III. Due Diligence Best Practices
Businesses should closely examine their entire supply chain(s) for North Korean laborers and goods, services, or technology, and adopt appropriate due diligence best practices. This especially applies to those businesses with operations in high-risk countries, or who operate in high-risk industries. While due diligence practices will vary based on the size and nature of the business, well-documented due diligence policies and practices may be considered mitigating factors when the U.S. government determines the appropriate enforcement response. For specific recommendations of due diligence practices and potential mitigating factors, please see DHS Q&A, specifically question eight, and OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R Part 501, Appendix A.
IV. Penalties for Violations of Sanctions and Enforcement Actions
Individuals and entities should be aware of the potential consequences for engaging in or facilitating prohibited or sanctionable conduct.
OFAC investigates apparent violations of its regulations and maintains enforcement authority as outlined in its Economic Sanctions Enforcement Guidelines, 31 C.F.R Part 501, Appendix A. Persons who violate U.S. sanctions with respect to North Korea can be subject to civil monetary penalties equal to the greater of twice the value of the underlying transaction or $295,141 per violation, referred for criminal prosecution, or both.4 For additional information regarding OFAC’s enforcement authorities, Economic Sanctions Enforcement Guidelines, and recent civil penalties and enforcement actions, visit the OFAC Resource Center.
CBP and ICE enforce the prohibition against importing goods made with forced labor through civil and criminal enforcement actions, respectively. Where CBP finds evidence of prohibited North Korean labor, CBP will deny entry of the goods, which could lead to the issuance of civil penalties, and the seizure and forfeiture of the associated goods, as appropriate. ICE’s Homeland Security Investigations works with CBP on these types of enforcement actions and may initiate criminal investigations relating to the importation of these proscribed goods that target individuals and/or corporations for their roles in the importation of proscribed goods into the United States in violation of the law. These laws include, but are not limited to, 18 U.S.C. 1761, 18 U.S.C. 545, and 18 U.S.C. 1589, and conviction under these laws could result in incarceration, fines, and forfeiture of any/all goods imported and proceeds of these crimes.
V. Activities that Could Result in Designation by OFAC
OFAC has authority to impose sanctions on any person determined to, among other things:
- operate in the construction, energy, financial services, fishing, information technology, manufacturing, medical, mining, textiles, or transportation industries in North Korea;
- have engaged in at least one significant importation from or exportation to North Korea of any goods, services, or technology;
- have engaged in, facilitated, or been responsible for an abuse or violation of human rights by the government of North Korea or the Workers’ Party of Korea or any person acting for or on behalf of either such entity;
- have engaged in, facilitated, or been responsible for the exportation of laborers from North Korea, including exportation to generate revenue for the government of North Korea or the Workers’ Party of Korea; or
- have sold, supplied, transferred, or purchased, directly or indirectly, to or from North Korea or any person acting for or on behalf of the government of North Korea or the Workers’ Party of Korea, metal, graphite, coal, or software, where any revenue or goods received may benefit the government of North Korea or the Workers’ Party of Korea.
Additionally, if the Secretary of the Treasury, in consultation with the Secretary of State, determines that a foreign financial institution has knowingly conducted or facilitated significant trade with North Korea, or knowingly conducted or facilitated a significant transaction on behalf of a person designated under a North Korea-related Executive order, or under Executive Order 13382 for North Korea-related activity, that institution may, among other potential restrictions, lose the ability to maintain a correspondent account in the United States.
VI. North Korea Sanctions Resources
For additional information on OFAC sanctions, please see the North Korean Sanctions Regulations, 31 C.F.R. Part 510. For questions or concerns related to OFAC sanctions regulations and requirements, including disclosing a potential violation of U.S. sanctions regulations, please contact OFAC’s Compliance Hotline at 1-800-540-6322 or OFAC_Feedback@treasury.gov
. To submit a request to OFAC for a specific license, see https://licensing.ofac.treas.gov/Apply/Introduction.aspx
The DHS Q&A publication focuses on CAATSA Title III Section 321(b), which affects the entry of merchandise produced by North Korean nationals or citizens. CAATSA reiterates the need for comprehensive due diligence by and on behalf of U.S. companies involved in importing goods. Careful consideration of, and reasonable care with respect to, the different risks presented in your supply chain should always be taken into account when importing into the United States.
Importers have an obligation to exercise reasonable care and take all necessary and appropriate steps to ensure that goods entering the United States comply with all laws and regulations. To assist importers in understanding these obligations, CBP recently updated and published an Informed Compliance Publication, What Every Member of the Trade Community Should Know: Reasonable Care. CBP has also published seven fact sheets on various topics related to forced labor, including Forced Labor – Importer Due Diligence. These are also posted on CBP.gov.
The Responsible Sourcing Tool, funded by the State Department, is an online platform with resources to help
federal contractors, acquisitions officers, and businesses identify, prevent, and address human trafficking risks
in their global supply chains. The site contains information on industries and commodities at risk for trafficking
or trafficking-related activities, as well as 10 risk management tools and a set of tools specific to the seafood