export-controls 28 September 2017

OFAC settles with Cartier parent company for apparent sanctions violations

The US Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) has announced a $344,800 settlement with Richemont North America Inc – the New York-based parent company of luxury jeweller Cartier – for apparent violations of the Foreign Narcotic Kingpin Sanctions Regulations (‘FNKSR’).

The FNKSR allow the US President to designate significant foreign narcotics traffickers. Richemont was charged with apparent violation of s598.203 of FNKSR – the company apparently exported four shipments of jewellery to Shuen Wai Holding Ltd (‘Shuen Wai’) in 2010 and 2011. Shuen Wai was placed on OFAC’s List of Specially Designated Nationals and Blocked Persons (‘SDN List’) in 2008.

OFAC said: ‘On four separate occasions, an individual purchased jewelry from one of Richemont’s Cartier boutiques located in California or Nevada and provided Shuen Wai’s name and mailing address to Richemont as the ship-to party… Although the information and documentation provided to Richemont contained the same name, address, and country location for Shuen Wai as they appear on the SDN List, Richemont did not identify any sanctions-related issues with the transaction prior to shipping the goods.’

The company also did not voluntarily disclose the transactions to OFAC. However, despite Richemont failing to ‘exercise a minimal degree of caution or care’ the offences were considered ‘non-egregious’ by OFAC, and the company co-operated throughout the investigation. The original base penalty $620,000 was thus reduced.

OFAC noted: ‘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.’

The agency pointed out that some of the factors that a company could consider in respect to its compliance programme include ‘an assessment of its products and services, frequency and volume of international transactions and shipments, client base, and size and geographic location(s)’.


For the OFAC enforcement notice, please see: