e.l.f. Cosmetics, Inc. (“ELF”), a California based company, agreed to pay $996,080 for 156 violations of OFAC’s North Korea Sanctions Regulations. According to the Justice department, the company imported 156 shipments of false eyelash kits from suppliers located in China that contained materials from North Korea. ELF imported the false eyelash kits for over four years period and the total value of the shipments exceeded $4 million.
Throughout the violation time period, from about April 1, 2012 to on or about January 28, 2017, ELF’s OFAC compliance program was either ineffective or non-existent. Thus it failed to discover that approximately 80 percent of the false eyelash kits provided by China-based suppliers contained materials from the North Korea.
In order to prevent further violations and stay compliant with the U.S. export control and trade sanctions ELF taken the following steps:
Implemented supply chain audits that verify the country of origin of goods and services used in ELF’s products;
- Adopted new procedures to require suppliers to sign certificates of compliance;
- Conducted an enhanced supplier audit that included verification of payment information related to production materials and the review of supplier bank statements;
- Engaged outside counsel to provide additional training for key employees in the United States and in China regarding U.S. sanctions regulations and other relevant U.S. laws and regulations; and
- Held mandatory training on U.S. sanctions regulations for employees and suppliers in China and implemented additional mandatory trainings for employees and suppliers based in China.
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