Essentra FZE Company Limited OFAC Settlement: $665.1K

In early 2018, an Essentra FZE senior manager and a customer-facing employee were introduced to a DPRK national during a business meeting arranged by the regional director of a foreign tobacco company. During this meeting, the DPRK national asked Essentra FZE whether it could manufacture cigarette filter rods for exportation to the DPRK. The customer-facing employee later exchanged messages with the DPRK national, who provided the instruction: "[D]on't mention that customer is in my country… You just mention China or where else. Contract will be signed by other foreign company." The DPRK national asked Essentra FZE to avoid identifying the DPRK several times after this exchange.

In the Spring of 2018, a draft contract indicating the filter rods would be shipped from the UAE to China was sent to Essentra FZE. The senior manager later asked, "Any news on NK contract… Eagerly awaiting the progress[.]" Essentra FZE subsequently received an executed copy of a contract that made no mention of the DPRK; instead, it identified the counterparties as front companies located in third countries, and related transactional documents identified the "ship to" party as an entity located in China. Shortly after receiving this contract, Essentra FZE received additional purchase orders to ship more filter rods to an entity in China with the knowledge the goods were ultimately destined for the DPRK. The senior manager undertook these activities in a deceptive manner in violation of company policies and procedures.

Essentra FZE's manufacturing and exportation of cigarette filters to the DPRK resulted in three wire transfers to pay for the goods, one in U.S. dollars that transited the United States and two in another currency, deposited into Essentra FZE's accounts at the foreign branch of a U.S. bank between September 2018 and December 2018. Essentra FZE appears to have violated § 510.212 of the NKSR when it caused U.S. persons (including the Branch) to export, directly or indirectly, financial services to the DPRK or otherwise facilitate export transactions that would have been prohibited if engaged in by U.S. persons, in apparent violation of §§ 510.206 and 510.211 of the NKSR. The approximate commercial value of the Apparent Violations is $333,272.

The statutory maximum civil monetary penalty applicable in this matter is $923,766. OFAC determined that Essentra FZE did not voluntarily self-disclose the Apparent Violations and that the Apparent Violations constitute an egregious case. Accordingly, under OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A, the base civil monetary penalty amount applicable in this matter is the statutory maximum of $923,766. The settlement amount of $665,112 reflects OFAC's consideration of the General Factors under the Enforcement Guidelines. Essentra FZE's obligation to pay OFAC the settlement amount is deemed satisfied by Essentra FZE's payment of a greater amount in satisfaction of penalties assessed by the U.S. Department of Justice arising from the same course of conduct.

As noted in OFAC's Framework for Compliance Commitments, many non-U.S. persons have engaged in violations of OFAC's regulations by processing financial transactions to, through, or involving U.S. financial institutions that pertain to commercial activity with an OFAC-sanctioned country, region, or person. Although no organizations subject to U.S. jurisdiction may be involved in the underlying commercial activity, such as the shipment of goods to or from a third country to an OFAC-sanctioned country, the inclusion of a U.S. financial institution in any payments associated with these commercial activities can result in or cause prohibited activity (e.g., the exportation or reexportation of services from the United States, or by U.S. persons, to a comprehensively sanctioned country).

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