An EU company’s case, and a plain one: the counterparty was known, and the only question was how to pay it.
What happened
Mondo, headquartered in Rome, had subcontracted animation work to a studio owned by the North Korean government since the 1990s. It paused the relationship in 2016 over human rights concerns, and in July 2019 agreed to pay a debt of about $1.1 million in monthly instalments and to commission new projects.
Before each payment the studio issued an invoice that named a third-party company and its bank account. The studio named two companies in China and one in the United States, with accounts at several US financial institutions. Mondo paid those accounts, believing the payments settled debts the studio owed them. OFAC says Mondo “understood it was paying a DPRK company” throughout: the CEO signed the 2019 agreement, which referred explicitly to North Korea, and emails named Pyongyang and the US company and banks.
Between May 2019 and November 2021 Mondo made 18 wire transfers destined for the studio that were processed or settled at US institutions: 12 to the US company’s account at a US bank, one clearing through a US correspondent bank, and five to a foreign company’s account at a US bank. OFAC designated the studio in December 2021.
The penalty
Non-egregious and not voluntarily self-disclosed: the base was $725,000, the settlement $538,000. OFAC described the conduct as reckless disregard, noted that senior management knew, and credited cooperation and Mondo’s assistance with wider US government objectives. Mondo had no sanctions compliance policy at the time.
What the record shows
- The invoice told the payer where to send the money. The instruction to pay a third party came from the sanctioned party itself.
- Knowing the counterparty was not enough of a control. Senior management knew, and the payments still went through US banks.