Richemont North America, dba Cartier, agreed to a $334,800 for 4 apparent violations of the Kingpin Act. Simply put, an individual purchased jewelry from Cartier in either California or Nevada, but designated Shuen Wai Holding, a Hong Kong-based SDN, as the party to whom the goods should be shipped. And Cartier did not apparently identify Shuen Wai and freeze the assets in question.
The base penalty for the four non-egregious, non self-reported violations is $620,000. Here’s OFAC’s explanation of the General Factors (from the Enforcement Guidelines published on their enforcement page) involved in setting the settlement amount (reformatting mine):
OFAC considered the following to be aggravating factors:
- Richemont failed to exercise a minimal degree of caution or care with respect to the conduct that led to the apparent violations;
- Richemont caused significant harm to the objectives of U.S. sanctions regulations by dealing in the property of an SDN and allowing an SDN access to the commercial marketplace; and
- Richemont is a commercially sophisticated entity with global operations operating in an industry at high risk for money laundering.
OFAC considered the following to be mitigating factors:
- Richemont has not received a Penalty Notice or Finding of Violation from OFAC in the five years preceding the earliest date of the transactions giving rise to the apparent violations;
- Richemont cooperated with OFAC during its investigation of the apparent violations, including by agreeing to execute multiple agreements to toll the statute of limitations; and
- Richemont took remedial action to correct the deficiencies giving rise to the apparent violations.
The enforcement action is also intended to provide a lesson, as noted in the last paragraph:
This enforcement action highlights the risks for companies with retail operations that engage in international transactions, specifically including businesses that ship their products directly to customers located outside of the United States. OFAC encourages companies to develop, implement, and maintain a risk-based approach to sanctions compliance, and to implement processes and procedures to identify and mitigate areas of risks. Some of the multitude of factors that a company could consider with respect to its compliance program is an assessment of its products and services, frequency and volume of international transactions and shipments, client base, and size and geographic location(s).