January 14, 2021

Indonesian paper manufacturer settles apparent sanctions violations for over $1 million

The Office of Foreign Assets Control of the US Department of the Treasury has announced a settlement with PT Bukit Muria Jaya, an Indonesian manufacturer of paper products, to resolve the company’s potential civil liability for apparent violations of § 510.212 of the North Korea Sanctions Regulations, 31 CFR part 510.

According to OFAC, between March 2016 and May 2018, Bukit Muria exported cigarette paper valued at $959,111 to entities in the Democratic People’s Republic of Korea, or to intermediaries doing business on behalf of the DPRK, causing 28 wire transfers connected with those exports to clear through US banks.  These wire transfers were conducted in apparent violation of the sanctions regulations because they caused US banks to deal in the property of a specially designated national or blocked person, export financial services to the DPRK, or facilitate export transactions that would have been prohibited if engaged in by US persons.

Once it became aware of its exposure to US sanctions laws, Bukit Muria adopted a formal written sanctions policy, appointed a new head of the compliance department reporting directly to the president of the company, and implemented know-your-customer processes and anti-diversion agreements for trading companies and agents.  However, OFAC determined that the company did not voluntarily self-disclose the apparent violations.

OFAC viewed as mitigating factors both Bukit Muria’s remedial measures, its clean record of violations for the preceding five years, and its cooperation with OFAC’s investigation.  At the same time, OFAC viewed as aggravating factors the company’s actual knowledge of the conduct and its reckless disregard for US sanctions laws and regulations.  As a result of these considerations, the settlement amount is $1,016,000, to be satisfied by the payment of a greater amount paid in penalties to the US Department of Justice in an action arising out of the same conduct.

US Dept of the Treasury press release | Enforcement  release