the loan and the present value of the fee determined under 

either such option is the same amount. It is also the policy of the 

United States that the Bank in the exercise of its functions should 

supplement and encourage, and not compete with, private capital; 

that the Bank, in determining whether to provide support for a 

transaction under the loan, guarantee, or insurance program, or 

any combination thereof, shall consider the need to involve private 

capital in support of United States exports as well as the cost of 

the transaction as calculated in accordance with the requirements 

of the Federal Credit Reform Act of 1990; that the Bank shall accord equal opportunity to export agents and managers, independent export firms, export trading companies, and small commercial banks in the formulation and implementation of its programs; that the Bank should give emphasis to assisting new and 

small business entrants in the agricultural export market, and 

shall, in cooperation with other relevant Government agencies, including the Commodity Credit Corporation, develop a program of 

education to increase awareness of export opportunities among 

small agribusinesses and cooperatives, that loans, so far as possible 

consistent with the carrying out of the purposes of subsection (a) 

of this section, shall generally be for specific purposes, and, in the 

judgment of the Board of Directors, offer reasonable assurance of 

repayment; and that in authorizing any loan or guarantee, the 

Board of Directors shall take into account any serious adverse effect of such loan or guarantee on the competitive position of United 

States industry, the availability of materials which are in short 

supply in the United States, and employment in the United States, 

and shall give particular emphasis to the objective of strengthening 

the competitive position of United States exporters and thereby of 

expanding total United States exports. Only in cases where the 

President, after consultation with the Committee on Financial 

Services of the House of Representatives and the Committee on 

Banking, Housing, and Urban Affairs of the Senate, determines 

that such action would be in the national interest where such action would clearly and importantly advance United States policy in 

such areas as international terrorism (including, when relevant, a 

foreign nation’s lack of cooperation in efforts to eradicate terrorism), nuclear proliferation, the enforcement of the Foreign CorVerDate Sep 11 2014 05:24 Oct 24, 2017 Jkt 079006 PO 00000 Frm 00022 Fmt 6659 Sfmt 6602 E:\HR\OC\HR361.XXX HR361
23 

rupt Practices Act of 1977, the Arms Export Control Act, the International Emergency Economic Powers Act, or the Export Administration Act of 1979, environmental protection and human rights 

(such as are provided in the Universal Declaration of Human 

Rights adopted by the United Nations General Assembly on December 10, 1948) (including child labor), should the Export-Import 

Bank deny applications for credit for nonfinancial or noncommercial considerations. Each such determination shall be delivered in 

writing to the President of the Bank, shall state that the determination is made pursuant to this section, and shall specify the applications or categories of applications for credit which should be 

denied by the Bank in furtherance of the national interest. 

(C) Consistent with the policy of section 501 of the Nuclear NonProliferation Act of 1978 and section 119 of the Foreign Assistance 

Act of 1961, the Board of Directors shall name an officer of the 

Bank whose duties shall include advising the President of the Bank 

on ways or promoting the export of goods and services to be used 

in the development, production, and distribution of nonnuclear renewable energy resources, disseminating information concerning 

export opportunities and the availability of Bank support for such 

activities, and acting as a liaison between the Bank and the Department of Commerce and other appropriate departments and 

agencies. 

(D) It is further the policy of the United States to foster the delivery of United States services in international commerce. In exercising its powers and functions, the Bank shall give full and equal 

consideration to making loans and providing guarantees for the export of services (independently, or in conjunction with the export 

of manufactured goods, equipment, hardware or other capital 

goods) consistent with the Bank’s policy to neutralize foreign subsidized credit competition and to supplement the private capital 

market. 

(E)(i)(I) It is further the policy of the United States to encourage 

the participation of small business in international commerce. 

(II) In exercising its authority, the Bank shall develop a program 

which gives fair consideration to making loans and providing guarantees for the export of goods and services by small businesses. 

(ii) It is further the policy of the United States that the Bank 

shall give due recognition to the policy stated in section 2(a) of the 

Small Business Act that ‘‘the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small business concerns in order to preserve free competitive enterprise’’. 

(iii) In furtherance of this policy, the Board of Directors shall 

designate an officer of the Bank who— 

(I) shall be responsible to the President of the Bank for all 

matters concerning or affecting small business concerns; and 

(II) among other duties, shall be responsible for advising 

small business concerns of the opportunities for small business 

concerns in the functions of the Bank, with particular emphasis on conducting outreach and increasing loans to socially and 

economically disadvantaged small business concerns (as defined in section 8(a)(4) of the Small Business Act), small business concerns (as defined in section 3(a) of the Small Business 

Act) owned by women, and small business concerns (as defined 

in section 3(a) of the Small Business Act) employing fewer than 

24 

100 employees, and for maintaining liaison with the Small 

Business Administration and other departments and agencies 

in matters affecting small business concerns.) 

(iv) The Director appointed to represent the interests of small 

business under section 3(c) of this Act shall ensure that the Bank 

carries out its responsibilities under clauses (ii) and (iii) of this 

subparagraph and that the Bank’s financial and other resources 

are, to the maximum extent possible, appropriately used for small 

business needs. 

(v) To assure that the purposes of clauses (i) and (ii) of this subparagraph are carried out, the Bank shall make available, from the 

aggregate loan, guarantee, and insurance authority available to it, 

an amount to finance exports directly by small business concerns 

(as defined under section 3 of the Small Business Act) which shall 

be not less than 25 percent of such authority for each fiscal year. 

From the amount made available under the preceding sentence, it 

shall be a goal of the Bank to increase the amount made available 

to finance exports directly by small business concerns referred to 

in section 3(i)(1). 

(vi) The Bank shall utilize the amount set-aside pursuant to 

clause (v) of this subparagraph to offer financing for small business 

exports on terms which are fully competitive with regard to interest rates and with regard to the portion of financing which may be 

provided, guaranteed, or insured. Financing under this clause (vi) 

shall be available without regard to whether financing for the particular transaction was disapproved by any other Federal agency. 

(vii)(I) The Bank shall utilize a part of the amount set aside pursuant to clause (v) to provide lines of credit or guarantees to consortia of small or medium size banks, export trading companies, 

State export finance agencies, export financing cooperatives, small 

business investment companies (as defined in section 103 of the 

Small Business Investment Act of 1958), or other financing institutions or entities in order to finance small business exports. 

(II) Financing under this clause (vii) shall be made available only 

where the consortia or the participating institutions agree to undertake processing, servicing, and credit evaluation functions in 

connection with such financing. 

(III) To the maximum extent practicable, the Bank shall delegate 

to the consortia or other financing institutions or entities the authority to approve financing under this clause (vii). 

(IV) In the administration of the program under this clause (vii), 

the Bank shall provide appropriate technical assistance to participating consortia and may require such consortia periodically to furnish information to the Bank regarding the number and amount of 

loans made and the creditworthiness of the borrowers. 

(viii) In order to assure that the policy stated in clause (i) is carried out, the Bank shall promote small business exports and its 

small business export financing programs in cooperation with the 

Secretary of Commerce, the Office of International Trade of the 

Small Business Administration, and the private sector, particularly 

small business organizations, State agencies, chambers of commerce, banking organizations, export management companies, export trading companies and private industry. 

(ix) The Bank shall provide, through creditworthy trade associations, export trading companies, State export finance companies, 

25 

export finance cooperatives, and other multiple-exporter organizations, medium-term risk protection coverage for the members and 

clients of such organizations. Such coverage shall be made available to each such organization under a single risk protection policy 

covering its members or clients. Nothing in this provision shall be 

interpreted as limiting the Bank’s authority to deny support for 

specific transactions or to disapprove a request by such an organization to participate in such coverage. 

(x) The Bank shall implement technology improvements that are 

designed to improve small business outreach, including allowing 

customers to use the Internet to apply for the Bank’s small business programs. 

(F) Consistent with international agreements, the Bank shall 

urge the Foreign Credit Insurance Association to provide coverage 

against 100 per centum of any loss with respect to exports having 

a value of less than $100,000. 

(G) Participation in or access to long-, medium-, and short-term 

financing, guarantees, and insurance provided by the Bank shall 

not be denied solely because the entity seeking participation or access is not a bank or is not a United States person. 

(H)(i) It is further the policy of the United States to foster the 

development of democratic institutions and market economies in 

countries seeking such development, and to assist the export of 

high technology items to such countries. 

(ii) In exercising its authority, the Bank shall develop a program 

for providing guarantees and insurance with respect to the export 

of high technology items to countries making the transition to market based economies, including eligible East European countries 

(within the meaning of section 3 of the Support For East European 

Democracy (SEED) Act of 1989). 

(iii) As part of the ongoing marketing and outreach efforts of the 

Bank, the Bank shall, to the maximum extent practicable, inform 

high technology companies, particularly small business concerns 

(as such term is defined in section 3 of the Small Business Act), 

about the programs of the Bank for United States companies interested in exporting high technology goods to countries making the 

transition to market based economies, including any eligible East 

European country (within the meaning of section 3 of the Support 

For East European Democracy (SEED) Act of 1989). 

(iv) In carrying out clause (iii), the Bank shall— 

(I) work with other agencies involved in export promotion 

and finance; and 

(II) invite State and local governments, trade centers, commercial banks, and other appropriate public and private organizations to serve as intermediaries for the outreach efforts. 

(I) The President of the Bank shall undertake efforts to enhance 

the Bank’s capacity to provide information about the Bank’s programs to small and rural companies which have not previously participated in the Bank’s programs. Not later than 1 year after the 

date of enactment of this subparagraph, the President of the Bank 

shall submit to Congress a report on the activities undertaken pursuant to this subparagraph. 

(J) The Bank shall implement an electronic system designed to 

track all pending transactions of the Bank. 

26 

(K) The Bank shall promote the export of goods and services related to renewable energy sources. 

(L) The Bank shall require an applicant for assistance from the 

Bank to disclose whether the applicant has been found by a court 

of the United States to have violated the Foreign Corrupt Practices 

Act of 1977, the Arms Export Control Act, the International Emergency Economic Powers Act, or the Export Administration Act of 

1979 within the preceding 12 months, and shall maintain, in cooperation with the Department of Justice, for not less than 3 years 

a record of such applicants so found to have violated any such Act. 

(M) Not later than 2 years after the date of the enactment of the 

Export-Import Bank Reform and Reauthorization Act of 2015, the 

Bank shall implement policies— 

(i) to accept electronic documents with respect to transactions whenever possible, including copies of bills of lading, 

certifications, and compliance documents, in such manner so as 

not to undermine any potential civil or criminal enforcement 

related to the transactions; and 

(ii) to accept electronic payments in all of its programs. 

(2) PROHIBITION ON AID TO MARXIST-LENINIST COUNTRIES.— 

(A) IN GENERAL.—The Bank in the exercise of its functions 

shall not guarantee, insure, extend credit, or participate in the 

extension of credit— 

(i) in connection with the purchase or lease of any product by a Marxist-Leninist country, or agency or national 

thereof; or 

(ii) in connection with the purchase or lease of any product by any other foreign country, or agency or national 

thereof, if the product to be purchased or leased by such 

other country, agency, or national is, to the knowledge of 

the Bank, principally for use in, or sale or lease to, a 

Marxist-Leninist country. 

(B) MARXIST-LENINIST COUNTRY DEFINED.— (i) IN GENERAL.—For purposes of this paragraph, the 

term ‘‘Marxist-Leninist country’’ means any country that 

maintains a centrally planned economy based on the principles of Marxism-Leninism, or is economically and militarily dependent on any other such country. 

(ii) SPECIFIC COUNTRIES DEEMED TO BE MARXIST-LEN- INIST.—Unless otherwise determined by the President in 

accordance with subparagraph (C), the following countries 

are deemed to be Marxist-Leninist countries for purposes 

of this paragraph: 

(I) Democratic People’s Republic of Korea. 

(II) Democratic Republic of Afghanistan. 

(III) People’s Republic of China. 

(IV) Republic of Cuba. 

(V) Socialist Republic of Vietnam. 

(VI) Tibet. 

(C) PRESIDENTIAL DETERMINATION THAT A COUNTRY HAS

CEASED TO BE MARXIST-LENINIST.—If the President determines 

that any country on the list contained in subparagraph (B)(ii) 

has ceased to be a Marxist-Leninist country (within the definition of such term in subparagraph (B)(i)), such country shall 

not be treated as a Marxist-Leninist country for purposes of 

27 

this paragraph after the date of such determination, unless the 

President subsequently determines that such country has 

again become a Marxist-Leninist country. 

(D) PRESIDENTIAL DETERMINATION RELATING TO FINANCING IN

THE NATIONAL INTEREST.— (i) IN GENERAL.—Subparagraph (A) shall not apply to 

guarantees, insurance, or extensions of credit by the Bank 

to a country, agency, or national described in clause (i) or 

(ii) of subparagraph (A) (in connection with transactions 

described in such clauses) if the President determines that 

such guarantees, insurance, or extensions of credit are in 

the national interest. 

(ii) SEPARATE DETERMINATION FOR CERTAIN TRANSACTIONS.—The President shall make a separate determination under clause (i) for each transaction described in 

clause (i) or (ii) of subparagraph (A) for which the Bank 

would extend a loan in an amount equal to or greater than 

$50,000,000. 

(iii) REPORT OF CLAUSE (i) DETERMINATIONS TO CONGRESS.—Any determination by the President under clause 

(i) shall be reported to the Congress not later than the earlier of— 

(I) the end of the 30-day period beginning on the 

date of such determination; or 

(II) the date the Bank takes final action with respect 

to the first transaction involving the country, agency, 

or national for which such determination is made after 

the date of the enactment of the Export-Import Bank 

Amendments of 1974, unless a report of a determination with respect to such date of enactment. 

(iv) REPORT OF CLAUSE (ii) DETERMINATIONS TO CONGRESS.—Any determination by the President under clause 

(ii) shall be reported to the Congress not later than the 

earlier of— 

(I) the end of the 30-day period beginning on the 

date of such determination; or 

(II) the date the Bank takes final action with respect 

to the transaction for which such determination is 

made. 

(3) Except as provided by the fourth sentence of this paragraph, 

no loan or financial guarantee or general guarantee or insurance 

facility or combination thereof (i) in an amount which equals or exceeds $100,000,000, or (ii) for the export of technology, fuel, equipment, materials, or goods or services to be used in the construction, 

alteration, operation, or maintenance of nuclear power, enrichment, 

reprocessing, research, or heavy water production facilities, shall 

be finally approved by the Board of Directors of the Bank, unless 

in each case the Bank has submitted to the Congress with respect 

to such loan, financial guarantee, or combination thereof, a detailed 

statement describing and explaining the transaction, at least 25 

days of continuous session of the Congress prior to the date of final 

approval. For the purpose of the preceding sentence, continuity of 

a session of the Congress shall be considered as broken only by an 

adjournment of the Congress sine die, and the days on which either 

House is not in session because of an adjournment of more than 3 

28 

days to a day certain shall be excluded in the computation of the 

25 day period referred to in such sentence. Such statement shall 

contain— 

(A) in the case of a loan or financial guarantee— 

(i) a brief description of the purposes of the transaction; 

(ii) the identity of the party or parties requesting the 

loan or financial guarantee; 

(iii) the nature of the goods or services to be exported 

and the use for which the goods or services are to be exported; and 

(iv) in the case of a general guarantee or insurance facility— 

(I) a description of the nature and purpose of the facility; 

(II) the total amount of guarantees or insurance; 

and 

(III) the reasons for the facility and its methods of 

operation; and 

(B) a full explanation of the reasons for Bank financing of 

the transaction, the amount of the loan to be provided by the 

Bank, the approximate rate and repayment terms at which 

such loan will be made available and the approximate amount 

of the financial guarantee. 

If the Bank submits a statement to the Congress under this paragraph and either House of Congress is in an adjournment for a period which continues for at least ten days after the date of submission of the statement, then any such loan or guarantee or combination thereof may, subject to the second sentence of this paragraph, 

be finally approved by the Board of Directors upon the termination 

of the twenty-five-day period referred to in the first sentence of this 

paragraph or upon the termination of a thirty-five-calendar-day period (which commences upon the date of submission of the statement), whichever occurs sooner. 

(4)(A) If the Secretary of State determines that— 

(i) any country that has agreed to International Atomic Energy Agency nuclear safeguards materially violates, abrogates, 

or terminates, after October 26, 1977, such safeguards; 

(ii) any country that has entered into an agreement for cooperation concerning the civil use of nuclear energy with the 

United States materially violates, abrogates, or terminates, 

after October 26, 1977, any guarantee or other undertaking to 

the United States made in such agreement; 

(iii) any country that is not a nuclear-weapon state detonates, after October 26, 1977, a nuclear explosive device; 

(iv) any country willfully aids or abets, after June 29, 1994, 

any non-nuclear-weapon state to acquire any such nuclear explosive device or to acquire unsafeguarded special nuclear material; or 

(v) any person knowingly aids or abets, after the date of enactment of the National Defense Authorization Act for Fiscal 

Year 1997, any non-nuclear-weapon state to acquire any such 

nuclear explosive device or to acquire unsafeguarded special 

nuclear material, 

then the Secretary of State shall submit a report to the appropriate 

committees of the Congress and to the Board of Directors of the 

29 

Bank stating such determination and identifying each country or 

person the Secretary determines has so acted. 

(B)(i) If the Secretary of State makes a determination under subparagraph (A)(v) with respect to a foreign person, the Congress 

urges the Secretary to initiate consultations immediately with the 

government with primary jurisdiction over that person with respect 

to the imposition of the prohibition contained in subparagraph (C). 

(ii) In order that consultations with that government may be pursued, the Board of Directors of the Bank shall delay imposition of 

the prohibition contained in subparagraph (C) for up to 90 days if 

the Secretary of State requests the Board to make such delay. Following these consultations, the prohibition contained in subparagraph (C) shall apply immediately unless the Secretary determines 

and certifies to the Congress that that government has taken specific and effective actions, including appropriate penalties, to terminate the involvement of the foreign person in the activities described in subparagraph (A)(v). The Board of Directors of the Bank 

shall delay the imposition of the prohibition contained in subparagraph (C) for up to an additional 90 days if the Secretary requests 

the Board to make such additional delay and if the Secretary determines and certifies to the Congress that that government is in the 

process of taking the actions described in the preceding sentence. 

(iii) Not later than 90 days after making a determination under 

subparagraph (A)(v), the Secretary of State shall submit to the appropriate committees of the Congress a report on the status of consultations with the appropriate government under this subparagraph, and the basis for any determination under clause (ii) that 

such government has taken specific corrective actions. 

(C) The Board of Directors of the Bank shall not give approval 

to guarantee, insure, or extend credit, or participate in the extension of credit in support of United States exports to any country, 

or to or by any person, identified in the report described in subparagraph (A). 

(D) The prohibition in subparagraph (C) shall not apply to approvals to guarantee, insure, or extend credit, or participate in the 

extension of credit in support of United States exports to a country 

with respect to which a determination is made under clause (i), (ii), 

(iii), or (iv) of subparagraph (A) regarding any specific event described in such clause if the President determines and certifies in 

writing to the Congress not less than 45 days prior to the date of 

the first approval following the determination that it is in the national interest for the Bank to give such approvals. 

(E) The prohibition in subparagraph (C) shall not apply to approvals to guarantee, insure, or extend credit, or participate in the 

extension of credit in support of United States exports to or by a 

person with respect to whom a determination is made under clause 

(v) of subparagraph (A) regarding any specific event described in 

such clause if— 

(i) the Secretary of State determines and certifies to the Congress that the appropriate government has taken the corrective 

actions described in subparagraph (B)(ii); or 

(ii) the President determines and certifies in writing to the 

Congress not less than 45 days prior to the date of the first approval following the determination that— 

(I) reliable information indicates that— 

30 

(aa) such person has ceased to aid or abet any nonnuclear-weapon state to acquire any nuclear explosive 

device or to acquire unsafeguarded special nuclear material; and 

(bb) steps have been taken to ensure that the activities described in item (aa) will not resume; or 

(II) the prohibition would have a serious adverse effect 

on vital United States interests. 

(F) For purposes of this paragraph: 

(i) The term ‘‘country’’ has the meaning given to ‘‘foreign 

state’’ in section 1603(a) of title 28, United States Code. 

(ii) The term ‘‘knowingly’’ is used within the meaning of the 

term ‘‘knowing’’ in section 104(h)(3) of the Foreign Corrupt 

Practices Act (15 U.S.C. 78dd–2(h)(3)). 

(iii) The term ‘‘person’’ means a natural person as well as a 

corporation, business association, partnership, society, trust, 

any other nongovernmental entity, organization, or group, and 

any governmental entity operating as a business enterprise, 

and any successor of any such entity. 

(iv) The term ‘‘nuclear-weapon state’’ has the meaning given 

the term in Article IX(3) of the Treaty on the Non-Proliferation 

of Nuclear Weapons, signed at Washington, London, and Moscow on July 1, 1968. 

(v) The term ‘‘non-nuclear-weapon state’’ has the meaning 

given the term in section 830(5) of the Nuclear Proliferation 

Prevention Act of 1994 (Public Law 103–236; 108 Stat. 521). 

(vi) The term ‘‘nuclear explosive device’’ has the meaning 

given the term in section 830(4) of the Nuclear Proliferation 

Prevention Act of 1994 (Public Law 103–236; 108 Stat. 521). 

(vii) The term ‘‘unsafeguarded special nuclear material’’ has 

the meaning given the term in section 830(8) of the Nuclear 

Proliferation Prevention Act of 1994. 

(5) The Bank shall not guarantee, insure, or extend credit, or 

participate in the extension of credit in connection with (A) the 

purchase of any product, technical data, or other information by a 

national or agency of any nation which engages in armed conflict 

declared or otherwise, with the Armed Forces of the United States, 

(B) the purchase by any nation (or national or agency thereof) of 

any product, technical data, or other information which is to be 

used principally by or in any such nation described in clause (A), 

or (C) the purchase of any liquid metal fast breeder nuclear reactor 

or any nuclear fuel reprocessing facility. The Bank shall not guarantee, insure, or extend credit, or participate in the extension of 

credit in connection with the purchase of any product, technical 

data, or other information by a national or agency of any nation if 

the President determines that any such transaction would be contrary to the national interest. 

(6)(A) The Bank shall not guarantee, insure, or extend credit, or 

participate in an extension of credit in connection with any credit 

sale of defense articles and defense services to any country. 

(B) Subparagraph (A) shall not apply to any sale of defense articles or services if— 

(i) the Bank is requested to provide a guarantee or insurance 

for the sale; 

31 

(ii) the President determines that the defense articles or 

services are being sold primarily for anti-narcotics purposes; 

(iii) section 490(e) of the Foreign Assistance Act of 1961 does 

not apply with respect to the purchasing country; and 

(iv) the President determines, in accordance with subparagraph (C), that the sale is in the national interest of the 

United States; and 

(v) the Bank determines that, notwithstanding the provision 

of a guarantee or insurance for the sale, not more than 5 percent of the guarantee and insurance authority available to the 

Bank in any fiscal year will be used by the Bank to support 

the sale of defense articles or services. 

(C) In determining whether a sale of defense articles or services 

would be in the national interest of the United States, the President shall take into account whether the sale would— 

(i) be consistent with the anti-narcotics policy of the United 

States; 

(ii) involve the end use of a defense article or service in a 

major illicit drug producing or major drug-transit country (as 

defined in section 481(e) of the Foreign Assistance Act of 1961); 

and 

(iii) be made to a country with a democratic form of government. 

(D)(i) The Board shall not give approval to guarantee or insure 

a sale of defense articles or services unless— 

(I) the President determines, in accordance with subparagraph (C), that it is in the national interest of the United 

States for the Bank to provide such guarantee or insurance; 

(II) the President determines, after consultation with the Assistant Secretary of State for Human Rights and Humanitarian Affairs, that the purchasing country has complied with 

all restrictions imposed by the United States on the end use 

of any defense articles or services for which a guarantee or insurance was provided under subparagraph (B), and has not 

used any such defense articles or services to engage in a consistent pattern of gross violations of internationally recognized 

human rights; and 

(III) such determinations have been reported to the Speaker 

and the Committee on Financial Services of the House of Representatives, and to the Committee on Banking, Housing, and 

Urban Affairs and the Committee on Foreign Relations of the 

Senate, not less than 25 days of continuous session of the Congress before the date of such approval. 

(ii) For purposes of clause (i), continuity of a session of the 

Congress shall be considered as broken only by an adjournment of the Congress sine die, and the days on which either 

House is not in session because of an adjournment of more 

than 3 days to a day certain shall be excluded in the computation of the 25–day period referred to in such clause. 

(E) The provision of a guarantee or insurance under subparagraph (B) shall be deemed to be the provision of security assistance 

for purposes of section 502B of the Foreign Assistance Act of 1961 

(relating to governments which engage in a consistent pattern of 

gross violations of internationally recognized human rights). 

32 

(F) To the extent that defense articles or services for which a 

guarantee or insurance is provided under subparagraph (B) are 

used for a purpose other than anti-narcotics purposes, they may be 

used only for those purposes for which defense articles and defense 

services sold under the Arms Export Control Act (relating to the 

foreign military sales program) may be used under section 4 of 

such Act. 

(G) As used in subparagraphs (B), (C), (D), and (F), the term ‘‘defense articles or services’’ means articles, services, and related technical data that are designated as defense articles and defense services pursuant to sections 38 and 47(7) of the Arms Export Control 

Act and listed on the United States Munitions List (part 121 of 

title 22 of the Code of Federal Regulations). 

(H) Once in each calendar quarter, the Bank shall submit a report to the Committee on Banking, Housing, and Urban Affairs of 

the Senate, and the Committee on Financial Services of the House 

of Representatives on all instances in which the Bank, during the 

reporting quarter, guaranteed, insured, or extended credit or participated in an extension of credit in connection with any credit 

sale of an article, service, or related technical data described in 

subparagraph (G) that the Bank determined would not be put to 

a military use or described in subparagraph (I)(i). Such report shall 

include a description of each of the transactions and the justification for the Bank’s actions. 

(I)(i) Subparagraph (A) shall not apply to a transaction involving 

defense articles or services if— 

(I) the Bank determines that— 

(aa) the defense articles or services are nonlethal; and 

(bb) the primary end use of the defense articles or services will be for civilian purposes; and 

(II) at least 15 calendar days before the date on which the 

Board of Directors of the Bank gives final approval to Bank 

participation in the transaction, the Bank provides notice of 

the transaction to the Committees on Financial Services and 

on Appropriations of the House of Representatives and the 

Committees on Banking, Housing, and Urban Affairs and on 

Appropriations of the Senate. 

(ii) Not more than 10 percent of the loan, guarantee, and insurance authority available to the Bank for a fiscal year may be used 

by the Bank to support the sale of defense articles or services to 

which subparagraph (A) does not apply by reason of clause (i) of 

this subparagraph. 

(iii) Not later than September 1 of each fiscal year, the Comptroller General of the United States, in consultation with the Bank, 

shall submit to the Committees on Financial Services and on Appropriations of the House of Representatives and the Committees 

on Banking, Housing, and Urban Affairs and on Appropriations of 

the Senate a report on the end uses of any defense articles or services described in clause (i) with respect to which the Bank provided 

support during the second preceding fiscal year. 

(7) In no event shall the Bank have outstanding at any time in 

excess of 71⁄2 per centum of the limitation imposed by section 7 of 

this Act for such guarantees, insurance, credits or participation in 

credits with respect to exports of defense articles and services to 

33 

countries which, in the judgment of the Board of Directors of the 

Bank, are less developed. 

(8) The Bank shall supplement but not compete with private capital and the programs of the Commodity Credit Corporation to ensure that adequate financing will be made available to assist the 

export of agricultural commodities, except that, consistent with section 2(b)(1)(A) of this Act, the Bank in assisting any such export 

transactions shall, in cooperation with the export financing instrumentalities of other governments, seek to minimize competition in 

Government-supported export financing, and shall, in cooperation 

with other appropriate United States Government agencies, seek to 

reach international agreements to reduce Government subsidized 

export financing. In order to carry out the purposes of this subsection, the Bank shall consult with the Secretary of Agriculture 

and where the Secretary of Agriculture has recommended against 

Bank financing of the export of a particular agricultural commodity, shall take such recommendation into consideration in determining whether to provide credit or other assistance for any export sale of such commodity, and shall consider the importance of 

agricultural commodity exports to the United States export market 

and the Nation’s balance of trade in deciding whether or not to provide assistance under this subsection. 

(9)(A) The Board of Directors of the Bank shall, in consultation 

with the Secretary of Commerce and the Trade Promotion Coordinating Committee, take prompt measures, consistent with the credit standards otherwise required by law, to promote the expansion 

of the Bank’s financial commitments in sub-Saharan Africa under 

the loan, guarantee, and insurance programs of the Bank. 

(B)(i) The Board of Directors shall establish and use an advisory 

committee to advise the Board of Directors on the development and 

implementation of policies and programs designed to support the 

expansion described in subparagraph (A). 

(ii) The advisory committee shall make recommendations to the 

Board of Directors on how the Bank can facilitate greater support 

by United States commercial banks for trade with sub-Saharan Africa. 

(iii) The advisory committee shall terminate on the date on which 

the authority of the Bank expires under section 7. 

(C) The Bank shall include in the annual report to the Congress 

submitted under section 8(a) a separate section that contains a report on the efforts of the Bank to— 

(i) improve its working relationships with the African Development Bank, the African Export-Import Bank, and other institutions in the region that are relevant to the purposes of 

subparagraph (A) of this paragraph; and 

(ii) coordinate closely with the United States Foreign Service 

and Foreign Commercial Service, and with the overall strategy 

of the United States Government for economic engagement 

with Africa pursuant to the African Growth and Opportunity 

Act. 

(D) Consistent with the requirement that the Bank obtain a reasonable assurance of repayment in connection with each transaction the Bank supports, the Bank shall, in consultation with the 

entities described in subparagraph (C), seek to qualify a greater 

34 

number of appropriate African entities for participation in programs of the Bank. 

(10)(A) The Bank shall not, without a specific authorization by 

law, guarantee, insure, or extend credit (or participate in the extension of credit) to— 

(i) assist specific countries with balance of payments financing; or 

(ii) assist (as the primary purpose of any such guarantee, insurance, or credit) any country in the management of its international indebtedness, other than its outstanding obligations to 

the Bank. 

(B) Nothing contained in subparagraph (A) shall preclude guarantees, insurance, or credit the primary purpose of which is to support United States exports. 

(11) PROHIBITION RELATING TO ANGOLA.—The Bank may not 

guarantee, insure, or extend (or participate in the extension of) 

credit in connection with any export of any good (other than food 

or an agricultural commodity) or service to the People’s Republic of 

Angola until the President certifies to the Congress that free and 

fair elections have been held in Angola in which all participants 

were afforded free and fair access, and that the government of Angola— 

(A) is willing, and is actively seeking, to achieve an equitable 

political settlement of the conflict in Angola, including free and 

fair elections, through a mutual cease-fire and a dialogue with 

the opposition armed forces; 

(B) has demonstrated progress in protecting internationally 

recognized human rights, and particularly in— 

(i) ending, through prosecution or other means, involvement of members of the military and security forces in political violence and abuses of internationally recognized 

human rights; 

(ii) vigorously prosecuting persons engaged in political 

violence who are connected with the government; and 

(iii) bringing to justice those responsible for the abduction, torture, and murder of citizens of Angola and citizens 

of the United States; and 

(C) has demonstrated progress in its respect for, and protection of— 

(i) the freedom of the press; 

(ii) the freedom of speech; 

(iii) the freedom of assembly; 

(iv) the freedom of association (including the right to organize for political purposes); 

(v) internationally recognized worker rights; and 

(vi) other attributes of political pluralism and democracy. 

The President shall include in each report made pursuant to this 

paragraph a detailed statement with respect to each of the conditions set forth in this paragraph. This paragraph shall not be construed to impose any requirement with respect to Angola that is 

more restrictive than any requirement imposed by this section generally on all other countries. 

(12) PROHIBITION RELATING TO RUSSIAN TRANSFERS OF CERTAIN

MISSILE SYSTEMS.—If the President of the United States determines 

35 

that the military or Government of the Russian Federation has 

transferred or delivered to the People’s Republic of China an SS– 

N–22 missile system and that the transfer or delivery represents 

a significant and imminent threat to the security of the United 

States, the President of the United States shall notify the Bank of 

the transfer or delivery as soon as practicable. Upon receipt of the 

notice and if so directed by the President of the United States, the 

Board of Directors of the Bank shall not give approval to guarantee, insure, extend credit, or participate in the extension of credit 

in connection with the purchase of any good or service by the military or Government of the Russian Federation. 

(13) PROHIBITION ON ASSISTANCE TO DEVELOP OR PROMOTE CERTAIN RAILWAY CONNECTIONS AND RAILWAY-RELATED CONNECTIONS.— 

The Bank shall not guarantee, insure, or extend (or participate in 

the extension of) credit in connection with the export of any good 

or service relating to the development or promotion of any railway 

connection or railway-related connection that does not traverse or 

connect with Armenia and does traverse or connect Baku, Azerbaijan, Tbilisi, Georgia, and Kars, Turkey. 

(14) PROHIBITION ON SUPPORT INVOLVING PERSONS CON- NECTED WITH NORTH KOREA.—The Bank may not guarantee, 

insure, or extend credit, or participate in the extension of credit 

in connection with the export of a good or service to a covered 

person (as defined under section 7 of the Impeding North Korea’s Access to Finance Act of 2017). 

(c)(1) The Bank shall charge fees and premiums commensurate, 

in the judgment of the Bank, with risks covered in connection with 

the contractual liability that the Bank incurs for guarantees, insurance, coinsurance, and reinsurance against political and credit 

risks of loss. 

(2) The Bank may issue such guarantees, insurance, coinsurance, 

and reinsurance to or with exporters, insurance companies, financial institutions, or others, or groups thereof, and where appropriate may employ any of the same to act as its agent in the 

issuance and servicing of such guarantees, insurance, coinsurance, 

and reinsurance, and the adjustment of claims arising thereunder. 

(3) TRANSFERABILITY OF GUARANTEES.— (A) IN GENERAL.—With respect to medium-term and longterm obligation insured or guaranteed by the Bank after the 

date of the enactment of the Export-Import Bank Act Amendments of 1986, the Bank shall authorize the unrestricted transfer of such obligations by the originating lenders or their transferees to other lenders without affecting, limiting, or terminating the guarantee or insurance provided by the Bank. 

(B) GUARANTEE COVERAGE.—For the guarantee program provided for in this subsection, the Bank may provide up to 100 

percent coverage of the interest and principal if the Board of 

Directors determines such coverage to be necessary to ensure 

acceptance of Bank guarantees by financial institutions for any 

transaction in any export market in which the Bank is open for 

business. 

(d)(1) In carrying out its responsibilities under this Act, the Bank 

shall work to ensure that United States companies are afforded an 

equal and nondiscriminatory opportunity to bid for insurance in 

connection with transactions assisted by the Bank. 

36 

(2) COMPETITIVE OPPORTUNITY FOR INSURANCE COMPANIES.—In 

the case of any long-term loan or guarantee of not less than 

$25,000,000, the Bank shall seek to ensure that United States insurance companies are accorded a fair and open competitive opportunity to provide insurance against risk of loss in connection with 

any transaction with respect to which such loan or guarantee is 

provided. 

(3) RESPONSIVE ACTIONS.—If the Bank becomes aware that a fair 

and open competitive opportunity is not accorded to any United 

States insurance company in a foreign country with respect to 

which the Bank is considering a loan or guarantee, the Bank— 

(A) may approve or deny the loan or guarantee after considering whether such action would be likely to achieve competitive access for United States insurance companies; and 

(B) shall forward information regarding any foreign country 

that denies United States insurance companies a fair and open 

competitive opportunity to the Secretary of Commerce and to 

the United States Trade Representative for consideration of a 

recommendation to the President that access by such country 

to export credit of the United States should be restricted. 

(4) NOTICE OF APPROVAL.—If the Bank approves a loan or guarantee with respect to a foreign country notwithstanding information regarding denial by that foreign country of competitive opportunities for United States insurance companies, the Bank shall include notice of such approval and the reason for such approval in 

the report on competition in officially supported export credit required under subsection (b)(1)(A). 

(5) DEFINITIONS.—For purposes of this section— 

(A) the term ‘‘United States insurance company’’— 

(i) includes an individual, partnership, corporation, holding company, or other legal entity which is authorized (or 

in the case of a holding company, subsidiaries of which are 

authorized) by a State to engage in the business of issuing 

insurance contracts or reinsuring the risk underwritten by 

insurance companies; and 

(ii) includes foreign operations, branches, agencies, subsidiaries, affiliates, or joint ventures of any entity described in clause (i); and 

(B) the term ‘‘fair and open competitive opportunity’’ means, 

with respect to the provision of insurance by a United States 

insurance company, that the company— 

(i) has received notice of the opportunity to provide such 

insurance; and 

(ii) has been evaluated for such opportunity on a nondiscriminatory basis. 

(e) LIMITATION ON ASSISTANCE WHICH ADVERSELY AFFECT THE

UNITED STATES.— 

(1) IN GENERAL.—The Bank may not extend any direct credit 

of financial guarantee for establishing or expanding production 

of any commodity for export by any country other than the 

United States, if— 

(A) the Bank determines that— 

(i) the commodity is likely to be in surplus on world 

markets at the time the resulting commodity will first 

be sold; or 

37 

(ii) the resulting production capacity is expected to 

compete with United States production of the same, 

similar, or competing commodity; and 

(B) the Bank determines that the extension of such credit or guarantee will cause substantial injury to United 

States producers of the same, similar, or competing commodity. 

In making the determination under subparagraph (B), the 

Bank shall determine whether the facility that would benefit 

from the extension of a credit or guarantee is reasonably likely 

to produce a commodity in addition to, or other than, the commodity specified in the application and whether the production 

of the additional commodity may cause substantial injury to 

United States producers of the same, or a similar or competing, 

commodity. 

(2) OUTSTANDING ORDERS AND PRELIMINARY INJURY DETERMINATIONS.— 

(A) ORDERS.—The Bank shall not provide any loan or 

guarantee to an entity for the resulting production of substantially the same product that is the subject of— 

(i) a countervailing duty or antidumping order under 

title VII of the Tariff Act of 1930; or 

(ii) a determination under title II of the Trade Act 

of 1974. 

(B) AFFIRMATIVE DETERMINATION.—Within 60 days after 

the date of the enactment of this paragraph, the Bank 

shall establish procedures regarding loans or guarantees 

provided to any entity that is subject to a preliminary determination of a reasonable indication of material injury to 

an industry under title VII of the Tariff Act of 1930. The 

procedures shall help to ensure that these loans and guarantees are likely to not result in a significant increase in 

imports of substantially the same product covered by the 

preliminary determination and are likely to not have a significant adverse impact on the domestic industry. The 

Bank shall report to the Committee on Financial Services 

of the House of Representatives and the Committee on 

Banking, Housing, and Urban Affairs of the Senate on the 

implementation of these procedures. 

(C) COMMENT PERIOD.—The Bank shall establish procedures under which the Bank shall notify interested parties 

and provide a comment period of not less than 14 days 

(which, on request of any affected party, shall be extended 

to a period of not more than 30 days) with regard to loans 

or guarantees reviewed pursuant to subparagraph (B) or 

(D). 

(D) CONSIDERATION OF INVESTIGATIONS UNDER TITLE II

OF THE TRADE ACT OF 1974.—In making any determination 

under paragraph (1) for a transaction involving more than 

$10,000,000, the Bank shall consider investigations under 

title II of the Trade Act of 1974 that have been initiated 

at the request of the President of the United States, the 

United States Trade Representative, the Committee on Finance of the Senate, or the Committee on Ways and 

38 

Means of the House of Representatives, or by the International Trade Commission on its own motion. 

(E) ANTI-CIRCUMVENTION.—The Bank shall not provide a 

loan or guarantee if the Bank determines that providing 

the loan or guarantee will facilitate circumvention of an 

order or determination referred to in subparagraph (A). 

(3) EXCEPTION.—Paragraphs (1) and (2) shall not apply in 

any case where, in the judgment of the Board of Directors of 

the Bank, the short- and long-term benefits to industry and 

employment in the United States are likely to outweigh the 

short- and long-term injury to United States producers and 

employment of the same, similar, or competing commodity. 

(4) DEFINITION.—For purposes of paragraph (1)(B), the extension of any credit or guarantee by the Bank will cause substantial injury if the amount of the capacity for production established, or the amount of the increase in such capacity expanded, by such credit or guarantee equals or exceeds 1 percent of United States production. 

(5) DESIGNATION OF SENSITIVE COMMERCIAL SECTORS AND

PRODUCTS.—Not later than 120 days after the date of the enactment of this Act, the Bank shall submit a list to the Committee on Banking, Housing, and Urban Affairs of the Senate 

and the Committee on Financial Services of the House of Representatives, which designates sensitive commercial sectors 

and products with respect to which the provision of financing 

support by the Bank is deemed unlikely by the President of the 

Bank due to the significant potential for a determination that 

such financing support would result in an adverse economic 

impact on the United States. The President of the Bank shall 

review on an annual basis thereafter the list of sensitive commercial sectors and products and the Bank shall submit an updated list to the Committee on Banking, Housing, and Urban 

Affairs of the Senate and the Committee on Financial Services 

of the House of Representatives of such sectors and products. 

(6) FINANCIAL THRESHOLD DETERMINATIONS.—For purposes of 

determining whether a proposed transaction exceeds a financial threshold under this subsection or under the procedures or 

rules of the Bank, the Bank shall aggregate the dollar amount 

of the proposed transaction and the dollar amounts of all loans 

and guarantees, approved by the Bank in the preceding 24- 

month period, that involved the same foreign entity and substantially the same product to be produced. 

(7) PROCEDURES TO REDUCE ADVERSE EFFECTS OF LOANS AND

GUARANTEES ON INDUSTRIES AND EMPLOYMENT IN UNITED

STATES.— 

(A) CONSIDERATION OF ECONOMIC EFFECTS OF PROPOSED

TRANSACTIONS.—If, in making a determination under this 

paragraph with respect to a loan or guarantee, the Bank 

conducts a detailed economic impact analysis or similar 

study, the analysis or study, as the case may be, shall include consideration of— 

(i) the factors set forth in subparagraphs (A) and (B) 

of paragraph (1); and 

(ii) the views of the public and interested parties. 

(B) NOTICE AND COMMENT REQUIREMENTS.— 

39 

(i) IN GENERAL.—If, in making a determination 

under this subsection with respect to a loan or guarantee, the Bank intends to conduct a detailed economic impact analysis or similar study, the Bank shall 

publish in the Federal Register a notice of the intent, 

and provide a period of not less than 14 days (which, 

on request by any affected party, shall be extended to 

a period of not more than 30 days) for the submission 

to the Bank of comments on the economic effects of the 

provision of the loan or guarantee, including comments on the factors set forth in subparagraphs (A) 

and (B) of paragraph (1). In addition, the Bank shall 

seek comments on the economic effects from the Department of Commerce, the Office of Management and 

Budget, the Committee on Banking, Housing, and 

Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives. 

(ii) CONTENT OF NOTICE.—The notice shall include 

appropriate, nonproprietary information about— 

(I) the country to which the goods involved in 

the transaction will be shipped; 

(II) the type of goods being exported; 

(III) the amount of the loan or guarantee involved; 

(IV) the goods that would be produced as a result of the provision of the loan or guarantee; 

(V) the amount of increased production that will 

result from the transaction; 

(VI) the potential sales market for the resulting 

goods; and 

(VII) the value of the transaction. 

(iii) PROCEDURE REGARDING MATERIALLY CHANGED

APPLICATIONS.— (I) IN GENERAL.—If a material change is made 

to an application for a loan or guarantee from the 

Bank after a notice with respect to the intent described in clause (i) is published under this subparagraph, the Bank shall publish in the Federal 

Register a revised notice of the intent, and shall 

provide for a comment period, as provided in 

clauses (i) and (ii). 

(II) MATERIAL CHANGE DEFINED.—As used in 

subclause (I), the term ‘‘material change’’, with respect to an application, includes— 

(aa) a change of at least 25 percent in the 

amount of a loan or guarantee requested in 

the application; and 

(bb) a change in the principal product to be 

produced as a result of any transaction that 

would be facilitated by the provision of the 

loan or guarantee. 

(C) REQUIREMENT TO ADDRESS VIEWS OF ADVERSELY AF- FECTED PERSONS.—Before taking final action on an application for a loan or guarantee to which this section applies, 

the staff of the Bank shall provide in writing to the Board 

40 

of Directors the views of any person who submitted comments pursuant to subparagraph (B). 

(D) PUBLICATION OF CONCLUSIONS.—Within 30 days 

after a party affected by a final decision of the Board of 

Directors with respect to a loan or guarantee makes a 

written request therefor, the Bank shall provide to the affected party a non-confidential summary of the facts found 

and conclusions reached in any detailed economic impact 

analysis or similar study conducted pursuant to subparagraph (B) with respect to the loan or guarantee, that were 

submitted to the Board of Directors. 

(E) MAINTENANCE OF DOCUMENTATION.—The Bank shall 

maintain documentation relating to economic impact analyses and similar studies conducted under this subsection 

in a manner consistent with the Standards for Internal 

Control of the Federal Government issued by the Comptroller General of the United States. 

(F) RULE OF INTERPRETATION.—This paragraph shall not 

be construed to make subchapter II of chapter 5 of title 5, 

United States Code, applicable to the Bank. 

(G) REGULATIONS.—The Bank shall implement such regulations and procedures as may be appropriate to carry 

out this paragraph. 

(f) AUTHORITY TO DENY APPLICATION FOR ASSISTANCE BASED ON

FRAUD OR CORRUPTION BY PARTY INVOLVED IN THE TRANSACTION.— In addition to any other authority of the Bank, the Bank may deny 

an application for assistance with respect to a transaction if the 

Bank has substantial credible evidence that any party to the transaction or any party involved in the transaction has committed an 

act of fraud or corruption in connection with the transaction. 

(g) PROCESS FOR NOTIFYING APPLICANTS OF APPLICATION STATUS.—The Bank shall establish and adhere to a clearly defined 

process for— 

(1) acknowledging receipt of applications; 

(2) informing applicants that their applications are complete 

or, if incomplete or containing a minor defect, of the additional 

material or changes that, if supplied or made, would make the 

application eligible for consideration; and 

(3) keeping applicants informed of the status of their applications, including a clear and timely notification of approval or 

disapproval, and, in the case of disapproval, the reason for disapproval, as appropriate. 

(h) RESPONSE TO APPLICATION FOR FINANCING; IMPLEMENTATION

OF ONLINE LOAN REQUEST AND TRACKING PROCESS.— 

(1) RESPONSE TO APPLICATIONS.—Within 5 days after the 

Bank receives an application for financing, the Bank shall notify the applicant that the application has been received, and 

shall include in the notice— 

(A) a request for such additional information as may be 

necessary to make the application complete; 

(B) the name of a Bank employee who may be contacted 

with questions relating to the application; and 

(C) a unique identification number which may be used 

to review the status of the application at a website established by the Bank. 

41 

(2) WEBSITE.—Not later than September 1, 2007, the Bank 

shall exercise the authority granted by subparagraphs (E)(x) 

and (J) of subsection (b)(1) to establish, and thereafter to maintain, a website through which— 

(A) Bank products may be applied for; and 

(B) information may be obtained with respect to— 

(i) the status of any such application; 

(ii) the Small Business Division of the Bank; and 

(iii) incentives, preferences, targets, and goals relating to small business concerns (as defined in section 

3(a) of the Small Business Act), including small business concerns exporting to Africa. 

(i) DUE DILIGENCE STANDARDS FOR LENDER PARTNERS.—The 

Bank shall set due diligence standards for its lender partners and 

participants, which should be applied across all programs consistently. To minimize or prevent fraudulent activity, the Bank should 

require all delegated lenders to implement ‘‘Know your customer 

practices’’. 

(j) NON-SUBORDINATION REQUIREMENT.—In entering into financing contracts, the Bank shall seek a creditor status which is not 

subordinate to that of all other creditors, in order to reduce the risk 

to, and enhance recoveries for, the Bank. 

(k) PROHIBITION ON DISCRIMINATION BASED ON INDUSTRY.— 

(1) IN GENERAL.—Except as provided in this Act, the Bank 

may not— 

(A) deny an application for financing based solely on the 

industry, sector, or business that the application concerns; 

or 

(B) promulgate or implement policies that discriminate 

against an application based solely on the industry, sector, 

or business that the application concerns. 

(2) APPLICABILITY.—The prohibitions under paragraph (1) 

apply only to applications for financing by the Bank for 

projects concerning the exploration, development, production, 

or export of energy sources and the generation or transmission 

of electrical power, or combined heat and power, regardless of 

the energy source involved. 

* * * * * * * 

INTERNATIONAL FINANCIAL INSTITUTIONS ACT 

* * * * * * * 

TITLE XVI—HUMAN WELFARE 

* * * * * * * 

SEC. 1629. SUPPORT FOR CAPACITY OF THE INTERNATIONAL MONETARY FUND TO PREVENT MONEY LAUNDERING AND FINANCING OF TERRORISM. 

The Secretary of the Treasury shall instruct the United States Executive Director at the International Monetary Fund to support the 

use of the administrative budget of the Fund for technical assistance 

42 

that strengthens the capacity of Fund members to prevent money 

laundering and the financing of terrorism. 

* * * * * * * 

(43) 

ADDITIONAL VIEWS 

The alarming, rapid acceleration in the scale and range of North 

Korea’s nuclear and long-range missile programs, including the 

launch of an intercontinental ballistic missile in July that appeared 

to have the range to hit major U.S. cities, followed by an announcement in September that North Korea had tested a hydrogen bomb, 

have led many lawmakers to believe that a new policy towards 

North Korea involving a maximum pressure campaign of financial 

isolation is the best chance we have to resolve this situation peacefully. Such a strategy must entail a massive, immediate and qualitatively different level of pressure, the likes of which the North Koreans have yet to experience, and which could threaten Kim Jongun’s very hold on power. 

H.R. 3898 calls for just such a U.S. policy approach to North 

Korea, one that also draws us away from a military-first response. 

The legislation takes a page from the Iran sanctions playbook by 

mandating the use of powerful secondary sanctions, which were 

widely credited with ultimately forcing Iran to the negotiating 

table. 

In the context of North Korea, an American program of secondary sanctions wouldn’t just ban U.S. companies from doing 

business with North Korea, it would also force companies, individuals, banks and governments to make a choice: stop doing business 

with North Korea and its enablers or lose access to the United 

States financial system. 

Although we saw in the Iran context just how powerful this approach can be when carefully fashioned as part of a broad coalition, 

we must remember that sanctions alone are not a strategy. Sanctions are a tool, and in order for them to work, they must be linked 

to a broader strategic effort, with a high level of skill in their design and implementation, and with a clear understanding of the 

policy goals we are trying to achieve. While much attention has 

been given to the work done by the Treasury Department, and the 

Office of Foreign Assets Control (OFAC) in particular, and our intelligence agencies, in terms of getting effective, crippling sanctions 

in place on Iran, the diplomatic outreach needed to make those 

sanctions work and to make them stick was equally important. 

According to Adam Szubin, who formerly served as the Under 

Secretary of the Treasury for Terrorism and Financial Crimes, 

when Congress considered a series of secondary sanction measures 

in 2010 aimed at containing Iran’s nuclear program, the Administration was staffed and ready to immediately deploy senior officials 

to every corner of the world upon passage. What followed was a 

massive and sustained effort involving hundreds of thousands of 

hours of visits to different capitals everywhere from Azerbaijan to 

Singapore to ensure that bankers, traders and regulators were enVerDate Sep 11 2014 05:24 Oct 24, 2017 Jkt 079006 PO 00000 Frm 00043 Fmt 6604 Sfmt 6604 E:\HR\OC\HR361.XXX HR361
44 

1Testimony of Adam J. Szubin, Senate Banking Subcommittee on National Security and 

International Trade and Finance hearing titled ‘‘Secondary Sanctions against Chinese Institutions: Assessing their Utility for Constraining North Korea’’ (May 10, 2017). 

forcing the sanctions in a tough and meaningful way.1 The result 

was the most effective sanctions campaign the world had ever seen. 

Today, there is widespread recognition that any successful strategy to isolate and pressure North Korea must not only entail the 

effective implementation of sanctions, but also a similarly active, 

global engagement by the United States, including complex negotiations with North Korea, skilled policy coordination with our allies, and careful diplomacy with China. 

It is extremely concerning, therefore, that President Trump has 

shown virtually no appetite for the type of diplomatic engagement 

necessary to secure concessions from North Korea, or made a serious or concerted effort to enlist China and other key players to do 

their part to isolate the Kim regime. 

In fact, President Trump’s reckless threats, his promise of ‘‘fire 

and fury,’’ his vow to destroy the Kim regime, his name-calling, 

warmongering, and rejection of diplomacy directly contradict his 

leading cabinet officials who continue to stress the importance of 

imposing pressure on the Kim regime. It also demonstrates a commander-in-chief who lacks the discipline and the capacity to convince our allies to join us in dealing with the North Korean threat. 

Given the high-stakes objectives; the lack of a unified, coherent 

policy from the executive branch; and concern about U.S. credibility 

on the global stage, we view this legislation as an opportunity for 

Congress to show that the voice of America still matters, that the 

United States is committed to policy consistency, and that the 

world should not view the Trump doctrine as a broader signal of 

American unreliability. 

MAXINE WATERS. ED PERLMUTTER. 

VICENTE GONZALEZ. 

EMANUEL CLEAVER. AL GREEN. 

GWEN MOORE. BRAD SHERMAN. 

NYDIA M. VELA ́ ZQUEZ. STEPHEN F. LYNCH. MICHAEL E. CAPUANO. 

Æ