A settlement agreement between Richemont North America, the parent company of Cartier, and the Office of Foreign Assets Control (OFAC) for violations of U.S. sanctions regulations is an important wake up call for U.S. and global retailers, which have often considered themselves to be somewhat outside the scope of U.S. sanctions laws. In truth, the rules apply to all companies and have the greatest application to those that export goods or conduct other international business.
According to OFAC, two Cartier boutiques in the United States sold jewelry to a customer who directed Cartier to ship the items to an address in Hong Kong. It turns out that the jewelry was destined to a blacklisted Specially Designated National (SDN) that was listed pursuant to OFAC’s narcotics trafficking sanctions regulations. OFAC pointed out that the name of the entity receiving the goods and the ship to address were exact matches to the entry on OFAC’s SDN List. If the company had checked the SDN List, it would have quickly determined that the transaction was impermissible under U.S. sanctions laws.
OFAC used the case to specifically call on retailers who ship goods overseas to adopt sanctions compliance programs. Luxury brands like Cartier may be at particular risk for sanctions violations —OFAC pointed out that an aggravating factor in the case was that Richemont operates in an industry (the luxury goods market) that has a high risk of illicit money laundering activity.