A U.S. based cosmetics company has settled with the U.S. Department of the Treasury Office of Foreign Assets Control (OFAC) and agreed to pay close to USD$1 million dollars in fines to settle civil liabilities regarding North Korea sanctions violations, the Treasury announced on Thursday.
According to an OFAC web notice, “ELF” Cosmetics had since April 2012 imported 156 shipments of false eyelash kits from two China-based suppliers that contained materials sourced from North Korea, with the total value of the shipments amounting to $4,427,019.26 in total.
“e.l.f. Cosmetics, Inc. (“ELF”), a cosmetics company headquartered in Oakland, California, has agreed to pay $996,080 to settle its potential civil liability for 156 apparent violations of the North Korea Sanctions Regulations, 31 C.F.R. part 510 (NKSR),” the web notice read.
“Until January 2017, ELF’s compliance program and its supplier audits failed to discover that approximately 80 percent of the false eyelash kits supplied by two of ELF’s China-based suppliers contained materials from the DPRK,” it added.
Regardless of the goods, the specific regulations – 510.201(C) – effectively prohibit any imports from North Korea into the U.S. without an OFAC license. However, it was noted that ELFhad “voluntarily self-disclosed the apparent violations to OFAC”.
While they did make the disclosure voluntarily, OFAC said ELF’s compliance program “was either non-existent or inadequate”. It also revealed that should OFAC and ELF not have settled, the company faced significant penalties.
“The statutory maximum civil monetary penalty amount for the apparent violations was $40,833,633, and the base civil monetary penalty amount for the apparent violations was $2,213,510,” the web notice added.
While the settlement fee dwarfs in comparison to the potential fines faced by the company, OFAC outlined mitigating circumstances mitigating the sanctions breaches, which would have included the voluntary submission.
This included ELF’s full cooperation with OFAC after the fact and supplying the body with additional information upon request. OFAC also noted that ELF has taken significant steps to try and rectify shortcomings that led to the imports going unnoticed.
One North Korea sanctions expert, speaking to NK News on Thursday, said however that such enforcement was insubstantial compared to other examples of U.S. actions against other breaches.
“The body blows the Justice Department struck against Huawei this week for breaking Iran sanctions really show us the chasm between potential and practice in enforcing North Korea sanctions,” Joshua Stanton, an attorney who was involved in the drafting of the North Korea Sanctions and Policy Enhancement Act, told NK News.
While ELF Cosmetics was found to have breached U.S. measures, Stanton pointed to more significant cases of sanctions evasion that have not resulted in U.S. action against entities or banks despite their involvement in matters pertaining to higher risk trade and transactions.
“When Trump came into office trumpeting “maximum pressure,” I would have expected more than having to wait two years for OFAC to file its first North Korea penalty settlement, only for it to be a small-ball $1 million fine, based on an Obama-era executive order, for importing false eyelashes because of sloppy supply chain monitoring,” he said.
“Where are the sanctions against Glocom’s international arms-smuggling and money laundering racket? What about Chinpo shipping, which OFAC still hasn’t blocked years after a Singaporean court convicted it of laundering dollars through the United States to finance North Korean arms dealing?,” he added among other examples.
NK News also reached out to ELF Cosmetics but did not receive a response in time for publication.
Edited by Oliver Hotham
Featured image: Elf Beauty
Join the influential community of members who rely on NK News original news and in-depth reporting.
Subscribe to read the remaining 586 words of this article.