A United Arabs Emirates ("UAE")-based manufacturer of cigarette filters and tear tape settled separate DOJ and OFAC charges (see here and here) for violation of the International Emergency Economic Powers Act ("IEEPA") and evading North Korea Sanctions Regulations. Notably, this is the first enforcement action brought by the DOJ for violations of such regulations.

According to the settlements, the DOJ and OFAC claimed that the manufacturer received three wire transfers totaling in approximately $333,272 in accounts at a U.S. financial institution's foreign branch from buyers in the Democratic People's North Korea ("DPRK"). The wire transfers were sent as payment for the cigarette filters to be exported to the DPRK. According to the DOJ and OFAC, the manufacturer violated North Korea Sanctions Regulations and the IEEPA by deceiving UAE and U.S. banks into providing financial services to the DPRK and facilitating the process of exporting transactions to the DPRK

The DOJ and OFAC found that the manufacturer (i) was aware at all times that the cigarette filters would be sent to the DPRK and (ii) complied with the buyer's request to export the transactions through "multiple layers of front companies" in China, among other countries, to avoid detection.

To settle the charges, the manufacturer agreed to pay a (i) $665,112 settlement to OFAC and (ii) $666,543.88 monetary penalty to the DOJ. In the DOJ Deferred Prosecution Agreement, the manufacturer also agreed to implement a compliance program designed to detect any future violations of sanctions regulations or the IEEPA.

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