10 October, 2017
The parent company of luxury goods retailer Cartier has been fined $334,800 by US regulators for breaching Department of Treasury sanctions.
Richemont North America Inc exported four jewellery shipments to Hong Kong-based Shuen Wai Holding Ltd between 5 October 2010 and 21 April 2011, according to details of the settlement published by the Treasury's Office of Foreign Assets Control (OFAC). Shuen Wai was blacklisted by OFAC under the Foreign Narcotics Kingpin Designation Act (Kingpin Act) in 2008.
Although the offences were "non-egregious", Richemont did not voluntarily self-disclose the transactions to OFAC, the regulator said. It also found that the company "failed to exercise a minimal degree of caution or care", despite being a "commercially sophisticated entity with global operations operating in an industry at high risk for money laundering".
International sanctions expert Tom Stocker of Pinsent Masons, the law firm behind Out-Law.com, said that the case should be taken as a "warning" by all companies exporting goods internationally.
"In broad terms, US and EU sanctions make it an offence to deal with listed persons or entities," he said.
"Businesses need to implement and maintain risk-based compliance procedures, and undertake third party due diligence that screens counterparties against sanctions lists and mitigate areas of risk. Even indirect sales can lead to breaches," he said.
The Kingpin Act allows the US president to implement sanctions against foreign individuals and entities that play "a significant role in international narcotics trafficking". Those subject to sanctions are included on OFAC's list of specially designated nationals and blocked persons (SDN list), which means that US businesses are prohibited from doing business with them.
OFAC said in its enforcement notice that an individual had purchased jewellery from one of Richemont's Cartier boutiques in California or Nevada on "four separate occasions", and gave Shuen Wai's name and mailing address as shipping information. Although this information "contained the same name, address and country location" for Shuen Wai as included on the SDN list, Richemont "did not identify any sanctions-related issues with the transaction prior to shipping the goods", OFAC said.
The "base penalty" applicable to non-egregious sanctions violations which are not self-reported to the regulators was $620,000 in this case. This was reduced by OFAC to reflect mitigating factors, including that the business had not breached any OFAC sanctions in the preceding five years and that it had cooperated with OFAC throughout its investigation, it said.
This article was published in Out-law here.
For further information, please contact:
Tom Stocker, Partner, Pinsent Masons
tom.stocker@pinsentmasons.com
