OFAC settles with Italian animator for NK outsourcing
The US Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) says it has reached a $538,000 settlement with an ‘Italy-based animation company’, Mondo TV, S.p.a., to ‘settle its potential civil liability for 18 apparent violations of the North Korea Sanctions Regulations.’
It said that, between May 2019 and November 2021, ‘Mondo caused U.S. financial institutions to process approximately $537,939 in payments for animation work Mondo outsourced to a Government of North Korea-owned animation studio.’
OFAC said that Mondo’s dealings with Scientific Educational Korea Studio (‘SEK’), a Government of North Korea-owned animation firm in North Korea, ‘began in the 1990s, when Mondo began subcontracting animation work to SEK for a variety of programming, including children’s animation.’
In a web notice, it said, ‘Mondo accumulated approximately $1,123,120 in outstanding debt owed to SEK for several projects. In July 2019, SEK and Mondo executed an agreement whereby Mondo would pay SEK in monthly instalments for work SEK completed for Mondo prior to 2016, when Mondo paused their relationship due to human rights concerns, and for new projects SEK would undertake for Mondo beginning in 2019.
‘Before each monthly payment, SEK would issue an invoice to Mondo that named a third-party company and its bank account details for Mondo to remit payment. Among them, SEK identified two third-party companies in China and one US company, along with their respective account information at several US financial institutions. Mondo then remitted the monthly payments to these intermediaries according to SEK’s instructions. Mondo appeared to believe the payments to these third-party companies were to satisfy debts SEK had to these companies. Throughout the course of their relationship, and while remitting payments pursuant to the 2019 agreement, Mondo understood it was paying a DPRK company.’
Several agreements signed by Mondo’s chief executive ‘made explicit reference to North Korea,’ said the web notice, while 18 wire transfers ultimately destined for SEK were processed by or settled at US financial institutions, thus ‘appearing to have caused US financial institutions to: (1) deal in the blocked property or interests in property of the Government of North Korea; and (2) export financial services to the DPRK, activities that would have been prohibited [under US North Korea sanctions regulations]’.
See the web notice at: https://ofac.treasury.gov/media/932986/download?inline
