Richemont pays $334,800 for ‘drug kingpin’ sanctions violations

New York-based luxury goods retailer Richemont North America has agreed to pay a $334,800 civil penalty to settle four violations of the Foreign Narcotics Kingpin Sanctions Regulations, according to the Office of Foreign Assets Control (OFAC).    New York-based luxury goods retailer Richemont North America has agreed to pay a $334,800 civil penalty to settle four violations of the Foreign Narcotics Kingpin Sanctions Regulations, according to the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).
   The violations involved shipments of jewelry to Shuen Wai Holding Ltd. in Hong Kong that occurred between Oct. 5, 2010 and April 21, 2011. Shuen Wai was added to OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN) on Nov. 13, 2008.
   “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,” OFAC said. “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.”
   In addition, Richemont didn’t voluntarily self-disclose the violations to the government.
   OFAC said Richemont should have known better when shipping product to Shuen Wai, since it is “a commercially sophisticated entity with global operations operating in an industry at high risk for money laundering.”
   The penalty amount for Richemont could have been as much as $620,000, but OFAC said it mitigated the amount due to the fact that the company had no violations in the past five years, cooperated with investigators, and took action to fix compliance shortcomings.
   OFAC said this case should serve as a lesson to other luxury goods retailers involved in exports, adding that they should “develop, implement, and maintain a risk-based approach to sanctions compliance, and to implement processes and procedures to identify and mitigate areas of risks.” 
   “Some of the multitude of factors that a company could consider with respect to its compliance program is an assessment of its products and services, frequency and volume of international transactions and shipments, client base, and size and geographic location(s),” OFAC explained.