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OFAC reaches settlement with cosmetics company for alleged North Korean sanctions violations

Financial Crimes OFAC Department of Treasury Sanctions Settlement North Korea Of Interest to Non-US Persons

Financial Crimes

On January 31, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $996,080 settlement with a California-based cosmetics company for 156 alleged violations of the North Korean Sanctions Regulations. According to OFAC, the settlement resolves potential civil liability for the company’s alleged involvement in the importation of goods from two Chinese suppliers containing materials sourced from North Korea.

In arriving at the settlement amount, OFAC considered the following as aggravating factors: (i) the alleged violations may have resulted in the North Korean government gaining control of U.S.-origin funds; (ii) the company is “large and commercially sophisticated [and] engages in a substantial volume of international trade”; and (iii) during the period of the alleged activity, the company’s compliance program, which was either non-existent or inadequate, failed to have “exercised sufficient supply chain due diligence” in its sourcing of products from a region posing a high risk to the effectiveness of the North Korean Sanctions Regulations.

OFAC also considered numerous mitigating factors, including (i) company personnel did not have actual knowledge of the suppliers’ conduct; (ii) the company has not received a penalty or finding of a violation in the five years prior to the transactions at issue; (iii) the alleged violations are not a large part of the company’s business; and (iv) the company voluntarily self-disclosed the apparent violations and cooperated with OFAC’s investigation. In addition, the company has adopted an enhanced compliance program to lower the risk of recurrence of similar conduct in the future.

Visit here for additional InfoBytes coverage on North Korea sanctions.

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