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Sanctions : UAE company settles with USA over North Korea sanctions.

Editorial Staff

Essentra FZE Limited, a manufacturer of cigarette filters and tear tape has agreed to forfeit USD 665,112 in respect of "apparent" breaches of US sanctions relating to North Korea. Essentra is a company registered in the United Arab Emirates with no physical presence in the USA.

The USA describes it as "egregious."

In early 2018, two members of staff from United Arab Emirates company Essentra FZE Limited were introduced by a senior director of a tobacco company to a national of the Democratic People's Republic of Korea, more commonly known as North Korea or NoKo.

Discussions took place for the supply of cigarette filters and investigations showed that the North Korean had repeatedly insisted that nothing in the documentation should mention NoKo. "[D]on’t mention that customer is in my country... You just mention China or where else. Contract will be signed by other foreign company.” The plan was that the goods would be delivered to China. According to the US Treasury the contract "identified the counter-parties as front companies located in third-countries, and related transactional document sidentified the “ship to”party as an entity located in China. Shortly after receiving a copy of this contract, Essentra FZE received additional purchase orders to ship more filter rods to an entity in China with the knowledge the goods were ultimately destined for the DPRK. "

The actions were undertaken by the staff who employed various forms of subterfuge to hide their activities from their employer, in breach of the company's policies and procedures.

The deal was done in a combination of US dollars and on other currency. This meant that part of the payment was made via correspondent banking in the USA. But even then, the other currency was deposited in an offshore branch of a US bank.

The US government was entirely unsympathetic with the company despite accepting that it had been duped by staff which it later dismissed. It had not self-reported the facts of which it was not aware. It was argued that it "significantly harmed US foreign policy when it caused US persons (that's the banks) to confer economic benefits while providing to NoKo that would be combined with tobacco or tobacco products.