Four Sanctions Cases That Everyone Should Know

How prepared is your organization to handle the evolving landscape of sanctions compliance? In this episode of Corruption, Crime and Compliance, Michael Volkov dives into critical sanctions compliance cases and their implications for global companies. He discusses four significant cases that underscore the necessity of robust compliance programs, particularly in light of increased DOJ enforcement actions. Through these examples, he breaks down the consequences of third-party liability, supply chain risks, and the dangers of inadequate compliance measures, offering valuable insights into how companies can proactively avoid similar pitfalls.

Cases discussed:

• British American Tobacco (BAT): The company faced a staggering $629 million settlement for circumventing North Korean trade sanctions. This case illustrates how corporate prosecutions are evolving to resemble Foreign Corrupt Practices Act (FCPA) cases, emphasizing the growing scrutiny on multinational corporations.
• Epsilon Electronics: This case clarifies the liabilities companies face when third-party distributors divert products to prohibited countries, such as Iran. Even if the company had no direct involvement in the diversion, it still bears responsibility, underscoring the importance of diligent monitoring of distribution channels.
• ELF Cosmetics: The company received a $1 million fine for importing goods containing materials sourced from North Korea. This case underscores the critical importance of conducting thorough supply chain due diligence to ensure compliance with international sanctions.
• Murad LLC: This case focuses on post-acquisition compliance failures, demonstrating the urgent need for thorough pre- and post-acquisition audits. These audits are essential to uncover potential sanctions violations and ensure that newly acquired companies adhere to compliance standards.

Resources:

Michael Volkov on LinkedIn | Twitter

The Volkov Law Group

Links to the four cases: British American Tobacco I Epsilon Electronics I Elf Cosmetics I Murad LLC

A Framework for OFAC Compliance Commitments (May 2019)