The Treasury Department’s Office of Foreign Assets Control reports that a company in India has agreed to pay $332,500 to settle charges that it violated the North Korea Sanctions Regulations in connection with its use of the U.S. financial system to receive payments for tobacco it indirectly exported to North Korea.
According to OFAC, the company failed to include North Korea on the trade documentation for a shipping container full of tobacco sent to that country and instead listed an intermediary in Thailand as the customer and China as the destination. The company then relied on other intermediaries in Hong Kong to receive payment, which further obscured the nexus to North Korea and caused U.S. financial institutions to process these transactions. This constituted an export of financial services or facilitation of exports to North Korea in violation of U.S. sanctions against that country.
OFAC states that the statutory maximum civil monetary penalty applicable in this matter is $1.78 million and the base penalty is $475,000. Aggravating factors included the company’s failure to exercise a minimal degree of caution or care for U.S. sanctions laws and regulations and the fact that several company managers had actual knowledge that the conduct at issue concerned exports to North Korea. Mitigating factors included the company’s response to learning of the apparent violations (e.g., implementing a sanctions compliance policy, procedures, and framework) and its compliance history.
This case highlights how non-U.S. persons engaged in business with sanctioned actors and jurisdictions can violate U.S. sanctions regulations by causing U.S. persons to engage in prohibited transactions, OFAC states. It also illustrates the deceptive practices North Korean entities use to evade U.S. and international sanctions and acquire revenue-generating goods, such as by employing intermediaries in various countries to coordinate shipping and make payments.
For more information on complying with U.S. sanctions, please contact attorney Kristine Pirnia via email.
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