Jun 27, 2024

Italy's Mondo TV fined $538,000 by the U.S. Treasury Department for producing animated programs in North Korea.

Mondo TV, an Italian animation company, has agreed to pay $538,000 for "clear violation" of U.S. sanctions that prohibit the use of the U.S. financial system to send money to North Korea.

According to a press release from the U.S. Treasury Department's Office of Foreign Assets Control, between May 2019 and November 2021, Mondo paid the North Korean government-run animation studio, Scientific Educational Korea Studio (SEK), for production services by He transferred $17,939,000 to the studio. In doing so, Mondo "acted in reckless disregard of U.S. sanctions laws and regulations" and caused U.S. banks to process payments for the North Korean government, the U.S. government said.

According to the U.S. government, Mondo had been subcontracting work to North Korea since the 1990s. In addition, Mondo has hosted North Korean animators in Italy for animation training.

Further details from a Treasury Department investigation (download full PDF here):

Mondo accumulated approximately $1,123,120 in outstanding debts to SEK for several projects; in July 2019, SEK and Mondo suspended their relationship due to Mondo's human rights concerns Mondo entered into an agreement to pay SEK in monthly installments for work completed by SEK for Mondo prior to 2016 and for new projects SEK would undertake for Mondo beginning in 2019.

Prior to each monthly payment, SEK issued an invoice to Mondo with the name of the third-party company and its bank account details so that Mondo could remit payment. In it, SEK identified two third-party companies in China and one in the U.S., as well as account information for each of several U.S. financial institutions. Mondo then wired monthly payments to these intermediaries according to SEK's instructions. Mondo apparently believed that the payments to these third-party firms were to repay debts that SEK owed to these firms.

Throughout the course of the relationship and while remitting payments pursuant to the 2019 Agreement, Mondo understood that he was paying the North Korean companies. Mondo's CEO approved and signed the 2019 contract, which explicitly referred to North Korea, as well as two additional contracts signed on Mondo's behalf with SEK for additional projects undertaken in 2019. SEK, North Korea, and Pyongyang are frequently identified on related invoices, payment receipts, and emails between Mondo management and SEK representatives. In addition, e-mails between Mondo management and SEK representatives directly reference specific payments to named U.S. companies and named U.S. financial institutions. Mondo's Chief Operations Officer and Head of Legal and Corporate Affairs personally approved all transactions. Mondo did not have a sanctions compliance policy in place at the time the conduct in question occurred.

Ultimately, Mondo initiated 18 wire transfers to the Korean animation studio SEK, which were processed or settled at U.S. financial institutions.

Many questions remain about how much animation North Korea produces for Western producers. A few months ago, a report by the Stimson Center's 38 North project indicated that American producers may be using North Korean production services. Unlike the Mondo situation, however, Americans were unaware that their work was being outsourced to the heavily sanctioned Asian country. American programs allegedly produced in part in North Korea include Prime Video's "Invincible" and Max's "Iyanu."

The U.S. government is increasingly wary of companies using North Korean animation services; in 2022, the Treasury Department imposed sanctions against seven companies and two individuals who worked on behalf of SEK or used its services.