[Replay] Four Sanctions Cases That Everyone Should Know
Apr 21, 2025
Explore the crucial world of sanctions compliance and the lessons learned from notable cases. A staggering settlement against British American Tobacco highlights the evolution of corporate prosecutions. Epsilon Electronics illustrates the dire responsibilities companies face with third-party distributors. ELF Cosmetics reminds us of the risks tied to sourcing materials from prohibited nations. This discussion reveals the growing scrutiny on multinational corporations and emphasizes the need for robust compliance programs to navigate the changing landscape.
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question_answer ANECDOTE
British American Tobacco Sanctions Case
British American Tobacco (BAT) paid $629 million for circumventing North Korean trade sanctions.
They used a complex remittance structure with front companies to hide transactions, showing systemic bribery-like violations.
insights INSIGHT
Third-Party Liability for Sanctions
Exporters are liable if they have reason to know products are destined for sanctioned countries through third parties.
Liability attaches even if goods haven't reached the prohibited country yet, focusing on exporter state of mind.
question_answer ANECDOTE
Elf Cosmetics Supply Chain Liability
Elf Cosmetics paid nearly $1 million for importing goods containing materials sourced from North Korea.
Their failure in supply chain due diligence allowed use of North Korean materials, despite no knowledge of it.
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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.
Corruption Crime & Compliance